IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE WHANGANUI-A-TARA ROHE

CIV-2021-485-364 CIV-2021-485-361

[2022] NZHC 848

UNDER the Land Transfer Act 2017 and the Companies Act 1993

IN THE MATTER OF

an application under section 143 of the Land Transfer Act 2017 and an application under Part 16 of the Companies Act 1993

BETWEEN

JOHN MARSHALL SCUTTER as

liquidator of MATRIX HOMES LIMITED (in liquidation) and MATRIX HOMES LIMITED (in liquidation)

Applicant

AND

TAWA LIMITED PARTNERSHIP

Respondent

Hearing (by VMR): 28 February – 1 March 2022

Counsel:

K P Sullivan and D P MacKenzie for the Applicant M Colson QC and C J Houlahan for the Respondent

Judgment:

28 April 2022

JUDGMENT OF GWYN J

Solicitors:
WCM Legal, Wellington
Gibson Sheat Lawyers, Wellington

MATRIX HOMES LIMITED (in liquidation) v TAWA LIMITED PARTNERSHIP [2022] NZHC 848
[28 April 2022]

TABLE OF CONTENTS

Introduction [1]

The entities[10]

The contract[17]

Relevant subsequent events [24]

The liquidation [27]

The insolvent transaction[29]

Issues for determination[50]

Is there a transaction in terms of s 292(3) of the Act?[52]

What constitutes the transaction? [52]

Were the payments advances or pre-payments under the contract?[53] Discussion [71]
Were the credit invoices a transaction for the purposes of s 292(3) of the Act?[101] Discussion [103]

Was there a creditor/debtor relationship between Tawa LP and Matrix?[110]

Conclusion on insolvent transaction[116]

Transaction at undervalue [117]

Discussion[128]

The caveat[132]

Discussion[146]

The Tawa LP charge[161]

Conclusion on Tawa LP Charge[168]

Result [169]

Costs [172]

Introduction

[1] These proceedings concern two related applications by the liquidator of Matrix Homes Limited (in liquidation) (Matrix), to have certain transactions set aside as voidable transactions, pursuant to s 292 of the Companies Act 1993 (the Act), and for an order that a caveat not lapse.

[2] The applications arise from a contract dated 27 September 2016 between Matrix and Tawa Limited Partnership (Tawa LP) for the construction by Matrix of 11 duplex style modular apartments (the apartments), to be sited at 4 William Earp Place, Tawa, Wellington.

[3] The applicant in both proceedings is the liquidator of Matrix, Mr John Scutter. Mr Sutter seeks:

(a)That the voidable transactions be set aside and an order made for payment by Tawa LP to Matrix of $2,167,619.

(b)An order that a caveat placed by Matrix over a property at 4 William Earp Place, Tawa, not lapse.

(c)An order setting aside the security interest registered by Tawa LP on 29 May 2018 over 17 of the apartments, as voidable, under s 293 of the Act.

[4] The liquidator’s position is that credit invoices issued by Matrix to Tawa LP allowed Tawa LP to take ownership of the apartments, that were Matrix’s property. Without the issue of the credit invoices, Tawa LP and its shareholders would have remained creditors of Matrix, in the amount of $3.3 million.

[5] In the alternative, the liquidator says that the transfer of the apartments to Tawa LP was at an undervalue and falls within either s 297 and or…

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 Scutter v Tawa Limited Partnership

Details

AGLC: Scutter v Tawa Limited Partnership [2022] NZHC 848
Case: [2022] NZHC 848
Decision Date: 28 April 2022

CaseChat Overview and Summary

This case involves an application by the liquidator of Matrix Homes Limited (in liquidation) (Matrix), to have certain transactions set aside as voidable transactions, pursuant to s 292 of the Companies Act 1993 (the Act), and for an order that a caveat not lapse. The applications arise from a contract dated 27 September 2016 between Matrix and Tawa Limited Partnership (Tawa LP) for the construction by Matrix of 11 duplex style modular apartments (the apartments), to be sited at 4 William Earp Place, Tawa, Wellington. The liquidator’s position is that credit invoices issued by Matrix to Tawa LP allowed Tawa LP to take ownership of the apartments, that were Matrix’s property. Without the issue of the credit invoices, Tawa LP and its shareholders would have remained creditors of Matrix, in the amount of $3.3 million. In the alternative, the liquidator says that the transfer of the apartments to Tawa LP was at an undervalue and falls within either s 297 and or s 298 of the Act. Tawa LP’s primary defence is that the payments relied on by the liquidator were pre-payments made under the building contract between Tawa LP and Matrix, not shareholder advances, as the liquidator contends. The Court found that the credit invoices were an insolvent transaction and that Tawa LP received more towards the satisfaction of the debt owed by Matrix than it would have received, or been likely to receive, in Matrix’s liquidation. The Court also found that the Tawa LP Charge is voidable and should be set aside. The Court ordered that Tawa LP is to pay to Matrix $2,167,619 and that caveat no. 12074422.1 not lapse. The Court reserved costs, not having heard from counsel as to these. If counsel are unable to settle costs, as the Court would expect them to do, then they may come back to the Court by memoranda within 15 working days of the date of this judgment. The Court can indicate its preliminary view that the liquidator, as the successful party, is entitled to costs on a 2B basis.

Orders