Smartpay Ltd v Kumar - [2022] NZHC 2685

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-001775

[2022] NZHC 2685

IN THE MATTER OF The liquidation of 4468440 Limited (previously known as Optimizer Corporation Limited)

BETWEEN

SMARTPAY LIMITED
Plaintiff

AND

MANAS DHARMENDRA KUMAR

Defendant

Hearing: 17 October 2022

Counsel:

DJ Chisholm KC and JD Ryan for Plaintiff No appearance for Defendant

Judgment:

19 October 2022

JUDGMENT OF DOWNS J

(Quantum of compensation)

This judgment was delivered by me on Wednesday, 19 October 2022 at 12 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:
Claymore Partners Ltd, Auckland. DJ Chisholm KC, Auckland.

Copy to: Defendant.

SMARTPAY LTD v KUMAR [2022] NZHC 2685 [19 October 2022]

[1] This brief judgment should be read with my interim one of 13 May 2022, knowledge of which is assumed.1 The remaining issue is compensation under s 301(1)(b)(ii) of the Companies Act 1993. It empowers the Court to order the defendant “to contribute such sum to the assets of the company by way of compensation as the Court thinks just”.

[2] Smartpay contends compensation should be $850,427.43 (as well as interest under the Interest on Money Claims Act 2016).

[3] This figure is based on the evidence of Aidan Murphy, Smartpay’s chief business officer, and the supplementary evidence of Boris van Delden, liquidator. Taken together, this evidence establishes Smartpay supplied OCL 2161 terminals, of which 1002 were recovered or returned to Smartpay. So, 1159 terminals remain outstanding at a cost of $345 per terminal—a total of $399,855. To this must be added two amounts. First, what Smartpay was owed by OCL at the date of its liquidation:
$120,407.43. Second, post-termination fees payable by OCL to Smartpay under the distribution agreement. These come to $330,165. The three sums total $850,427.43, a figure the liquidators have accepted.

[4] Mr Kumar did not attend the compensation hearing, about which more shortly. Mr Kumar filed a submission challenging the number of outstanding terminals. He contended this could not be reliably established without analysis of underlying metadata. The short answer to this submission is the evidence of Mr Murphy. Mr Murphy says 1159 terminals remain outstanding, and his testimony is supported by business records exhibited to his brief of evidence. There is no reason to doubt the reliability of this evidence.

[5] Mr Kumar also contended OCL did not cause Smartpay’s loss. Mr Kumar advanced the same argument at the earlier hearing. I rejected it; see [47]–[51] of my earlier judgment. Mr Kumar may not re-litigate the point here.

1 Smartpay Ltd v Kumar [2022] NZHC 997. I continue to use the same abbreviations.

[6] It is not necessary to address potentially differing approaches to compensation under s 301(1)(b)(ii).2 On any view, OCL should have compensation of $850,427.43 (and interest). The amount reflects what OCL owed Smartpay, in circumstances in which OCL was insolvent from near inception.

[7] This leaves Mr Kumar’s non-attendance. Mr Kumar sought an adjournment of the compensation hearing on…

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 Smartpay Ltd v Kumar

Details

AGLC: Smartpay Ltd v Kumar [2022] NZHC 2685
Case: [2022] NZHC 2685
Decision Date: 19 October 2022

CaseChat Overview and Summary

The case of Smartpay Ltd v Kumar, heard by the High Court of New Zealand, involved a claim for compensation against Manas Dharmendra Kumar in the context of the liquidation of Optimizer Corporation Limited, previously known as 4468440 Limited. Smartpay Limited sought compensation under section 301(1)(b)(ii) of the Companies Act 1993, which empowers the Court to order the defendant to contribute a sum to the assets of the company as the Court sees fit. The plaintiff, Smartpay, argued that the defendant should compensate it for the outstanding cost of terminals, amounts owed by the liquidated company, and post-termination fees. Kumar, the defendant, did not attend the hearing but filed submissions challenging the evidence and the basis of the compensation claim.

The primary legal issue before the court was whether Kumar was liable to compensate Smartpay for the amount claimed, given that Kumar had not contested the liability in earlier proceedings. Kumar also argued that the number of outstanding terminals could not be reliably established without metadata analysis and that he was not responsible for the company's debts. The court had to determine the validity of Kumar's arguments and whether he was indeed liable for the compensation claimed by Smartpay. Another point of contention was Kumar's absence from the hearing and his contention that he had not received certain documents.

The court found that Kumar's arguments regarding the number of outstanding terminals were unconvincing, given the reliable evidence provided by Smartpay's chief business officer, Aidan Murphy. The court upheld its earlier decision that Kumar could not re-litigate the issue of liability. The court also dismissed Kumar's claims regarding the receipt of documents, noting that emails confirmed their service to Kumar's lawyers. The court concluded that Kumar was liable to pay compensation in the amount of $850,427.43, plus interest, and also ordered him to pay costs on a 2B basis. The court reserved permission for the liquidators to reapply if further creditor claims were admitted. Kumar's request for a transcript of the hearing was declined as the hearing was brief and unremarkable, and Kumar had chosen not to attend.

Orders