Sandfield Associates Ltd v Monnery - [2019] NZHC 2151

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-000505

[2019] NZHC 2151

BETWEEN
SANDFIELD ASSOCIATES LIMITED

First Plaintiff

CONVENDIUM LIMITED (IN LIQUIDATION)
Second Plaintiff

AND

PAUL MARK MONNERY, JULIE ANN MONNERY and DAVID GRIFFITHS

Defendants

Hearing: 27 August 2019

Appearances:

D J Chisholm QC for Plaintiffs C Carruthers QC for Defendants

Judgment:

30 August 2019

ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL

SANDFIELD ASSOCIATES LTD v MONNERY [2019] NZHC 2151 [30 August 2019]

Introduction

[1] The defendants, trustees of the P and J Monnery Family Trust, have shares in Convendium Ltd, the second plaintiff. That company is now in liquidation. At liquidation, they held just under 50 per cent of the shares in the company, though they had a larger proportion in the early years of the company.

[2] Convendium Ltd was incorporated in 2005. Its business was the development, marketing and sale of cashless payment systems used in vending machines such as drink and snack dispensers and for washing machines in laundromats. When the company was established, the defendants injected funds into the company by way of shareholders’ advances. Over time, those advances were repaid. They continued to receive drawings from the company, which has put them in debt to the company. In this proceeding the plaintiffs say that the defendants owe Convendium some $560,000. They sue to recover the overdrawn advances and have applied for summary judgment.

[3] Sandfield Associates Ltd is a creditor of Convendium Ltd. It is a software developer and licensed Convendium Ltd to use its software, called the Festival Payments system. Sandfield says that Convendium owes it $339,000. In November 2017 it served a statutory demand on Convendium Ltd and successfully applied for the company to be put into liquidation. The liquidation order was made in February this year. The liquidators are Mr Christopher McCullagh and Mr Stephen Lawrence. Mr Paul Monnery, the first defendant, was the sole director of Convendium from the early days of the company at least until October 2015, when he was ousted. The company was removed from the Register but was apparently restored to enable Sandfield to pursue its remedies against the company and against the defendants.

[4] As a matter of background which I will come back to, Mr Monnery has started his own proceeding against other people associated with shareholders in Convendium, alleging that they acted wrongfully to oust him as director of the company. They allege economic torts, conspiracy by unlawful means and intentionally causing economic loss by unlawful means. The proceeding is pending in the Wellington High Court. I will need to address that later in the judgment.

[5] The principles on which the courts decide plaintiffs’ applications for summary judgment are well known. I need do no more than refer to the Court of Appeal’s re- statement of the principles in Krukziener v Hanover Finance Ltd.1

Procedural matters

[6] Some procedural matters need to be addressed before I move on to the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Sandfield Associates Ltd v Monnery

Details

AGLC: Sandfield Associates Ltd v Monnery [2019] NZHC 2151
Case: [2019] NZHC 2151
Decision Date: 30 August 2019

CaseChat Overview and Summary

Sandfield Associates Ltd and Convendium Limited (in liquidation) have sued Paul Mark Monnery, Julie Ann Monnery, and David Griffiths for the repayment of overdrawn shareholder advances, totaling approximately $560,000. The defendants, trustees of the P and J Monnery Family Trust, held nearly 50% of Convendium’s shares at liquidation. Convendium was a developer of cashless payment systems, and the defendants had initially funded the company and continued to receive drawings. The plaintiffs claim that Convendium is owed $560,000 and seek summary judgment. The primary legal issue was whether the defendants could be held liable for repaying the overdrawn shareholder advances to Convendium. The court considered whether the claim could be pursued under section 301 of the Companies Act 1993 or at common law.

The court determined that section 301 of the Companies Act, which allows for the recovery of misapplied or retained company property, was not applicable as the defendants were shareholders, not officers of the company. The court found that the claim was an ordinary debt collection matter. The court ruled that Convendium could rely on its financial statements and accounting records to prove the debt. Despite the defendants' argument that they were entitled to drawings as compensation for not receiving a salary, the court held that this did not absolve them from repaying the overdrawn amounts. The court found that the defendants' claims of mismanagement and misappropriation by other shareholders did not justify withholding summary judgment. The court granted judgment to Convendium Ltd for $512,346.73 plus interest from the date of the liquidators' demand. The court also granted leave to apply for costs if the parties could not agree.

Orders