Shotblast Services (Auck) Limited v Levin - [2012] NZHC 2129

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-404-433 [2012] NZHC 2129

BETWEEN SHOTBLAST SERVICES (AUCK) LIMITED
Applicant

ANDHENRY DAVID LEVIN AND DAVID STUART VANCE AS LIQUIDATORS OF MULTI CONSTRUCTION CONCEPTS (MCC) LIMITED (IN LIQUIDATION) Respondents

Hearing: 27 June 2012

Counsel: J D McBride for Applicant
J R Sumner for Respondent

Judgment: 22 August 2012

JUDGMENT OF KEANE J

This judgment was delivered by on 22 August 2012 at pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar
Date:

Solicitors:
Knight Coldicutt, Auckland for Applicant
Ford Sumner, Wellington for Respondents
SHOTBLAST SERVICES (AUCK) LIMITED V HENRY DAVID LEVIN AND DAVID STUART VANCE AS LIQUIDATORS OF MULTI CONSTRUCTION CONCEPTS (MCC) LIMITED (IN LIQUIDATION) HC AK CIV 2012-404-433 [22 August 2012]

[1] On 24 February 2012 Henry Levin and David Vance, the liquidators of MCC, obtained judgment by default against Shotblast for $26,517.75. The effect was to require Shotblast to refund to the liquidators seven payments, declared void, that MCC had made to Shotblast between 29 June 2007 - 2 July 2008, almost all within the 12 months before MCC went into liquidation on 11 July 2008.

[2] Shotblast cannot contest the judgment as it relates to the last four of those payments, totalling $11,103. They were received after 1 November 2007, the date on which an amendment to the Companies Act 1993 removed any ability to assert that they were received 'in the ordinary course of business'. It contends that the first three payments, totalling $15,414.75, made before that date, were received ordinarily. As to those, it seeks to have the judgment set aside, contending that otherwise there will be a miscarriage of justice.

[3] Shotblast, in reality its sole shareholders and directors Mr and Mrs Styles, were served with the liquidator's originating application one week before the date on which it was first to be called. They did not appreciate, they contend, that judgment would be entered on that day if they did not appear. They promptly filed their application to have the judgment set aside. They have, they contend, a good defence to the liquidator's claim as to those three payments. They were received in the ordinary course of business.

[4] The liquidators oppose this application. Mr and Mrs Styles, they contend, must have been aware that judgment could be entered on 24 February 2012. They must have chosen to 'wait and see'. The judgment, the liquidators contend, is soundly based in an irregular pattern of payments showing that Shotblast was preferred over other creditors. They themselves have been put, they say, to significant cost and delay. The judgment should stand.

Judgment by default

[5] On 13 August 2008, shortly after MCC went into liquidation on 11 July 2008, Shotblast filed with the liquidators an unsecured creditors claim for $7,500 for two

invoices then outstanding. One, dated 30 May 2007, originally for $6,115.50, had been reduced by $1,376.25 to $4,739.25. The other, dated 20 June 2007, was for
$2,760.75.

[6] On 23 April…

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.

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Details

Case: [2012] NZHC 2129
Decision Date: 22 August 2012

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Shotblast Services (Auck) Limited v Levin involved a dispute over the voidability of payments made by Multi Construction Concepts (MCC) to Shotblast Services within two years before MCC's liquidation. The liquidators of MCC sought a default judgment for $26,517.75, which was granted against Shotblast on 24 February 2012. Shotblast later applied to set aside this judgment, arguing that the first three payments, totaling $15,414.75, made before 1 November 2007, were received in the ordinary course of business and should not be voided. The key legal issue was whether these payments were made in the ordinary course of business, as defined by the Companies Act 1993. The court considered the objective commercial setting of the payments, the previous commercial relationship between the parties, and general business practices. The court found that Shotblast had a substantial ground of defence and that the payments were not out of the ordinary. The court also found that Shotblast's failure to appear in court did not significantly prejudice the liquidators, and thus, the justice of the case favoured setting aside the judgment. The judgment was set aside, and no order was made as to costs.

Orders