BRUCE DONALD GEMMELL and RHYS JAMES CAIN v NITESH HIMMATSINGH [2014] NZHC 3044

BRUCE DONALD GEMMELL and RHYS JAMES CAIN v NITESH HIMMATSINGH [2014] NZHC 3044

The respondent failed to object within the 20 working day period under s294, thereby being precluded from contesting the liquidators' notice; the evidence established the company was insolvent when the payments were made and the payments were directors' fees not salary, so the transactions are voidable and must be set aside with repayment, interest and costs.

Citation
[2014] NZHC 3044
Parties
Applicant (liquidator): Bruce Donald Gemmell; Applicant (liquidator): Rhys James Cain; Respondent (director): Nitesh Himmatsingh
Court
High Court
Jurisdiction
New Zealand
Judgment Date
2 December 2014
Procedural Posture
Companies Act 1993 Liquidation/voidable Transactions / Hearing on Liquidators' Application to Set Aside Transactions (oral Judgment Delivered 2 December 2014)
Outcome
Application granted: impugned transactions set aside; repayment, interest and costs ordered.
Legal Topics
Voidable Transactions, Preference, Directors' Fees Vs Salary, Set Aside and Repayment, Interest and Costs
Company Law Insolvency Law Civil Procedure Voidable Transactions Preference Directors' Fees Vs Salary Set Aside and Repayment Interest and Costs

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Parties

Bruce Donald Gemmell

Applicant (liquidator)

Rhys James Cain

Applicant (liquidator)

Nitesh Himmatsingh

Respondent (director)

Procedural Posture

Companies Act 1993 Liquidation/voidable Transactions / Hearing on Liquidators' Application to Set Aside Transactions (oral Judgment Delivered 2 December 2014)

Legal Issues

  1. 1 Whether payments made during the specified period are voidable as preferences under the Companies Act 1993
  2. 2 Whether the respondent acted in good faith or suspected insolvency when payments were made
  3. 3 Whether the respondent timely objected to the liquidators' notice under s294 and is precluded from contesting the notice

Ratio Decidendi

The respondent failed to object within the 20 working day period under s294, thereby being precluded from contesting the liquidators' notice; the evidence established the company was insolvent when the payments were made and the payments were directors' fees not salary, so the transactions are voidable and must be set aside with repayment, interest and costs.

Court Disposition

Application granted: impugned transactions set aside; repayment, interest and costs ordered.

Orders

  • Set aside the transactions described in the liquidators' notice dated 29 November 2013
  • Order repayment of the transactions in accordance with Companies Act 1993 s295(a) (total $50,000)