HANSA LIMITED (IN LIQ) v HIBBS [2017] NZHC 2014

HANSA LIMITED (IN LIQ) v HIBBS [2017] NZHC 2014

The sole director, Paul Hibbs, knowingly misapplied investor funds and operated a Ponzi scheme such that he breached s136 (and ss131,133,135,137); causation and high culpability established; accordingly under s301 he must contribute the full creditors' claims of $7,062,597.67, pay liquidators' fees of $396,002.90 and plaintiffs' costs on a full indemnity basis.

Citation
[2017] NZHC 2014
Parties
First Plaintiff: HANSA LIMITED (IN LIQUIDATION); Second Plaintiffs (liquidators): DAMIEN GRANT AND STEVEN KHOV; First Defendant: PAUL CLIFFORD HIBBS; Second Defendant: CAMERON GLADSTONE INVESTMENTS LIMITED; Third Defendant: HALDON RANGE VINEYARDS LIMITED; Fourth Defendant: CONTAINERS DIRECT LEASING LIMITED
Court
High Court
Jurisdiction
New Zealand
Judgment Date
22 August 2017
Procedural Posture
Company Liquidation S301 Compensation Claim / Formal Proof Hearing Under High Court Rules R15.9 (default Defendant)
Outcome
Judgment for plaintiffs; judgment entered against first defendant Paul Hibbs on all s301 claims and related costs and liquidation fees
Legal Topics
Directors' Duties, Reckless Trading, Misappropriation of Funds, Ponzi Scheme, Section 301 Companies Act 1993, Formal Proof/default Judgment
Company Law Insolvency Law Civil Procedure Directors' Duties Reckless Trading Misappropriation of Funds Ponzi Scheme Section 301 Companies Act 1993 +1 more

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Parties

HANSA LIMITED (IN LIQUIDATION)

First Plaintiff

DAMIEN GRANT AND STEVEN KHOV

Second Plaintiffs (liquidators)

PAUL CLIFFORD HIBBS

First Defendant

CAMERON GLADSTONE INVESTMENTS LIMITED

Second Defendant

HALDON RANGE VINEYARDS LIMITED

Third Defendant

CONTAINERS DIRECT LEASING LIMITED

Fourth Defendant

Procedural Posture

Company Liquidation S301 Compensation Claim / Formal Proof Hearing Under High Court Rules R15.9 (default Defendant)

Legal Issues

  1. 1 Whether the sole director breached s136 by causing the company to incur obligations when it could not meet them
  2. 2 Whether the director breached ss131,133,135 and 137
  3. 3 Whether and to what extent the director should be ordered to contribute under s301, including quantum and costs

Ratio Decidendi

The sole director, Paul Hibbs, knowingly misapplied investor funds and operated a Ponzi scheme such that he breached s136 (and ss131,133,135,137); causation and high culpability established; accordingly under s301 he must contribute the full creditors' claims of $7,062,597.67, pay liquidators' fees of $396,002.90 and plaintiffs' costs on a full indemnity basis.

Court Disposition

Judgment for plaintiffs; judgment entered against first defendant Paul Hibbs on all s301 claims and related costs and liquidation fees

Orders

  • Pursuant to s301 Companies Act 1993 the first defendant Paul Clifford Hibbs is ordered to pay the plaintiffs the outstanding creditors' claims in Hansa's liquidation incurred between 4 November 2008 and 24 November 2016 totalling 7062597.67 NZD
  • Pursuant to s301 Companies Act 1993 the first defendant Paul Clifford Hibbs is ordered to pay the plaintiffs the liquidators' fees and disbursements in Hansa's liquidation from appointment to date of judgment totalling 396002.90 NZD