MADSEN-RIES AND LEVIN AS LIQUIDATORS OF SHEPTON INVESTMENTS LIMITED (IN LIQUIDATION) v BOYD-DUNLOP [2013] NZHC 2153

MADSEN-RIES AND LEVIN AS LIQUIDATORS OF SHEPTON INVESTMENTS LIMITED (IN LIQUIDATION) v BOYD-DUNLOP [2013] NZHC 2153

On the balance of probabilities the company did not make a payment or equivalent to the trustees; the ledger entries reflected a tripartite arrangement that produced a benefit to the shareholders by way of set-off and reinstatement of the shareholders' debt is required; accordingly the court ordered repayment by the shareholders under s 295(c) and recognised the trustees' original debt claim under s 295(g).

Citation
[2013] NZHC 2153
Parties
Applicant (liquidator): Vivien Judith Madsen-Ries; Applicant (liquidator): Henry David Levin; First Respondent: John Eyre Boyd-Dunlop; Second Respondent: Nanette Jacqueline Boyd-Dunlop as trustee of the Boyd-Dunlop Family Trust; Third Respondent: James Gavin Donovan; Fourth Respondent: John Eyre Boyd-Dunlop; Fifth Respondent: Nanette Jacqueline Boyd-Dunlop
Court
High Court
Jurisdiction
New Zealand
Judgment Date
5 September 2013
Procedural Posture
Companies Act 1993 Proceeding Concerning Liquidation and Voidable Transactions / Application for Orders Under S 295 Following Automatic Setting Aside Under S 294; Reserved Judgment Delivered 5 September 2013
Outcome
Application granted in part
Legal Topics
Voidable Transactions, Preferences, Setting Aside Transactions, Liquidator Relief Under S 295, Set Off
Company Law Insolvency Law Trusts Law Voidable Transactions Preferences Setting Aside Transactions Liquidator Relief Under S 295 Set Off

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Parties

Vivien Judith Madsen-Ries

Applicant (liquidator)

Henry David Levin

Applicant (liquidator)

John Eyre Boyd-Dunlop

First Respondent

Nanette Jacqueline Boyd-Dunlop as trustee of the Boyd-Dunlop Family Trust

Second Respondent

James Gavin Donovan

Third Respondent

John Eyre Boyd-Dunlop

Fourth Respondent

Nanette Jacqueline Boyd-Dunlop

Fifth Respondent

Procedural Posture

Companies Act 1993 Proceeding Concerning Liquidation and Voidable Transactions / Application for Orders Under S 295 Following Automatic Setting Aside Under S 294; Reserved Judgment Delivered 5 September 2013

Legal Issues

  1. 1 Whether the company took a step that constituted a payment or money equivalent to the trustees under s 292(3)
  2. 2 What relief under s 295 is appropriate and whether orders should be made against the trustees and/or the shareholders

Ratio Decidendi

On the balance of probabilities the company did not make a payment or equivalent to the trustees; the ledger entries reflected a tripartite arrangement that produced a benefit to the shareholders by way of set-off and reinstatement of the shareholders' debt is required; accordingly the court ordered repayment by the shareholders under s 295(c) and recognised the trustees' original debt claim under s 295(g).

Court Disposition

Application granted in part

Orders

  • Pursuant to s 295(c) Mr and Mrs Boyd-Dunlop as shareholders to pay to the liquidators the sum of 1012095 NZD
  • Pursuant to s 295(g) the trustees of the Boyd-Dunlop Family Trust are entitled to claim in the liquidation for their original debt of 1036379.11 NZD