New Zealand Case Law: Decisions & Judgments

Topic

Good faith defence

Legal area

Court

30 Sept 2019

GRANT v LAWSON ROBINSON LIMITED [2019] NZHC 2465

Citation

[2019] NZHC 2465
Court

High Court

The payment was made within the relation‑back period to a company that was unable to pay its due debts as at 9 May 2017 (large secured liabilities far exceeding liquid assets and substantial unsecured creditors), the creditor received more than it would likely obtain in liquidation (full payment versus negligible recovery), and the creditor was aware of or had reasonable grounds to suspect GLW's insolvency so could not rely on s 296(3); accordingly the payment was voidable and must be repaid with interest.
14 Mar 2016

COLIN DAVID OWENS AND DAVID STUART VANCE v T R GROUP LIMITED [2016] NZHC 427

Citation

[2016] NZHC 427
Court

High Court

The court held the payments did not form part of a continuing business relationship because truck rentals had been stopped and the payments were predominantly backward‑looking to reduce indebtedness; T R Group established the s 296(3) defence for payments of 5 and 14 February 2014 but from 21 March 2014 onwards a reasonable person in T R Group's position would have suspected insolvency, so payments from 21 March 2014 are voidable and must be repaid to the liquidators with interest.
14 Nov 2013

G REYNOLDS as liquidator of EBODE CONSTRUCTION LTD (In Liq) v EUROVISION LTD [2013] NZHC 3015

Citation

[2013] NZHC 3015
Court

High Court

All three payments were insolvent transactions under s 292. Eurovision proved it acted in good faith and that a reasonable person in its position would not have suspected insolvency for all payments. Eurovision proved alteration of position in respect of the first two payments (forgoing repossession, traveling to Auckland and completing assembly/installation) but did not prove contemporaneous alteration of position in respect of the third payment. Therefore recovery was permitted only in respect of the third payment net of agreed credit; net repayment of $26,695.25 ordered plus interest from…
10 Apr 2013

PETTERSON AS LIQUIDATOR OF HURLSTONE EARTHMOVING LIMITED V ALLIED CONCRETE LIMITED HC AK CIV-2012-404-006612

Citation

openlaw-989475e6_0a65_4cb4_b354_20580d65fca1.pdf
Court

High Court

Both respondents proved they acted in subjective good faith when receiving payments but failed to show that a reasonable person in their position would not have suspected that HEL was or would become insolvent and failed to establish that they gave value at the time the payments were received; accordingly the payments were voidable and the liquidator's applications to set them aside succeed.
9 May 2012

MCNAMARA AND ORS v AUCKLAND CITY COUNCIL SC 85/2010

Citation

MCNAMARA AND ORS v AUCKLAND CITY COUNCIL SC 85/2010
Court

Supreme Court

Majority held the appeal must be dismissed: Building Act 1991 s 50(1) required the territorial authority to accept certifier-issued certificates that were regular on their face and s 50(3) provided a qualified immunity for acts done in good faith in reliance on such certificates; absent actual knowledge that a certificate exceeded the certifier's authority (or notification under s 57), there was no duty to go behind a regular-on-its-face certificate and aggregation of officers' partial knowledge does not negate good faith; the negligent misstatement claim failed for like reasons
18 Feb 2011

SHEPHARD & ANOR AS LIQUIDATORS OF DERMAC INVESTMENTS LIMITED (IN LIQ) v KILBIRNIE PLYMOUTH INVESTMENTS LIMITED HC WN CIV-2009-485-2397

Citation

openlaw-34cc86f2_1752_4b83_b54c_30f8571b0436.pdf
Court

High Court

The set-off of prior advances to satisfy the deposit constituted a "payment of money" transaction under s292(1)(e); it was entered into while Dermac was unable to pay its debts, was not in the ordinary course of Dermac's business but a response to insolvency that preferred Kilbirnie over other creditors, Kilbirnie failed to establish good faith or reasonable alteration of position in reliance on validity, and therefore the transaction was voidable and must be set aside with repayment of the full sum received ($2,140,000).
7 Jul 2009

G B REYNOLDS AS LIQUIDATOR OF CARBONARA ENTERPRISES LTD (IN LIQUIDATION) OF AUCKLAND, LIQUIDATOR V GLENGARY HANCOCKS LTD HC AK CIV 2008-404-004745

Citation

openlaw-fd67978e_085c_4321_86f0_68fbd913747e.pdf
Court

High Court

Payment of $41,775.97 on 16 April 2007 was made within the six month restricted period and is therefore voidable under s292; the presumption of insolvency was not rebutted; Glengary failed to prove the cumulative requirements of amended s296(3) (good faith alone was accepted but not the absence of reasonable grounds to suspect insolvency nor the value/alteration element); accordingly the transaction is set aside and repayment with interest ordered.
18 Apr 2007

LEVIN V MARKET SQUARE TRUST CA CA224/05

Citation

openlaw-86917392_f5b4_4f7b_93ba_1bcb186a3c1b.pdf
Court

Court of Appeal

Peek's payment was a loan to One Italy and therefore a payment by One Italy within s292(1); One Italy was unable to pay its due debts at the time; the payment enabled Market Square Trust to receive a greater satisfaction than it would in the actual liquidation; Market Square did not receive the payment in good faith under s296(3); accordingly the payment of $35,768.74 is set aside and must be repaid under s295 and the appeal is allowed.