A & N CONTRACTORS (2009) LIMITED (IN LIQUIDATION) v LEVIN AND MADSEN-RIES AS LIQUIDATORS OF A & N CONTRACTORS (2009) LIMITED (IN LIQUIDATION) [2015] NZHC 3091

A & N CONTRACTORS (2009) LIMITED (IN LIQUIDATION) v LEVIN AND MADSEN-RIES AS LIQUIDATORS OF A & N CONTRACTORS (2009) LIMITED (IN LIQUIDATION) [2015] NZHC 3091

The court found the payments were personal drawings on a joint shareholder current account repayable on demand amounting to $294,231.68; the company was insolvent from at least 1 July 2010; the sole director continued trading while insolvent and allowed drawings, thereby breaching duties in ss 131, 135 and 136 and failing accounting duties, causally contributing to creditor losses; accordingly the company recovered the current account debt from both defendants and the court ordered the director under s 301 to contribute the full creditor loss of $258,810.24 plus interest from the date of liquidation

Citation
[2015] NZHC 3091
Parties
First Plaintiff (company): A & N Contractors (2009) Limited (in liquidation); Second Plaintiffs (liquidators): Henry David Levin and Vivien Judith Madsen-Ries; First Defendant (director and Shareholder): Nicolaas Petrus Liefting; Second Defendant (shareholder): Ngaire Liefting
Court
High Court
Jurisdiction
New Zealand
Judgment Date
8 December 2015
Procedural Posture
Liquidation and Director Liability Under the Companies Act 1993 / Formal Proof Hearing; Judgment Delivered
Legal Topics
Directors' Duties, Reckless Trading, Misapplication of Company Funds, Shareholder Current Account/drawings, Section 301 Compensation, Accounting Records Obligations
Company Law Insolvency Law Tax Law Civil Remedies Directors' Duties Reckless Trading Misapplication of Company Funds Shareholder Current Account/drawings +2 more

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Parties

A & N Contractors (2009) Limited (in liquidation)

First Plaintiff (company)

Henry David Levin and Vivien Judith Madsen-Ries

Second Plaintiffs (liquidators)

Nicolaas Petrus Liefting

First Defendant (director and Shareholder)

Ngaire Liefting

Second Defendant (shareholder)

Procedural Posture

Liquidation and Director Liability Under the Companies Act 1993 / Formal Proof Hearing; Judgment Delivered

Legal Issues

  1. 1 Whether payments from the company to the defendants constituted a debt on a joint current account repayable on demand
  2. 2 Whether the director breached duties under ss 131, 135 and 136 of the Companies Act 1993 by trading while insolvent and permitting drawings
  3. 3 Whether s 301 relief should be ordered to compensate creditors for losses caused by breaches of duty

Ratio Decidendi

The court found the payments were personal drawings on a joint shareholder current account repayable on demand amounting to $294,231.68; the company was insolvent from at least 1 July 2010; the sole director continued trading while insolvent and allowed drawings, thereby breaching duties in ss 131, 135 and 136 and failing accounting duties, causally contributing to creditor losses; accordingly the company recovered the current account debt from both defendants and the court ordered the director under s 301 to contribute the full creditor loss of $258,810.24 plus interest from the date of liquidation