DOWNES & OR v JAIN & OR [2019] NZHC 1145

DOWNES & OR v JAIN & OR [2019] NZHC 1145

The recall application was dismissed because Working Capital Solutions was not material to the summary judgment and defendants provided no evidence linking the SAIFamily Trust financing statement to the Pharma assets; a stay of execution was granted because the balance of convenience favored defendants (real risk appeal would be rendered nugatory, contracts and employment at risk) subject to strict protective conditions including $149,622 held in court, $7,500 bond, undertakings against dissipation, appointment of an independent insolvency practitioner to catalogue and value the assets, and access to premises.

Citation
[2019] NZHC 1145
Parties
Plaintiff (liquidator): Timothy Wilson Downes; Plaintiff (liquidator): Stephanie Beth Jeffreys; First Defendant: Akhil Jain; Second Defendant: Koru Lifescience Limited (formerly Pharmascience and Research Limited)
Court
High Court
Jurisdiction
New Zealand
Judgment Date
24 May 2019
Procedural Posture
Companies Act 1993 Liquidation Proceedings; Summary Judgment and Stay/recall Applications / High Court Judgment Issued; Stay Granted Pending Appeal to Court of Appeal
Outcome
Recall dismissed; stay of execution granted pending Court of Appeal determination subject to conditions
Legal Topics
Conversion, Section 274 Companies Act 1993, Sections 162 167 Personal Property Securities Act 1999, Recall of Judgment, Stay of Execution, Summary Judgment
Companies Law Insolvency Personal Property Securities Law Civil Procedure Tort (conversion) Conversion Section 274 Companies Act 1993 Sections 162 167 Personal Property Securities Act 1999 +3 more

Case Brief

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Parties

Timothy Wilson Downes

Plaintiff (liquidator)

Stephanie Beth Jeffreys

Plaintiff (liquidator)

Akhil Jain

First Defendant

Koru Lifescience Limited (formerly Pharmascience and Research Limited)

Second Defendant

Procedural Posture

Companies Act 1993 Liquidation Proceedings; Summary Judgment and Stay/recall Applications / High Court Judgment Issued; Stay Granted Pending Appeal to Court of Appeal

Legal Issues

  1. 1 Whether to recall judgment for failure to cite Working Capital Solutions and related authorities
  2. 2 Proper interpretation and effect of ss 162–167 of the PPSA on extinguishing/perfecting security interests
  3. 3 Whether to grant a stay of execution pending appeal

Ratio Decidendi

The recall application was dismissed because Working Capital Solutions was not material to the summary judgment and defendants provided no evidence linking the SAIFamily Trust financing statement to the Pharma assets; a stay of execution was granted because the balance of convenience favored defendants (real risk appeal would be rendered nugatory, contracts and employment at risk) subject to strict protective conditions including $149,622 held in court, $7,500 bond, undertakings against dissipation, appointment of an independent insolvency practitioner to catalogue and value the assets, and access to premises.

Court Disposition

Recall dismissed; stay of execution granted pending Court of Appeal determination subject to conditions

Orders

  • Second defendant to pay into court $149,622 to be held undisbursed in the name of the second defendant on interest bearing deposit
  • If Court of Appeal allows the appeal the $149,622 to be transferred at defendants' direction subject to further order