REYNOLDS V JAMES HC AK CIV-2011-404-2869

REYNOLDS V JAMES HC AK CIV-2011-404-2869

The Court held the general security agreement was voidable under s 293 insofar as it secured past debts and was also voidable under s 292 insofar as it would give Mr James priority over other claimants for post-22 May 2009 claims. The June 2009 payments of $60,904 were voidable under s 292, but the liquidator's claim for recovery of that sum was dismissed because Mr James had, after liquidation and with the liquidators' acquiescence, paid higher-priority liquidation expenses (liquidators' remuneration and litigation costs) totalling more than the preferential payments, thereby removing the preferential effect; accordingly Mr James has enforceable claims for those expenditures which rank...

Citation
openlaw-e84df4e8_ee5b_4477_8b75_33d2ab0ffb02.pdf
Parties
Applicant (liquidator): Grant Bruce Reynolds; Respondent: Chris James
Court
High Court
Jurisdiction
New Zealand
Judgment Date
22 August 2012
Procedural Posture
Insolvent Transaction (companies Act) / Judgment
Outcome
Part grant and part dismissal: GSA set aside in part under ss 293 and 292; June 2009 payments set aside as voidable but recovery claim dismissed because preference was remedied by higher‑priority payments; conditional ranking order made under s 295(g).
Legal Topics
Voidable Transactions, Preferences, Charges for Past Debts, General Security Agreement, Personal Property Securities, Liquidator's Claims
Companies Law Insolvency Property Securities Civil Procedure Voidable Transactions Preferences Charges for Past Debts General Security Agreement +2 more

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Parties

Grant Bruce Reynolds

Applicant (liquidator)

Chris James

Respondent

Procedural Posture

Insolvent Transaction (companies Act) / Judgment

Legal Issues

  1. 1 Is the general security agreement voidable under s 293 as giving a charge for past debts?
  2. 2 Did Mr James receive payments from the company?
  3. 3 Who funded the liquidators' fees and the post-liquidation litigation expenses?

Ratio Decidendi

The Court held the general security agreement was voidable under s 293 insofar as it secured past debts and was also voidable under s 292 insofar as it would give Mr James priority over other claimants for post-22 May 2009 claims. The June 2009 payments of $60,904 were voidable under s 292, but the liquidator's claim for recovery of that sum was dismissed because Mr James had, after liquidation and with the liquidators' acquiescence, paid higher-priority liquidation expenses (liquidators' remuneration and litigation costs) totalling more than the preferential payments, thereby removing the preferential effect; accordingly Mr James has enforceable claims for those expenditures which rank...

Court Disposition

Part grant and part dismissal: GSA set aside in part under ss 293 and 292; June 2009 payments set aside as voidable but recovery claim dismissed because preference was remedied by higher‑priority payments; conditional ranking order made under s 295(g).

Orders

  • General security agreement dated 22 May 2009 is set aside as voidable under s 293 insofar as it gives a charge for past debts.
  • General security agreement is set aside as voidable under s 292 insofar as it gives a charge for any claims Mr James might make against the company for expenses or indebtedness accruing after 22 May 2009.