INDEPENDENT CARPETS LIMITED (IN LIQUIDATION) v CARPET CALL 2000 NZ LIMITED) [2020] NZHC 2757

INDEPENDENT CARPETS LIMITED (IN LIQUIDATION) v CARPET CALL 2000 NZ LIMITED) [2020] NZHC 2757

Court found on admissible evidence that a verbal employer-of-record arrangement existed; Carpet Call breached that arrangement from about 31 December 2015 causing ICL's tax debt; Mr Waugh breached duties under ss 131,135,136 and 137 and failed to ensure compliance with ss 194 and 201; causation and culpability...

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Citation
[2020] NZHC 2757
Parties
First Plaintiff: Independent Carpets Limited (in liquidation); Second Plaintiffs: Vivian Judith Madsen-Ries and David Sean Webb (as liquidators of Independent Carpets Limited); First Defendant: Carpet Call 2000 NZ Limited; Second Defendant: David Waugh
Court
High Court
Jurisdiction
New Zealand
Judgment Date
20 October 2020
Procedural Posture
Company Liquidation Civil Claim (breach of Contract and Directors' Duties) / Formal Proof Hearing Judgment Delivered
Outcome
Judgment for plaintiffs. Judgment against Carpet Call 2000 NZ Limited for ICL's tax debt and interest; orders against David Waugh for contribution by way of compensation of $191,259.54 and personal liability under s 300 for $10,000; costs awarded to plaintiffs (2B) and disbursements $19,684.
Legal Topics
Directors' Duties, Insolvent Trading, Contract Breach, Section 301 Compensation, Section 300 Liability for Records, Section 136 Duty Regarding Obligations, Hearsay Admissibility Under Evidence Act, Interest on Judgment
Companies Law Contract Law Insolvency Law Evidence Law Directors' Duties Insolvent Trading Contract Breach Section 301 Compensation +4 more

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Parties

Independent Carpets Limited (in liquidation)

First Plaintiff

Vivian Judith Madsen-Ries and David Sean Webb (as liquidators of Independent Carpets Limited)

Second Plaintiffs

Carpet Call 2000 NZ Limited

First Defendant

David Waugh

Second Defendant

Procedural Posture

Company Liquidation Civil Claim (breach of Contract and Directors' Duties) / Formal Proof Hearing Judgment Delivered

Legal Issues

  1. 1 Whether a verbal contract existed between ICL and Carpet Call and whether Carpet Call breached it causing ICL's tax liability
  2. 2 Whether Mr Waugh breached duties under ss 131, 135, 136 and 137 of the Companies Act 1993
  3. 3 Whether Mr Waugh failed to comply with ss 194 and 201 (accounting records and financial statements) and is liable under s 300

Ratio Decidendi

Court found on admissible evidence that a verbal employer-of-record arrangement existed; Carpet Call breached that arrangement from about 31 December 2015 causing ICL's tax debt; Mr Waugh breached duties under ss 131,135,136 and 137 and failed to ensure compliance with ss 194 and 201; causation and culpability established such that under s 301 Mr Waugh must contribute $191,259.54 by way of compensation and under s 300 he is personally liable for $10,000 of company debts; hearsay in examinations on oath was admissible under s 18(1); Carpet Call ordered to pay judgment debt with specified interest; costs awarded to plaintiffs.

Court Disposition

Judgment for plaintiffs. Judgment against Carpet Call 2000 NZ Limited for ICL's tax debt and interest; orders against David Waugh for contribution by way of compensation of $191,259.54 and personal liability under s 300 for $10,000; costs awarded to plaintiffs (2B) and disbursements $19,684.

Orders

  • Judgment for plaintiffs against Carpet Call 2000 NZ Limited in the sum of $191,259.54 (ICL's indebtedness to IRD)
  • Interest of $4,220.60 on $191,259.54 from 13 December 2019 to 20 August 2020