FRANCIS v GROSS [2023] NZHC 1107

FRANCIS v GROSS [2023] NZHC 1107

Legal title to the incomplete pods remained with the company because contracts reserved ownership until full payment; however, customers who have paid purchase moneys for identified and appropriated incomplete pods hold equitable liens over those specific pods to the extent of the purchase moneys paid (including...

Source-derived case information.

Citation
[2023] NZHC 1107
Parties
Applicants Liquidators: Benjamin Brian Francis and Simon Dalton as liquidators of Podular Housing Systems Limited (in liquidation); First Respondent: Ilan Gross; Second Respondent: Lumen Business Solutions Limited; Third Respondent: Commissioner of Inland Revenue; Fourth Respondents: Matthew Pasley and Julie Pasley; Fifth Respondent: Lynley Anne Olsen; Sixth Respondent: Andrew Douglas Blood; Seventh Respondents: Adam Charles Cunningham and Kevin Graeme Hales; Eighth Respondents: David Pirotta and Katy Percivale; Ninth Respondent: Ashley James Ronald Hart; Tenth Respondent: Julia Mary McAuley; Eleventh Respondents: Jeannie Friedrich and Felix Scholz as trustees of the Stoke Ventures Family Trust; Twelfth Respondent: Louise Jaegar; Thirteenth Respondent: Andrew Van Staden; Fourteenth Respondent: Jesu Boaniface; Fifteenth Respondent: Leigh Hucker; Sixteenth Respondents: Louise Kelvin and Helen O'Hara; Seventeenth Respondent: Alex Williams; Eighteenth Respondents: Geraint Edwards and Kristina McCalman; Nineteenth Respondent: Convivium Limited; Twentieth Respondent: Eli Thomas; Twenty First Respondents: Brett Waterson, Marie Waterson and Legal Beagle Trustees Limited; Twenty Second Respondent: Leane Watkins; Twenty Third Respondent: Kay Drader; Twenty Fourth Respondent: Masterton District Council; Twenty Fifth Respondent: Employees of Podular Housing Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
10 May 2023
Procedural Posture
Application for Directions in Liquidation Under S 284 Companies Act 1993 / Judgment Following Urgent Directions Hearing
Outcome
Application granted in part: court directed that relevant customers have equitable liens over their respective partly-constructed pods to the extent of purchase moneys paid; title remains with company until full payment; other priority disputes and liquidator remuneration reasonableness reserved.
Legal Topics
Equitable Lien, PPSA Priority, Retention of Title, Purchase Money Security Interest (pmsi), Work in Progress / Inventory, Liquidators' Remuneration and Indemnity
Company Law Insolvency Personal Property Security Law Contract Law Equity Equitable Lien PPSA Priority Retention of Title +3 more

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Parties

Benjamin Brian Francis and Simon Dalton as liquidators of Podular Housing Systems Limited (in liquidation)

Applicants Liquidators

Ilan Gross

First Respondent

Lumen Business Solutions Limited

Second Respondent

Commissioner of Inland Revenue

Third Respondent

Matthew Pasley and Julie Pasley

Fourth Respondents

Lynley Anne Olsen

Fifth Respondent

Andrew Douglas Blood

Sixth Respondent

Adam Charles Cunningham and Kevin Graeme Hales

Seventh Respondents

David Pirotta and Katy Percivale

Eighth Respondents

Ashley James Ronald Hart

Ninth Respondent

Julia Mary McAuley

Tenth Respondent

Jeannie Friedrich and Felix Scholz as trustees of the Stoke Ventures Family Trust

Eleventh Respondents

Louise Jaegar

Twelfth Respondent

Andrew Van Staden

Thirteenth Respondent

Jesu Boaniface

Fourteenth Respondent

Leigh Hucker

Fifteenth Respondent

Louise Kelvin and Helen O'Hara

Sixteenth Respondents

Alex Williams

Seventeenth Respondent

Geraint Edwards and Kristina McCalman

Eighteenth Respondents

Convivium Limited

Nineteenth Respondent

Eli Thomas

Twentieth Respondent

Brett Waterson, Marie Waterson and Legal Beagle Trustees Limited

Twenty First Respondents

Leane Watkins

Twenty Second Respondent

Kay Drader

Twenty Third Respondent

Masterton District Council

Twenty Fourth Respondent

Employees of Podular Housing Limited

Twenty Fifth Respondent

Procedural Posture

Application for Directions in Liquidation Under S 284 Companies Act 1993 / Judgment Following Urgent Directions Hearing

Legal Issues

  1. 1 Whether legal title in partially constructed off-site 'pods' passed to customers prior to full payment
  2. 2 Whether customers have equitable liens over identified incomplete pods to the extent of purchase moneys paid
  3. 3 Whether customers hold perfected PMSIs under the PPSA or take goods free of security interests

Ratio Decidendi

Legal title to the incomplete pods remained with the company because contracts reserved ownership until full payment; however, customers who have paid purchase moneys for identified and appropriated incomplete pods hold equitable liens over those specific pods to the extent of the purchase moneys paid (including deposits); no perfected PMSI or transfer of title to customers arose; liquidators' statutory indemnity for reasonable remuneration and expenses remains subject to those equitable liens and the court reserved detailed assessment of liquidators' fees.

Court Disposition

Application granted in part: court directed that relevant customers have equitable liens over their respective partly-constructed pods to the extent of purchase moneys paid; title remains with company until full payment; other priority disputes and liquidator remuneration reasonableness reserved.

Orders

  • Under s 284(1)(a) Companies Act 1993 each relevant respondent has an equitable lien over the partly-constructed pod relating to their contract to the extent of purchase moneys (including deposit) paid by them
  • Costs reserved; active respondents to file short memoranda (max 5 pages plus single-page fee table) within ten working days; any response or reply to be filed in successive five working day intervals