WHISK DELI CO LTD (IN LIQ) v WILLIAMS [2016] NZHC 2345

WHISK DELI CO LTD (IN LIQ) v WILLIAMS [2016] NZHC 2345

By 31 August 2012 Ms Williams had sufficient information (ongoing failures to pay PAYE and GST and lack of funds) to make the required sober assessment; continuing to trade thereafter breached ss135 and 136; Mr Paulsen remained a de jure director until early 2015 and, by inaction, also breached ss135 and 136; losses caused by the breaches were assessed at $81,837.51 and defendants are jointly and severally liable for that sum plus interest and costs.

Citation
[2016] NZHC 2345
Parties
First Plaintiff: WHISK DELI CO LTD (IN LIQ); Second Plaintiff: HENRY DAVID LEVIN; Second Plaintiff: VIVIEN JUDITH MADSEN-RIES; First Defendant: KARYN ANNE WILLIAMS; Second Defendant: GAVIN MURRAY PAULSEN
Court
High Court
Jurisdiction
New Zealand
Judgment Date
4 October 2016
Procedural Posture
Companies Act 1993 S301 Director Liability in Liquidation / Formal Proof Hearing; Judgment Delivered
Outcome
Judgment for the liquidators; defendants liable jointly and severally
Legal Topics
Director Duties, Reckless Trading (s135), Duty in Relation to Obligations (s136), Breach and Assessment of Damages in Liquidation, Director Resignation and Registration, Admissibility of Business Records
Company Law Insolvency Tax Law Evidence Law Director Duties Reckless Trading (s135) Duty in Relation to Obligations (s136) Breach and Assessment of Damages in Liquidation +2 more

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Parties

WHISK DELI CO LTD (IN LIQ)

First Plaintiff

HENRY DAVID LEVIN

Second Plaintiff

VIVIEN JUDITH MADSEN-RIES

Second Plaintiff

KARYN ANNE WILLIAMS

First Defendant

GAVIN MURRAY PAULSEN

Second Defendant

Procedural Posture

Companies Act 1993 S301 Director Liability in Liquidation / Formal Proof Hearing; Judgment Delivered

Legal Issues

  1. 1 Whether Ms Williams breached s135 (reckless trading) and s136 (agreeing to obligations without reasonable grounds)
  2. 2 When the directors were required to make a ‘sober assessment’ and the date of breach
  3. 3 Whether Mr Paulsen remained a director after January 2012 and if he breached duties by inactivity

Ratio Decidendi

By 31 August 2012 Ms Williams had sufficient information (ongoing failures to pay PAYE and GST and lack of funds) to make the required sober assessment; continuing to trade thereafter breached ss135 and 136; Mr Paulsen remained a de jure director until early 2015 and, by inaction, also breached ss135 and 136; losses caused by the breaches were assessed at $81,837.51 and defendants are jointly and severally liable for that sum plus interest and costs.

Court Disposition

Judgment for the liquidators; defendants liable jointly and severally

Orders

  • Defendants to pay compensation to the liquidators of NZD 81837.51
  • Defendants to pay interest on that sum at 5% per annum from the date of liquidation to the date of judgment