ATTRACTUM LTD (IN LIQUIDATION) v CHAPMAN [2020] NZHC 318

ATTRACTUM LTD (IN LIQUIDATION) v CHAPMAN [2020] NZHC 318

The company was insolvent (balance‑sheet from FYE 2011, cashflow from Sept 2012); the Chapmans, as controlling directors and shareholders, diverted company revenue and retained the vehicle as a company asset; accordingly the liquidators proved entitlement to recover the Chapmans' current account debt of $44,915 and to clawback distributions/dispositions of $333,605; declarations of breaches of ss131, 135, 136 and 137 were warranted; no additional monetary contribution was ordered under the directors' duty claim beyond the judgments entered; costs awarded to plaintiffs on a 2B basis.

Citation
[2020] NZHC 318
Parties
First Plaintiff: Attractum Ltd (In Liquidation); Second Plaintiffs (liquidators): Henry David Levin and Vivien Judith Madsen-Ries; First Defendant: Mark John Chapman; Second Defendant: Pauline Lesley Chapman
Court
High Court
Jurisdiction
New Zealand
Judgment Date
28 February 2020
Procedural Posture
Companies Act 1993 — Liquidation and Recovery Claims / Judgment After Trial Hearing
Outcome
Judgment for plaintiffs in part: current account recovery and clawback of distributions; declarations of directors' breaches; dismissal of record‑keeping claim; costs to plaintiffs on a 2B basis; no further monetary contribution ordered under directors' duties beyond judgments entered.
Legal Topics
Liquidation, Solvency Test, Voidable Transactions/clawback, Directors' Liability, Current Account Recovery, Distributions, Post Liquidation Duties, Costs
Company Law Insolvency Directors' Duties Property Law Liquidation Solvency Test Voidable Transactions/clawback Directors' Liability +4 more

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Parties

Attractum Ltd (In Liquidation)

First Plaintiff

Henry David Levin and Vivien Judith Madsen-Ries

Second Plaintiffs (liquidators)

Mark John Chapman

First Defendant

Pauline Lesley Chapman

Second Defendant

Procedural Posture

Companies Act 1993 — Liquidation and Recovery Claims / Judgment After Trial Hearing

Legal Issues

  1. 1 Whether the company was insolvent and from when
  2. 2 Whether the Chapmans diverted company assets/revenue and are liable on their current account
  3. 3 Whether distributions/dispositions to the Chapmans while insolvent are recoverable (clawback)

Ratio Decidendi

The company was insolvent (balance‑sheet from FYE 2011, cashflow from Sept 2012); the Chapmans, as controlling directors and shareholders, diverted company revenue and retained the vehicle as a company asset; accordingly the liquidators proved entitlement to recover the Chapmans' current account debt of $44,915 and to clawback distributions/dispositions of $333,605; declarations of breaches of ss131, 135, 136 and 137 were warranted; no additional monetary contribution was ordered under the directors' duty claim beyond the judgments entered; costs awarded to plaintiffs on a 2B basis.

Court Disposition

Judgment for plaintiffs in part: current account recovery and clawback of distributions; declarations of directors' breaches; dismissal of record‑keeping claim; costs to plaintiffs on a 2B basis; no further monetary contribution ordered under directors' duties beyond judgments entered.

Orders

  • Judgment for plaintiffs on first cause of action against Mark John Chapman and Pauline Lesley Chapman for $44,915.00 plus interest
  • Judgment for plaintiffs on second and third causes of action (alternatives) against Mark John Chapman and Pauline Lesley Chapman for $333,605.00 plus interest