MCCULLAGH v ROBT JONES HOLDINGS LIMITED [2017] NZHC 2182

MCCULLAGH v ROBT JONES HOLDINGS LIMITED [2017] NZHC 2182

The Court held on the balance of probabilities that: (1) payments by Columbus Jan–May 2010 were a redirection of licence fees owed to NCI under a legitimate Nov09 licence and were made with NCI's knowledge/consent; (2) payments by MSH2 Sep–Nov 2010 were effectively loans to NCI (MSH2 a wholly owned subsidiary acting for NCI) and made with NCI's knowledge; (3) NCI was unable to pay its due debts at the relevant times; (4) the payments therefore constituted insolvent transactions by NCI within s292 and were voidable; accordingly the payments totalling $751,941.52 were set aside and RJH ordered to repay that sum with interest, but no exclusion order against RJH was made.

Citation
[2017] NZHC 2182
Parties
Applicant (liquidator): Anthony John McCullagh; Applicant (liquidator): Stephen Mark Lawrence; Respondent (creditor): Robt. Jones Holdings Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
8 September 2017
Procedural Posture
Application Under Companies Act 1993 to Set Aside Voidable Transactions (s292) / High Court Judgment on Originating Application Under S294 to Set Aside Transactions
Outcome
Originating application under s294 granted in part: payments set aside as voidable transactions; RJH ordered to repay $751,941.52 to Northern Crest Investments Ltd and to pay interest at 5% p.a. from 2 June 2011; order to exclude RJH from participation in liquidation refused; costs reserved.
Legal Topics
Voidable Transactions, Insolvent Transactions, Third Party Payments, Licence Agreements, Liquidation, Ownership of Intellectual Property, Remedies Under S295
Company Law Insolvency Law Contract Law Cross Border Insolvency Voidable Transactions Insolvent Transactions Third Party Payments Licence Agreements +3 more

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Parties

Anthony John McCullagh

Applicant (liquidator)

Stephen Mark Lawrence

Applicant (liquidator)

Robt. Jones Holdings Limited

Respondent (creditor)

Procedural Posture

Application Under Companies Act 1993 to Set Aside Voidable Transactions (s292) / High Court Judgment on Originating Application Under S294 to Set Aside Transactions

Legal Issues

  1. 1 Whether payments made to RJH by third parties (Columbus and MSH2) were transactions 'by' Northern Crest Investments Ltd for the purposes of s292
  2. 2 Whether those transactions were insolvent transactions (company unable to pay due debts and creditor received more than in liquidation)
  3. 3 Whether transactions occurred within the specified/restricted periods

Ratio Decidendi

The Court held on the balance of probabilities that: (1) payments by Columbus Jan–May 2010 were a redirection of licence fees owed to NCI under a legitimate Nov09 licence and were made with NCI's knowledge/consent; (2) payments by MSH2 Sep–Nov 2010 were effectively loans to NCI (MSH2 a wholly owned subsidiary acting for NCI) and made with NCI's knowledge; (3) NCI was unable to pay its due debts at the relevant times; (4) the payments therefore constituted insolvent transactions by NCI within s292 and were voidable; accordingly the payments totalling $751,941.52 were set aside and RJH ordered to repay that sum with interest, but no exclusion order against RJH was made.

Court Disposition

Originating application under s294 granted in part: payments set aside as voidable transactions; RJH ordered to repay $751,941.52 to Northern Crest Investments Ltd and to pay interest at 5% p.a. from 2 June 2011; order to exclude RJH from participation in liquidation refused; costs reserved.

Orders

  • Set aside payments received by Robt. Jones Holdings Ltd from Columbus Property Marketing Pty Ltd and MSH No.2 Ltd between 22 January 2010 and 5 November 2010 as voidable transactions of Northern Crest Investments Ltd under s292
  • Robt. Jones Holdings Ltd ordered to pay Northern Crest Investments Ltd $751,941.52 (being the value of the voidable transactions)