GRANT V INDEPENDENT LIVESTOCK 2010 LIMITED HC HAM CIV-2011-419-001233

GRANT V INDEPENDENT LIVESTOCK 2010 LIMITED HC HAM CIV-2011-419-001233

No pooling order under s 271(1)(b) because IL Agents and IL 2010 were not related companies under s 2(3)(d) (temporal separation and transfer rather than concurrent indistinguishable operation); second cause under phoenix provisions failed for lack of pooling; however Schuler breached his duties as director (s 131)...

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Citation
openlaw-8214751d_820a_47df_a39b_f32c2031d67a.pdf
Parties
Plaintiffs (liquidators of Independent Livestock Agents Ltd): DAMIEN GRANT AND STEVEN KHOV; First Defendant: INDEPENDENT LIVESTOCK 2010 LIMITED; Second Defendant: IAN CHARLES SCHULER
Court
High Court
Jurisdiction
New Zealand
Judgment Date
17 December 2012
Procedural Posture
Company Law / Insolvency (liquidation) / Judgment (high Court, Hamilton, 17 December 2012)
Outcome
Partial judgment for plaintiffs: first and second causes dismissed; third cause (s 301) succeeded against second defendant Ian Charles Schuler; order for repayment and interest; costs to plaintiffs
Legal Topics
S 271 Pooling of Assets, S 301 Director Liability and Repayment, Phoenix Company Provisions S 386, S 131 Duty of Directors, S 135 Reckless Trading, Misrepresentation by Director, Statutory Demand, Intermingling of Funds
Company Law Insolvency Directors' Duties Commercial Law S 271 Pooling of Assets S 301 Director Liability and Repayment Phoenix Company Provisions S 386 S 131 Duty of Directors +4 more

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Parties

DAMIEN GRANT AND STEVEN KHOV

Plaintiffs (liquidators of Independent Livestock Agents Ltd)

INDEPENDENT LIVESTOCK 2010 LIMITED

First Defendant

IAN CHARLES SCHULER

Second Defendant

Procedural Posture

Company Law / Insolvency (liquidation) / Judgment (high Court, Hamilton, 17 December 2012)

Legal Issues

  1. 1 Whether IL Agents and IL 2010 were related companies for a s 271 pooling order
  2. 2 Whether IL 2010 was a phoenix company and Schuler personally liable under s 386
  3. 3 Whether director Schuler breached duties (s 131, s 137) or traded recklessly (s 135)

Ratio Decidendi

No pooling order under s 271(1)(b) because IL Agents and IL 2010 were not related companies under s 2(3)(d) (temporal separation and transfer rather than concurrent indistinguishable operation); second cause under phoenix provisions failed for lack of pooling; however Schuler breached his duties as director (s 131) by deliberately misrepresenting reasons for non-payment, misapplying funds and misleading creditors, and under s 301(1)(b)(i) was ordered to repay the full Mudge shortfall of NZD 70,601 with interest, while claim under s 135 (reckless trading) was not made out.

Court Disposition

Partial judgment for plaintiffs: first and second causes dismissed; third cause (s 301) succeeded against second defendant Ian Charles Schuler; order for repayment and interest; costs to plaintiffs

Orders

  • Second defendant Ian Charles Schuler to pay to the plaintiffs as liquidators of Independent Livestock Agents Ltd the sum of 70601 NZD pursuant to s 301(1)(b)(i) of the Companies Act 1993
  • Interest to be paid on amounts outstanding at a rate of 8.4% per annum from 14 days after each relevant transaction date until payment; parties to calculate interest on that basis and may apply for directions