Tech Voice Data Limited (in liquidation) v Ovenden

[2015] NZHC 2766

IN THE HIGH COURT OF NEW ZEALAND

CHRISTCHURCH REGISTRY

CIV-2015-409-161

[2015] NZHC 2766

BETWEEN

TECH VOICE DATA LIMITED (IN LIQUIDATION)

First Plaintiff

VIVIEN JUDITH MADSEN-RIES and

HENRY DAVID LEVIN as liquidators of Tech Voice Data Limited (In Liquidation) Second Plaintiffs

AND

GRANT ASLAN OVENDEN

First Defendant

JOANNE OVENDEN
Second Defendant

JASON BRENT WOHNSIEDLER

Third Defendant

Hearing:	14 October 2015
Appearances:	PV Shackleton and CP Eason for the Plaintiffs No appearance for the Defendants
Judgment:	9 November 2015

JUDGMENT OF NICHOLAS DAVIDSON J

Issue

[1]    The liquidators of Tech Voice Data Ltd (‘the Company’ or ‘Tech Voice’) sue its former directors in their personal capacities, and in their former capacities as directors.

TECH VOICE DATA LIMITED (IN LIQUIDATION) & ANOR v OVENDEN & ORS [2015] NZHC 2766

[9 November 2015]

[2]    The action came before the Court as an undefended hearing, since the directors, Mr and Ms Ovenden and Mr Wohnsiedler, did not file anything in opposition. The plaintiffs’ submissions and evidence are therefore untested and, given the immediate and wider implications of judgment, the Court in the circumstances must be careful in reaching conclusions.

Background

[3]    The first plaintiff is the Company, now in liquidation. It was incorporated in 2007 and traded until 2010. It went into liquidation on 18 September 2014. The second plaintiffs are the Company’s liquidators, Ms Madsen-Ries and Mr Levin, both of Deloitte.

[4]    The first defendant is Mr Ovenden. He was a director of the Company from 13 September 2007 to 21 February 2008, and again from 1 September 2009 until the Company was liquidated. From 2007 to 26 February 2008 he held all the Company’s shares, and after 17 February 2009 held one of the Company’s 1000 shares.

[5]    Ms  Ovenden   is   the   second   defendant.   She   was   a   director   from   21 February 2008  until  about   8   November   2009.   She   held   800   shares   from 26 February 2008 until 17 February 2009. Thereafter, she held one share.

[6]    The  third  defendant   is   Mr   Wohnsiedler.   He   was   a   director   from   21 February 2008 until 11 April 2008, and held 200 shares from 26 February 2008 until 17 February 2009. Thereafter, he held one share.

[7]    On 31 May 2008, the Company was in default of its obligations to pay the Inland Revenue Department (IRD) certain tax. The liquidators depose that it owed

$999.54 in Pay As You Earn tax (PAYE), and Goods and Services Tax (GST) in the order of $1,694.93.

[8]    The liquidators assert that the Company’s financial statements for the financial years ending 31 March 2009 and 31 March 2010 show a net asset deficit and a working capital deficit. They reproduced these statements, which clearly indicate the

Company’s dire financial position at that time. The liquidators contend that the operating and asset deficits provide unequivocal evidence of the Company’s insolvency, at the very latest as of 31 March 2009. This financial strife led to liquidation.

[9]    The IRD was the only creditor to have issued a claim against the Company and as at 19 September 2014, its demands were as follows:

[10]the sum of $17,097.19 for PAYE along with interest and penalties of

$61,087.40 for the period 31 May 2008 to 30 November 2010;

[11]the sum of $25,627.50 for GST along with interest and penalties of

$39,630.67 for the period 31 May 2008 to 31 July 2014;

[12]the sum of $1,989.40 owing for Student Loan Employer (SLE) deductions along with interest and penalties of $5,600.82 for the period 31 July 2009 to 31 October 2010;

[13]the sum of $1,384.23 for KiwiSaver Employee Contributions (KSR) along  with  interest  and  penalties  of  $1,381.93  for  the  period     31 July 2009 to 31 October 2010;

[14]the sum of $468.72 for income tax along with interest and penalties of

$859.87 for the period 31 March 2009 to 31 March 2014; and

[15]the sum of $3,655.59 for court costs for the liquidation application.

[16]   Subsequent to the hearing, the Company’s liquidators received a formal claim from an additional creditor, Responsive ICT Ltd (in liquidation). The amount claimed is for “inter-company borrowing”, of $40,581.22.

[17]   The liquidators report that at the date of this hearing the only sum to have been paid to either of the creditors was $1,706.69 to the IRD, which cleared what they nominated as the “core debt owing for PAYE for the period to 31 March 2008”. This did not cover interest or penalties for that period.

Causes of Action

Debt

[18]   The first claim is made by the liquidators against Mr Ovenden for his debt to the Company on his current account. The liquidators divided this cause of action into two  different  time  periods.  The  first  is  for  debts  allegedly  incurred  before     31 March 2010. As such, they are recorded in the Company’s financial statements, and total $63,464.00.

[19]   For the period after 1 April 2010, the liquidators were required to construct Mr Ovenden’s current account, as the Company had made no such record. Using the Company’s bank statements, the liquidators claim a further $34,874.00 as expenditure which they say should be regarded as being for Mr Ovenden’s personal use, and not business expenditure. They therefore claim a total of $98,338.00 (plus interest and costs) from Mr Ovenden.

[20]   The second cause of action is against Ms Ovenden. The liquidators allege that the Company’s financial statements for the year ending 31 March 2010 disclose various payments made by the company to Ms Ovenden’s personal account. These total $41,080.00 and were not paid back. Further, they suggest that a payment of

$397.00 was made under the description “Les Mills”, from which they infer that    Ms Ovenden used that money to acquire a gym membership. They contend that this cannot properly be treated as company expenditure and so Ms Ovenden is obliged to repay it.

[21]   The third cause of action is against Mr Wohnsiedler for $32,844.00 owed to the Company. So much is obvious from the Company’s financial records for the year ending 31 March 2010. Without evidence that this amount has been repaid to the Company, the liquidators say the debt is outstanding.

Breach of directors’ duties

[22]   The fourth claim is made by the liquidators against Mr and Ms Ovenden under s 301 of the Companies Act 1993. They claim that the Ovendens violated their duties under ss 131(1), 133, 135, 136 and 137 of the Act. They cannot rely on any limitation of liability that a company may have had, for that is contingent on compliance with the Act.1 While there is some repetition in the facts alleged by the liquidators to constitute the breaches of the various sections of the Act, I will separate out each of the relevant duties and address them in turn.

Section 131(1)- Acting in good faith and in the Company’s best interests.

[23]Section 131(1) reads:

Subject to this section, a director of a company, when exercising powers or performing duties, must act in good faith and in what the director believes to be the best interests of the company.

[24]   The obligation is discharged by the director believing that he or she is acting in the best interests of the company. This is a subjective test. Once the company is of doubtful solvency, or if a certain payment could potentially jeopardise its solvency, the duty is owed to its creditors.2 Here, the liquidators submit that the Ovendens breached their duty to act in the Company’s best interests by allowing it to continue trading after 31 May 2008, the day on which it defaulted on its payments of GST and PAYE to the IRD.

[25]   Further, the liquidators submit that by making various drawings from company accounts for their personal benefit, Mr and Ms Ovenden improperly preferred themselves to the Company. They ought to have realised that the default in various tax payments was a matter which warranted urgent redress, and which was only made worse by putting company funds into their current accounts.

1      Mason v Lewis [2006] 3 NZLR 225 (CA) at [83].

2      Nicholson v Permakraft (NZ) Ltd [1985] 1 NZLR 242 (CA) at 249-250 per Cooke J.

Section 135- Reckless trading

[26]Section 135 reads:

A director of a company must not—

(a)agree to the business of the company being carried on in a manner likely to create a substantial risk of serious loss to the company’s creditors; or

(b)cause or allow the business of the company to be carried on in a manner likely to create a substantial risk of serious loss to the company’s creditors.

[27]   In Mason v Lewis, the Court of Appeal described the test in the following terms:3

·     the duty which is imposed by s 135 is one owed by directors to the company (rather than to any particular creditors);

·     the test is an objective one;

·     it focuses not on a director’s belief, but rather on the manner in which a company’s business is carried on, and whether that modus operandi creates a substantial risk of serious loss; and

·     what is required when the company enters troubled financial waters is what Ross [in Corporate Reconstructions: Strategies for Directors] accurately described as a “sober assessment” by the directors, we would add of an ongoing character, as to the company’s likely future income and prospects.

[28]   As with a director’s duty under s 131(1), the duties under s 135 have been held to extend to the company’s creditors, where that company is of doubtful solvency.4 The particular facts alleged by the liquidators to underlie the Ovendens’ breach of s 135 are their failure to cause the Company to cease trading (at the latest) after defaulting its tax obligations on 31 May 2008 and their drawing of money from company accounts for their own personal benefit. Further, the liquidators contend that by not preparing accounts after the financial year ending 31 March 2010, Mr Ovenden

3      Mason v Lewis, above n 1, at [51].

4      Sojourner v Robb [2007] NZCA 493, [2008] 1 NZLR 751 at [25] citing Nicholson v Permakraft (NZ) Ltd, above n2, with approval, and also citing Re New World Alliance Pty Ltd (1994) 51 FCR 425 at pp 444-445.

(then the director) was sailing in the dark, without knowing how the Company would fare.

Section 136- Duty in relation to incurring of obligations

[29]Section 136 provides:

A director of a company must not agree to the company incurring an obligation unless the director believes at that time on reasonable grounds that the company will be able to perform the obligation when it is required to do so.

[30]   In Peace and Glory Society Ltd (in liq) v Samsa, the Court of Appeal described the section as requiring:5

(a)that the defendant was a director of the company;

(b)that an obligation was incurred by the company; and

(c)that at the time of incurring the obligation, the defendant did not honestly believe on reasonable grounds that the company would be able to perform the obligation when it was required to do so.

[31]   The requirement that the belief was honestly held is a subjective test, while the requirement that there were reasonable grounds for holding that belief is objectively ascertained.6 The liquidators submit that in the absence of any evidence that the Ovendens prepared forecasts or assessments as to their financial position after 31 March 2010, it was not reasonable for them to continue incurring obligations to the IRD. This submission is similar to that made in respect of s 135.

Section 133- Exercise of powers for proper purposes

[32]   Section 133 provides that “[a] director must exercise a power for a proper purpose”. The liquidators regard the Ovendens as having breached this duty by drawing company money for their personal use.

Section 137- Failure to act as reasonable directors

5      Peace and Glory Society Ltd (in liq) v Samsa [2009] NZCA 396, [2010] 2 NZLR 57 at [45].

6      Fatupaito v Bates [2001] 3 NZLR 386 (HC) at [80] per O’Regan J.

[33]   The liquidators submit that the  Ovendens’  failure  to  cease  trading  after  31 March 2008 at the latest, and their use of company money for their own personal benefit, render their actions as directors unreasonable.

Discussion

[34]   Whether the defendants are obliged to refund the Company for money drawn out of the Company accounts into their own accounts turns on whether the money was so taken, whether it has been refunded, and whether it is attributable to business expenditure or additional salary.

[35]   Whether the Ovendens have breached their duties under any of ss 131, 133, 135, 136 and 137 turns on whether it was appropriate to allow the Company to continue trading after it had defaulted on its obligations to pay the IRD tax and whether it was legitimate to withdraw company funds for personal use. The nature of the Ovendens’ alleged shortcomings will mean that it is likely that if they are found in breach of one of their duties, they will be found in breach of others.

Causes of action 1, 2 and 3 - Debt

[36]   The first three causes of action all allege that the defendants are indebted to the Company to some extent. I will consider them together.

[37]   The Company’s financial statements for the year ending 31 March 2010 record that  Mr  Ovenden  had  a  shareholder’s  current  account  debt  of  $63,464.00.    The liquidators submit that I ought to take the financial statements at face value, both as to the sum owing and as to the absence of any record that the sum was repaid. It is clear that the Company’s financial statements at the date of liquidation are the responsibility of the directors.7 Further, the liquidators are entitled to rely on the accuracy of these statements.8 The Company accounts attest to Mr Ovenden being advanced the above sum. No evidence has been provided to suggest otherwise, or to suggest its repayment. Since advances made on a shareholder’s current account are

7      Thom Contractors Ltd (In Liq) v Thom HC Auckland CIV-2008-404-6829, 28 April 2009 at [11] and [17].

8      Chesterton Holdings Ltd (In Liq) v Durney HC Napier CI- 2011-441-007, 19 May 2011 at [31].

debts repayable when the Company requires, I hold that Mr Ovenden is liable for this sum.

[38]   The liquidators say further that Mr Ovenden’s debts include transactions made between 1 April 2010 (the date after which there are no company financial records) and 18 September 2014 (the date of liquidation). Due to the lack of official company records, the liquidators constructed their own records by reviewing company bank statements. They have identified $34,874.00 as the sum of these further transactions. Many of the transactions between these dates appear to be for Mr Ovenden’s personal benefit, as many are payments to cafes, restaurants, ATM withdrawals and payments to various bank accounts, all of which have been traced as made in Mr Ovenden’s name, Ms Ovenden’s name, or in their joint names. Given that Mr Ovenden was the Company’s sole director through this period and given the nature of the transactions, the liquidators submitted that I should infer that they were for Mr Ovenden’s personal benefit. On the authority of Morgenstern v Jeffreys it is clear that a director who has a personal interest in a company transaction must disclose the interest to the company, and unless the transaction is for “fair value”, it may be avoided by the company within three months.9 In such a situation the onus of proving that there is no conflict between the company’s interests and the director’s interests falls on the director.10

[39]   Here, a credible inference arises that the transactions between 1 April 2010 and 18 September 2014 were for the personal benefit of Mr Ovenden. The Court has not heard from Mr Ovenden. The reasonable inference is that the transactions between the above dates were for Mr Ovenden’s personal benefit.

[40]   In order that the payments might be recoverable, the liquidators say that in addition to the money being for Mr Ovenden’s personal benefit, they did not constitute salary or wage payments. In a memorandum dated 29 September 2014, Deloitte records Mr Ovenden as having commented in a meeting with two of its staff members that he received no regular wage. This statement, coupled with the infrequency and sporadic nature of the payments, suggests that these payments are not properly

9      Morgenstern v Jeffreys [2014] NZCA 449, (2014) 11 NZCLC 98-024 at [56], citing the Companies Act 1993, s 141.

10 At [58].

characterised as wage or salary payments. If Mr Ovenden had intended the payments to constitute salary or wages, he would have been required to comply with s 161 of the Act, or ss 107 and 108. However, there is no evidence that anything like the requisite procedure in s 161 was followed, and moreover s 108 would not have been satisfied between 1 April 2010 and 18 September 2014, as Mr Ovenden could not reasonably have believed in the Company’s solvency.11

Mr Ovenden - debt

[41]Mr Ovenden is therefore liable for the sum of $34,874.00, in addition to the

$63,464.00 he owed for current account debts as at 31 March 2010. His total liability is $98,338.00.

Ms Ovenden - debt

[42]   The same principles apply to Ms Ovenden. The Company’s financial statements from the year to 31 March 2010 record Ms Ovenden as having a shareholder’s current account debt of $41,080.00. As with Mr Ovenden, there is no record of her having repaid any money. Further, the liquidators identified an outgoing payment for a second Les Mills gym membership from the Company accounts after 1 April 2010. The total amount for this membership was $397.00. The liquidators had already attributed the first recorded gym membership (and the payments made in respect of it) to the sums owing under Mr Ovenden’s current account. They reasonably infer that the second membership was for Ms Ovenden. This payment is inconsistent with any reasonable interpretation of ‘business expenditure’ and so can be added to the sum owed by Ms Ovenden.

[43]   Ms Ovenden is liable for $41,477.00, being her current account debt plus the second Les Mills gym membership.

11     The relevant test for solvency is in s 4(4), with regard had in this context to s 108(5). Tech Voice Ltd would not have satisfied this test after 31 March 2008, at the latest.

Mr Wohnsiedler

[44]   The Company’s financial statements for the year ending 31 March 2010 record that Mr Wohnsiedler owes $32,844.00 to the Company. No record exists of its repayment. He is liable in this sum.

Breaches of a director’s duties

[45]   The liquidators ask the Court to exercise its powers under s 301 of the Act to order payment by the directors for breaches of directors’ duties under ss 131(1), 133, 135, 136 and 137 of the Act.

[46]   The liquidators allege that the Ovendens breached various director’s duties. The  first  set  of  breaches  relates  to  the  Company’s  continuing  to  trade  after   31 May 2008 (the date on which Tech Voice was in default of its obligations to pay PAYE and GST to the IRD). The second set of breaches relates to the Ovendens’ decisions to put company money to what I have inferred to be their personal use.

[47]   The test for a director’s compliance with s 131(1) is subjective and is a restatement of the position at common law, that directors are required to act honestly and with proper motives.12 This Court should presume that directors took decisions in good faith, unless it is clear that the actions taken could not have been properly taken by anyone with a semblance of knowledge of their fiduciary obligations.13 A finding that a director has not acted in good faith is not to be made lightly, especially in an undefended hearing, but I am of the view that the Ovendens did not act in good faith in allowing Tech Voice to continue trading after 31 May 2008, and by continuing to draw Company money for their own personal benefit. After 31 May 2008 it was clear that the company was in real financial trouble. It was in default of its tax obligations to the IRD and in the ensuing years defaulted on payments of KiwiSaver Employee Deductions, KiwiSaver Employee Contributions, Student Loan Employer and income tax. By the time of liquidation, the Company owed $159,231.19 to the IRD.

12     Re Smith & Fawcett Ltd [1942] Ch 304 (CA).

13     Vercauteren v B-Guided Media Ltd [2011] NZCCLR 9 (HC) at [51], citing Australian GrowthResources Corp Pty Ltd v Van Reesema (1988) 13 ACLR 261 (SCSA).

[48]   No reasonable business person in the Ovendens’ position would have allowed the Company to continue trading. The Company’s financial statements record no tangible receipt of revenue which could fund the growing tax liabilities, nor any prospect that such revenue would accrue. There is no evidence that either of the Ovendens contemplated taking action to mitigate the Company’s losses. As Asher J noted in Peters v Birnie, the director’s duty under s 131 “cannot be avoided by a director sitting on his or her hands”.14 On the evidence before the Court, that seems precisely what happened here.

[49]   The use of company money for their personal benefit is also sufficient to find the Ovendens acted in breach of their duty of good faith. Company money should have been applied to satisfy the ever-increasing tax liabilities. Instead, it went to various accounts held by the Ovendens in their personal capacities. This is a classic example of directors preferring their own interests over that of the Company.15 It is a clear breach of their s 131 duties. In McGreal Floor Coverings Ltd (in liq) v McGreal, a case the facts of which are similar, Venning J made an analogous finding as to an alleged breach of s 131 on the basis of a director allowing the company to continue trading notwithstanding considerable tax liability.16

[50]   It is clear that the Ovendens  conducted  their  business  affairs  recklessly. By failing to prevent the Company from incurring substantial tax debt and penalties, both by allowing the Company to continue trading and by using company funds for their own benefit, the Ovendens created a substantial risk of serious loss to the Company’s creditors. This is evinced by the sum left owing to the IRD as at the date of liquidation. Section 135 has therefore been breached.

[51]   I do not regard s 136 as a basis for judgment. It concerns situations where particular transactions are alleged to have been entered into without the director reasonably believing that the company will be able to perform its obligations when they fall due. It should not be invoked in respect of the manner of the Company’s

14  Peters v Birnie [2010] NZAR 494 (HC) at [30], upheld on appeal by the Court of Appeal in Birnie v Peters [2010] NZCA 433.

15 Aberdeen Railway Co v Blaikie Bros (1854) 1 Macq 461 (HL). See also the criteria used by the Court of Appeal in Morgenstern v Jeffreys, above n 9, at [85] to establish a breach of the director’s s 131 duty on the facts.

16     McGreal Floor Coverings Ltd (in liq) v McGreal [2014] NZHC 2884 especially at [14].

general operations. Allegations about the company’s general conduct ought to be pursued under ss 135 and 137. In support of their contention that there was a breach of s 136, the liquidators refer to the mounting tax liabilities and penalties of the Company. Such a submission was made in Richard Geewiz Gee Consultants Ltd (in liq) v Gee.17 For the reasons I have given, Brown J rejected this submission.18 I agree with His Honour.

[52]   I deal with the final two claims under ss 133 and 137 briefly. For the reasons I gave in allowing the claims under ss 131 and 135, I agree that the Ovendens failed to act as reasonable directors as they were required to do under s 137. Further, by using company money for their own benefit in circumstances where the Company badly needed funds to meet its tax obligations, they failed to exercise their powers as directors for a proper purpose. As such, they acted in breach of s 133.

[53]   In summary, the Ovendens acted in breach of ss 131, 133, 135 and 137 of the Companies Act. They are liable to pay compensation to the Company for these breaches. I therefore proceed to calculate their obligations under s 301.

Quantum of relief under s 301

[54]   The relevant provision for determining the sum the Ovendens are obliged to pay to the Company is s 301(1)(b)(ii). That provision directs that the Ovendens may be directed “to contribute such sum to the assets of the company by way of compensation as the Court thinks just”. That allows for a relatively broad discretion. Guidance as to the exercise of this discretion was provided by the Court of Appeal in Mason v Lewis, where the Court said:19

The standard approach has been to begin by looking at the deterioration in the company’s financial position between the date inadequate corporate governance became evident (really the ‘breach date’) and the date of liquidation.

Once that figure has been ascertained, New Zealand Courts have seen three factors – causation, culpability and the duration of trading – as being distinctly relevant to the exercise of the Court’s discretion.

17     Richard Geewiz Gee Consultants Ltd (in liq) v Gee [2014] NZHC 1483.

18     At [108]-[109].

19     Mason v Lewis, above n 1, at [109], [110] and [118] (citations omitted).

…

Finally claims of this character necessarily have to be approached in a relatively broad-brush way. The jurisdiction to order recompense is of an ‘equitable’ character.

[55]The Court of Appeal had earlier elaborated on this in Löwer v Traveller:20

The element of causation is concerned with the link between the carrying on of the company's business recklessly, to the knowledge of the impugned director, and the indebtedness of the company for which it is sought to impose personal liability. In a case such as the present that involves an assessment of how much the liabilities of the company were increased because of the illegitimate delay in its ceasing to trade and the identification of a point in time when the director knew that continuing to trade would be reckless ...

…

The relevance of culpability is linked to the deterrent purpose of the provision. This factor calls for an assessment of the blameworthiness of Mr Löwer's conduct, bearing in mind that at one end of the range the nature of a director's involvement will be blind faith or muddle-headedness, while at the other end there will be actions or instances of inaction which are plainly dishonest… The deterrent purpose of the section is served in cases involving a high degree of culpability by orders which are punitive as well as compensatory.

…

As to the duration of the wrongful trading, the company continued to trade after April 1995 until February 1998 accumulating an increasing deficit in the shareholders' funds. The duration of the wrongful trading to which Mr Löwer was a party was lengthy.

[56]   Here, there is a causative link between Mr and Ms Ovendens’ conduct and the Company’s losses. As directors they were responsible for the Company’s obligations to the IRD, which they did not satisfy, and on which they subsequently defaulted, incurring substantial penalties. Further, their use of company money for their own benefit exacerbated the extent of the Company’s liabilities as at the date of liquidation. If the money used for their personal benefit had remained in Company hands, the amount owed to the IRD would be substantially less.

[57]   I also regard Mr and Ms Ovenden as bearing real culpability for the Company’s eventual position. There is no evidence that any analysis was made as to the feasibility of continuing to trade, nor the formulation of any plan to meet obligations to the IRD.

20     Löwer v Traveller [2005] 3 NZLR 479 (CA) at [79], [83] and [86] (citations omitted).

However, the plaintiffs have distinguished their roles, and thus the respective responsibilities of Mr and Ms Ovenden. They rightly observe that Mr Ovenden was the director during the period in which Tech Voice borrowed from Responsive. As such, they suggest, he should be liable for more than Ms Ovenden.

[58]   The period of deficient governance of Tech Voice was lengthy. The evidence before the Court demonstrates that the Company was of very doubtful solvency as at 31 May 2008. Matters only got worse, with the subsequent defaults on various tax payments. Despite this, liquidation only took place on 18 September 2014.

[59]   There is a discretion given to the Court which I agree warrants Ms Ovenden being held liable for a lesser sum than Mr Ovenden, based on the creditors’ losses from failure to meet the Company’s tax obligations while a director from 11 June 2008 until 1 September 2009, after which Mr Ovenden was reinstated as a director.

[60]   Other than this adjustment, I see nothing which might act in mitigation of liability. I recognise that as this proceeding was undefended it is unlikely that the liquidators would press on the Court potentially mitigating features of the Ovendens’ behaviour, but the evidence is extensive and the submissions restrained.

[61]   I therefore accede to the liquidators’ submission that Mr Ovenden be ordered to pay the Company the full sum required to satisfy its creditors, and Ms Ovenden a lesser sum.

Disposition

[62]Judgment is entered against:

(1)Mr Ovenden for the sum of $98,338.00, being the amount owing under his shareholder’s current account, plus interest at the Judicature Act 1908 rate from 10 September 2014 to the date of this judgment.

(2)Ms Ovenden for the sum of $41,477.00, being the amount owing under her shareholder’s current account, plus interest at the Judicature Act rate from 10 September 2014 to the date of this judgment.

(3)Mr Wohnsiedler for the sum of $32,844.00, being the amount owing under his shareholder’s current account, plus interest at Judicature Act rate from 10 September 2014 to the date of this judgment.

[63]Under s 301(1)(b)(ii) of the Act the Court orders that:

(1)Mr Ovenden is to pay the company $203,468.00, being the amount owed to the Inland Revenue Department and Responsive ICT.

(2)Ms Ovenden is to pay $162,886.69, being the amount owed to the Inland Revenue Department.

(3)Both of the orders made at [57] (1) and (2) are with interest at Judicature Act rates from 18 September 2014 (the date of liquidation) to the date of this judgment.

[64]   Costs in respect of orders made under [56] and [57] above are on a 2B basis for reference back to the Court, if necessary.

[65]   Leave is reserved for reference back to the Court to clarify or effect any aspect of this judgment.

………………………………

Nicholas Davidson J

Solicitors:

Meredith Connell, Auckland