VIVIEN JUDITH MADSEN-RIES AND HENRY DAVID LEVIN V RAPID CONSTRUCTION LIMITED HC AK CIV 2012-404-001044

VIVIEN JUDITH MADSEN-RIES AND HENRY DAVID LEVIN V RAPID CONSTRUCTION LIMITED HC AK CIV 2012-404-001044

Rapid proved the cumulative s296(3) defence to the extent of $90,713.50 because it received the payment in good faith, had no reasonable grounds to suspect Giant's insolvency, and altered its position by issuing its cheque in conscious reliance on the payment; accordingly the court ordered recovery only of the balance $22,838.34 payable to the liquidators.

Citation
openlaw-bd54bc13_9ea2_4533_a2b1_0e5d1cd857f8.pdf
Parties
Applicant (liquidator): Vivien Judith Madsen-Ries; Applicant (liquidator): Henry David Levin; Respondent: Rapid Construction Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
20 December 2012
Procedural Posture
Application Under Companies Act 1993 S295 (insolvent Transaction) / High Court Judgment (hearing 27 June 2012; Judgment 20 December 2012)
Outcome
Application granted in part; Rapid ordered to pay $22,838.34 to the company in liquidation; Rapid's s296(3) defence succeeds to the extent of $90,713.50
Legal Topics
Voidable Transactions, Insolvent Transactions, Defence Under S296(3), Set Off, Liquidation
Company Law Insolvency Commercial Law Voidable Transactions Insolvent Transactions Defence Under S296(3) Set Off Liquidation

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Parties

Vivien Judith Madsen-Ries

Applicant (liquidator)

Henry David Levin

Applicant (liquidator)

Rapid Construction Limited

Respondent

Procedural Posture

Application Under Companies Act 1993 S295 (insolvent Transaction) / High Court Judgment (hearing 27 June 2012; Judgment 20 December 2012)

Legal Issues

  1. 1 Whether the payment of $113,551.84 to Rapid was a voidable insolvent transaction and should be set aside
  2. 2 Whether Rapid proves the defence in s296(3) (good faith, no reasonable grounds to suspect insolvency, and gave value or altered position)
  3. 3 Whether Rapid altered its position such that recovery should be limited to a net amount or the defence should apply to part of the payment

Ratio Decidendi

Rapid proved the cumulative s296(3) defence to the extent of $90,713.50 because it received the payment in good faith, had no reasonable grounds to suspect Giant's insolvency, and altered its position by issuing its cheque in conscious reliance on the payment; accordingly the court ordered recovery only of the balance $22,838.34 payable to the liquidators.

Court Disposition

Application granted in part; Rapid ordered to pay $22,838.34 to the company in liquidation; Rapid's s296(3) defence succeeds to the extent of $90,713.50

Orders

  • Rapid Construction Limited to pay Giant Engineering Limited (in liquidation) the sum of NZD 22,838.34
  • Parties to file and serve memoranda on costs by 1 February 2013 (leave reserved to seek extension)