DAVID ROSS PETTERSON AS LIQUIDATOR OF POLYETHYLENE PIPE SYSTEMS LIMITED (IN LIQUIDATION) v DAVID CHARLES BROWNE [2015] NZHC 866

DAVID ROSS PETTERSON AS LIQUIDATOR OF POLYETHYLENE PIPE SYSTEMS LIMITED (IN LIQUIDATION) v DAVID CHARLES BROWNE [2015] NZHC 866

The Court held the GSA would not be set aside because PPS was solvent when the transactions occurred, the transfers and charge formed part of a legitimate, contemporaneous restructuring for which the directors had reasonable grounds (including reliance on advice about insurance), and the advance was, in substance, by David Browne; accordingly the liquidator's applications were dismissed.

Citation
[2015] NZHC 866
Parties
Applicant (liquidator): David Ross Petterson as Liquidator of Polyethylene Pipe Systems Limited (in liquidation); Respondent: David Charles Browne; First Respondent: David Browne Contractors Limited; Second Respondent: David Browne Mechanical Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
29 April 2015
Procedural Posture
Company Insolvency Proceedings Under the Companies Act 1993 (voidable Transactions and Set Aside of Security) / High Court Judgment (final Determination)
Outcome
Both proceedings dismissed. Applications to set aside the charge under s 293 and s 299 dismissed; claims for repayment against David Browne Contractors Limited and David Browne Mechanical Limited dismissed.
Legal Topics
Voidable Transactions, Setting Aside Security, General Security Agreement, Preferential Payments, Receivership, Liquidator Remedies, Statutory Defences (s 296(3))
Companies Law Insolvency Law Commercial Law Voidable Transactions Setting Aside Security General Security Agreement Preferential Payments Receivership +2 more

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Parties

David Ross Petterson as Liquidator of Polyethylene Pipe Systems Limited (in liquidation)

Applicant (liquidator)

David Charles Browne

Respondent

David Browne Contractors Limited

First Respondent

David Browne Mechanical Limited

Second Respondent

Procedural Posture

Company Insolvency Proceedings Under the Companies Act 1993 (voidable Transactions and Set Aside of Security) / High Court Judgment (final Determination)

Legal Issues

  1. 1 Whether the $700,000 advance on 29 August 2008 was made by David Browne personally or by DBC
  2. 2 Whether the Court may make orders under s 299 after a receiver has been appointed and assets realised
  3. 3 Whether the general security agreement (GSA) granted by PPS to David Browne should be set aside under s 299

Ratio Decidendi

The Court held the GSA would not be set aside because PPS was solvent when the transactions occurred, the transfers and charge formed part of a legitimate, contemporaneous restructuring for which the directors had reasonable grounds (including reliance on advice about insurance), and the advance was, in substance, by David Browne; accordingly the liquidator's applications were dismissed.

Court Disposition

Both proceedings dismissed. Applications to set aside the charge under s 293 and s 299 dismissed; claims for repayment against David Browne Contractors Limited and David Browne Mechanical Limited dismissed.

Orders

  • Application to set aside the charge under s 293 dismissed
  • Application to set aside the charge under s 299 dismissed