Vance v Shot Blast Services (Auck) Limited - [2012] NZHC 3613

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-404-000433 [2012] NZHC 3613

UNDER the Companies Act 1993

IN THE MATTER OF an application to set aside default judgment

BETWEEN HENRY DAVID LEVIN AND DAVID STUART VANCE AS LIQUIDATORS OF MULTI CONSTRUCTION CONCEPTS (MCC) LIMITED (IN LIQUIDATION) Applicants

ANDSHOT BLAST SERVICES (AUCK) LIMITED
Respondent

Hearing: 10 December 2012

Appearances: K Berry for applicants
J D McBride for defendant

Judgment: 21 December 2012

INTERIM JUDGMENT OF ASSOCIATE JUDGE ABBOTT

This judgment was delivered by me on 21 December 2012 at 3pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:
J Sumner/K Berry, Ford Sumner, PO Box 25 299, Wellington
B Cran, Knight Coldicutt, PO Box 106214, Auckland

Counsel:
J McBride, Barrister, Dryden Chambers, PO Box 1008, Shortland Street, Auckland

HENRY DAVID LEVIN AND DAVID STUART VANCE AS LIQUIDATORS OF MULTI CONSTRUCTION CONCEPTS (MCC) LIMITED (IN LIQUIDATION) V SHOT BLAST SERVICES (AUCK) LIMITED HC AK CIV 2012-404-000433 [21 December 2012]

[1] The applicants are the liquidators of Multi Construction Concepts (MCC) Limited (in liquidation) (MCC). They have applied under s 294(5) of the Companies Act 1993 (the Act) for an order setting aside payments made by MCC to the respondent, Shot Blast Services (Auck) Limited (Shot Blast).

[2] The liquidators were appointed on 11 July 2008. Following their appointment they formed the view that seven payments made at various times in the year leading up to MCC being put into liquidation, totalling $26,517.75, were voidable transactions. They served notice on Shot Blast of their wish to set aside those payments on the grounds that they were voidable because they were made within the specified period prior to liquidation, at a time when MCC was unable to pay its debts, and as a consequence Shot Blast received more in satisfaction of MCC’s indebtedness than would have been the case as a result of the liquidation.

[3] Shot Blast objected to the payments being set aside. Accordingly, the liquidators brought this application.

[4] Shot Blast initially failed to take steps, and the liquidators obtained judgment by default at the first call of the application. Shot Blast subsequently applied successfully to set that judgment aside.1 In the course of hearing that application, Shot Blast withdrew its opposition to any payments received after 1 November 2007, being the date that the Companies Amendment Act 2006 came into force and the defence of receiving a payment in the ordinary course of business was removed from s 292 of the Act.

[5] Just before this judgment was due to be issued, counsel for Shot Blast filed a memorandum requesting that it be delayed on the basis that Shot Blast had withdrawn its opposition in respect of the four payments received after 1 November
2007 due to an erroneous view of the law. At the hearing, counsel had been of the view that Shot Blast had no defence under s 296 of the Act because it understood that defence to require either an…

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 3613
Decision Date: 21 December 2012

CaseChat Overview and Summary

The applicants are the liquidators of Multi Construction Concepts (MCC) Limited (in liquidation) (MCC) and they have applied under s 294(5) of the Companies Act 1993 for an order setting aside payments made by MCC to Shot Blast Services (Auck) Limited (Shot Blast). The liquidators contend that seven payments totalling $26,517.75 were voidable transactions because they were made within the specified period prior to liquidation, at a time when MCC was unable to pay its debts. Shot Blast objected to the payments being set aside and the liquidators brought this application. Shot Blast initially failed to take steps and the liquidators obtained judgment by default at the first call of the application. Shot Blast subsequently applied successfully to set that judgment aside. In the course of hearing that application, Shot Blast withdrew its opposition to any payments received after 1 November 2007, being the date that the Companies Amendment Act 2006 came into force and the defence of receiving a payment in the ordinary course of business was removed from s 292 of the Act. The liquidators oppose any delay in release of the judgment submitting that the hearing has concluded. This decision will only address whether the first three payments received, totalling $15,414.75, were received in the ordinary course of business. The Court held that the liquidators had not discharged their onus in respect of the first payment, and that Shot Blast had rebutted the presumption in respect of the second and third payment. The Court found that Shot Blast was entitled to resist the liquidators’ application on the grounds that the three payments still in question were made in the ordinary course of business. As the request for leave to argue a defence under s 296 has still to be considered, the Court made no other orders at this time, and reserved costs on the point that it had determined.

Orders