CHRIS DE RUYTER PAINTING LIMITED (IN LIQ) v DE RUYTER [2017] NZHC 1810

CHRIS DE RUYTER PAINTING LIMITED (IN LIQ) v DE RUYTER [2017] NZHC 1810

Court accepted liquidators' reconstructed accounts and found payments to shareholders and transfers to the BozTarLuc Trust were improper dispositions made after service of the statutory demand that caused or accelerated insolvency; found the first defendant breached s131 by preferring personal and related parties' interests; granted leave to continue against the bankrupt first defendant subject to non-enforcement without leave; ordered restitutionary relief requiring repayment of shareholder current account advances ($228,795) and restoration/compensation from the Trust ($66,175.84) and alternatively awarded a s301 restitutionary judgment against the first defendant totalling $294,970.84;...

Citation
[2017] NZHC 1810
Parties
First Plaintiff: Chris de Ruyter Painting Limited (In Liquidation); Second Plaintiff (liquidator): Vivien Judith Madsen-Ries; Second Plaintiff (liquidator): Henry David Levin; First Defendant: Chris de Ruyter; Second Defendant: Lesley de Ruyter; Third Defendants: Chris de Ruyter, Lesley de Ruyter and Robert John Shaw as trustees of the BozTarLuc Trust
Court
High Court
Jurisdiction
New Zealand
Judgment Date
1 August 2017
Procedural Posture
Company Liquidation and Director Liability / Final Judgment (high Court)
Outcome
Judgment for plaintiffs in respect of shareholder current account debts, prejudicial disposition to trustees and alternatively a restitutionary s301 award against the first defendant; leave granted to continue against adjudicated bankrupt on condition no enforcement without leave; costs awarded to plaintiffs with...
Legal Topics
Director's Duties, Prejudicial Dispositions (pla Subpart 6), Statutory Demand, Liquidators' Claims Under S301, Restitution V Compensation, Leave to Continue Proceedings Against Bankrupt Defendant
Company Law Insolvency Law Property Law Trusts Law Civil Procedure Director's Duties Prejudicial Dispositions (pla Subpart 6) Statutory Demand +3 more

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Parties

Chris de Ruyter Painting Limited (In Liquidation)

First Plaintiff

Vivien Judith Madsen-Ries

Second Plaintiff (liquidator)

Henry David Levin

Second Plaintiff (liquidator)

Chris de Ruyter

First Defendant

Lesley de Ruyter

Second Defendant

Chris de Ruyter, Lesley de Ruyter and Robert John Shaw as trustees of the BozTarLuc Trust

Third Defendants

Procedural Posture

Company Liquidation and Director Liability / Final Judgment (high Court)

Legal Issues

  1. 1 Whether shareholders' current account advances are recoverable as debts owed to the company
  2. 2 Whether transfers to the BozTarLuc Trust were prejudicial dispositions under the Property Law Act 2007 and subject to restoration or compensation
  3. 3 Whether the first defendant breached directors' duties (Companies Act ss131, 135, 136, 137) and what relief under s301 is appropriate

Ratio Decidendi

Court accepted liquidators' reconstructed accounts and found payments to shareholders and transfers to the BozTarLuc Trust were improper dispositions made after service of the statutory demand that caused or accelerated insolvency; found the first defendant breached s131 by preferring personal and related parties' interests; granted leave to continue against the bankrupt first defendant subject to non-enforcement without leave; ordered restitutionary relief requiring repayment of shareholder current account advances ($228,795) and restoration/compensation from the Trust ($66,175.84) and alternatively awarded a s301 restitutionary judgment against the first defendant totalling $294,970.84;...

Court Disposition

Judgment for plaintiffs in respect of shareholder current account debts, prejudicial disposition to trustees and alternatively a restitutionary s301 award against the first defendant; leave granted to continue against adjudicated bankrupt on condition no enforcement without leave; costs awarded to plaintiffs with...

Orders

  • Judgment against first defendant for $55,810.48 plus interest from date of liquidation to date of judgment
  • Judgment against second defendant for $110,529.75 plus interest from date of liquidation to date of judgment