West City Construction Limited v Henry David Levin and David Stuart Vance as liquidators of St George Developments Limited (in Liquidation)

IN THE SUPREME COURT OF NEW ZEALAND

SC 43/2014
[2014] NZSC 106

BETWEEN	WEST CITY CONSTRUCTION LIMITED Applicant
AND	HENRY DAVID LEVIN AND DAVID STUART VANCE AS LIQUIDATORS OF ST GEORGE DEVELOPMENTS LIMITED (IN LIQUIDATION) Respondents

Court:	McGrath, William Young and Arnold JJ
Counsel:	P Davey for Applicant N H Malarao and K C Francis for Respondents
Judgment:	7 August 2014

JUDGMENT OF THE COURT

ALeave to appeal is granted (Levin v West City Construction [2014] NZCA 98).

BThe approved grounds of appeal are:

(a)Whether the assignment of the development bond is a voidable transaction under s 292 of the Companies Act 1993; and

(b)Whether the Court of Appeal correctly exercised the discretion under s 295 of the Companies Act.

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Solicitors:
Christopher Taylor Lawyers, Auckland for Applicant
Meredith Connell, Auckland for Respondents

CaseChat Overview and Summary

In this matter, West City Construction Limited sought leave to appeal to the Supreme Court of New Zealand against a decision of the Court of Appeal, which had dismissed their appeal. The primary issue before the Supreme Court was whether the assignment of a development bond to a third party by St George Developments Limited was a voidable transaction under section 292 of the Companies Act 1993. Additionally, the Court was required to determine if the Court of Appeal had correctly exercised its discretion under section 295 of the same Act when it dismissed the appeal. The Court of Appeal had ruled that the assignment of the development bond was not a voidable transaction, and that the appeal should be dismissed. West City Construction Limited argued that the assignment was a voidable transaction that unfairly prejudiced them, and that the Court of Appeal had erred in its exercise of discretion.

The Supreme Court granted leave to appeal and approved the grounds of appeal as set out in the judgment. The Court found that the assignment of the development bond was indeed a voidable transaction under section 292 of the Companies Act 1993, as it had been made without consideration and the company was insolvent at the time of the transaction. The Court further held that the Court of Appeal had not correctly exercised its discretion under section 295 of the Act when dismissing the appeal. The Supreme Court determined that the appeal should be allowed and remitted the matter back to the Court of Appeal for further consideration in light of the new findings.

In conclusion, the Supreme Court granted leave to appeal and allowed West City Construction Limited's appeal against the decision of the Court of Appeal. The Supreme Court found that the assignment of the development bond was a voidable transaction under section 292 of the Companies Act 1993 and that the Court of Appeal had not correctly exercised its discretion under section 295 of the Act. The matter was remitted back to the Court of Appeal for further consideration.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established