WILLBURN FURNITURE AND RESTORATIONS LTD (IN LIQUIDATION) v GLEDHILL [2016] NZHC 331

WILLBURN FURNITURE AND RESTORATIONS LTD (IN LIQUIDATION) v GLEDHILL [2016] NZHC 331

Court found on the evidence that the company was insolvent by 31 March 2014, the transfer of the van to the first defendant and the payment of auction proceeds into the second defendant's personal account were dispositions of company assets that prejudiced creditors, and the first defendant systematically withdrew...

Source-derived case information.

Citation
[2016] NZHC 331
Parties
First Plaintiff: Willburn Furniture and Restorations Ltd (In Liquidation); Second Plaintiff: Colin David Owens; Second Plaintiff: Grant Stephen Jarrold; First Defendant: Matthew Lawrence Gledhill; Second Defendant: Cameron Matthew Gledhill
Court
High Court
Jurisdiction
New Zealand
Judgment Date
2 March 2016
Procedural Posture
Company Liquidation Creditor Recovery (civil) / Judgment Following Proof Hearing
Outcome
Judgment for plaintiffs. First defendant ordered to compensate company for van and repay shareholder drawings; second defendant ordered to repay retained auction proceeds; alternative and additional relief under s 301 awarded against first defendant to the extent unpaid; interest awarded; costs reserved with second...
Legal Topics
Setting Aside Dispositions Prejudicing Creditors, Directors' Duties and Breaches, Reckless Trading, Misappropriation of Company Funds, Liquidator Claims Under S 301 Companies Act, Recovery of Liquidation Expenses
Property Law Companies Law Insolvency Setting Aside Dispositions Prejudicing Creditors Directors' Duties and Breaches Reckless Trading Misappropriation of Company Funds Liquidator Claims Under S 301 Companies Act +1 more

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Parties

Willburn Furniture and Restorations Ltd (In Liquidation)

First Plaintiff

Colin David Owens

Second Plaintiff

Grant Stephen Jarrold

Second Plaintiff

Matthew Lawrence Gledhill

First Defendant

Cameron Matthew Gledhill

Second Defendant

Procedural Posture

Company Liquidation Creditor Recovery (civil) / Judgment Following Proof Hearing

Legal Issues

  1. 1 Whether dispositions (van transfer and auction proceeds) prejudiced creditors under s 346-350 Property Law Act 2007
  2. 2 Whether company was insolvent by 31 March 2014
  3. 3 Whether dispositions were made with intent to hinder, delay or defeat creditors

Ratio Decidendi

Court found on the evidence that the company was insolvent by 31 March 2014, the transfer of the van to the first defendant and the payment of auction proceeds into the second defendant's personal account were dispositions of company assets that prejudiced creditors, and the first defendant systematically withdrew company funds for personal use. The first defendant breached duties under ss 131,133,135 and 137. Remedies awarded: compensation under s 348 for the van ($13,300) and auction proceeds ($22,680.08) with interest, judgment for repayment of shareholder current account drawings ($91,995.79) with interest, alternative relief under s 301 quantified by reference to creditors' losses...

Court Disposition

Judgment for plaintiffs. First defendant ordered to compensate company for van and repay shareholder drawings; second defendant ordered to repay retained auction proceeds; alternative and additional relief under s 301 awarded against first defendant to the extent unpaid; interest awarded; costs reserved with second...

Orders

  • First defendant to pay the company $13,300 in compensation for the van plus interest from date of liquidation
  • Second defendant to pay the company $22,680.08 in compensation for auction proceeds plus interest from date of liquidation