New Zealand Case Law: Decisions & Judgments

Topic

Inability to pay debts

Legal area

Court

28 Sept 2021

COMMISSIONER OF INLAND REVENUE v BF7 TRADING LIMITED [2021] NZHC 2553

Citation

[2021] NZHC 2553
Court

High Court

The court exercised its discretion under s241(4) Companies Act 1993 to order liquidation because BF7 Trading Ltd was clearly insolvent, repeatedly defaulted on tax obligations including after a statutory demand, the proposed sale arrangement was fragile and had already failed to deliver the initial payment, and the involvement of an undischarged bankrupt in prominent operational roles raised concerns warranting independent investigation to protect creditors and the public interest.
9 Apr 2020

MENZIES v VAYCAY TRADING LTD [2020] NZHC 618

Citation

[2020] NZHC 618
Court

High Court

The Court concluded Vaycay was unable to pay its debts on the evidence and there was an irretrievable breakdown between the shareholders (including a protection order and withholding of company records and asset information); because the respondent's alternative s 174 proposal was vague, unparticularised and did not negate insolvency grounds, the Court exercised its discretion to order liquidation.
13 May 2019

INDUSTRIAL AND COMMERCIAL BANK OF CHINA (NEW ZEALAND) LIMITED v CBL CORPORATION LIMITED (IN VOLUNTARY ADMINISTRATION) [2019] NZHC 1038

Citation

[2019] NZHC 1038
Court

High Court

Evidence of creditor demands not met established the company was insolvent and unable to pay its debts; no viable restructuring materialised and no party opposed liquidation, therefore the Court ordered the company into liquidation and appointed joint and several liquidators and awarded costs to the plaintiffs.
14 Feb 2019

THE ASTROLABE COMMUNITY TRUST v NGAI TE HAPU INCORPORATED [2019] NZHC 159

Citation

[2019] NZHC 159
Court

High Court

The statutory demand complied with s289, was not complied with, and the trust filed the liquidation application within the s288 time limit; accordingly the society is presumed unable to pay its debts and the Court ordered the society into liquidation and appointed the Official Assignee as liquidator.
13 Dec 2017

EASTLIGHT ASSET TRADING NO.3 LIMITED v JAAFAR HOLDINGS LIMITED [2017] NZHC 3105

Citation

[2017] NZHC 3105
Court

High Court

The application for liquidation was dismissed because the defendant successfully rebutted the statutory presumption of insolvency by producing persuasive affidavit evidence and recent financial statements demonstrating solvency (substantial shareholders' funds, positive working capital, recent profits and cash), so the plaintiff failed to prove inability to pay debts required for an order under s241(4)(a).
22 Jun 2017

CAMPBELL v MARBLE POINT WINERY LTD [2017] NZHC 1412

Citation

[2017] NZHC 1412
Court

High Court

Mutual confidence between the equal shareholder-directors had irretrievably broken down, Marble Point was insolvent and effectively defunct after one shareholder (Dennis) took control of assets and trading through another company without accounting; the applicant did not create the deadlock and freezing the bank account was not disentitling conduct; accordingly it was just and equitable to wind up Marble Point and appoint independent liquidators.
14 Jun 2016

MEMELINK v MARTENS [2016] NZHC 1285

Citation

[2016] NZHC 1285
Court

High Court

The application to set aside was dismissed because it had not been validly served within the statutory period so the Court lacked jurisdiction to extend time; alternatively, on the merits at least part of the debt claimed was owing and there was no arguable defence to the whole demand; costs were declined and left to lie where they fell because the Body Corporate had no entitlement to invoke liquidation procedures against trustees of a trust.
20 Oct 2015

COMMISSIONER OF INLAND REVENUE v A1 AUTOMOTIVE SERVICES LIMITED [2015] NZHC 2573

Citation

[2015] NZHC 2573
Court

High Court

Given the statutory demand non-compliance, an extended history of unpaid tax liabilities and returns, repeated unfulfilled proposals to pay, and the company's failure to present evidence or take steps despite multiple adjournments, the proper inference is that the company cannot pay its debts and the court should exercise its discretion to make a liquidation order and appoint liquidators.
29 Jun 2015

NEWTON and DUNCAN COTTERILL NELSON TRUSTEES (2011) LIMITED AS TRUSTEES OF THE L NEWTON FAMILY TRUST v INFRATECH MINING LIMITED [2015] NZHC 1476

Citation

[2015] NZHC 1476
Court

High Court

The written loan agreements and contemporaneous communications plainly described the payments as loans repayable on the dates or on demand; the defendant did not set aside the statutory demand and failed to displace the presumption of inability to pay; the defendant's accounts showed liabilities exceeding assets and insufficient current funds, so the company was insolvent and a liquidator (the Official Assignee) should be appointed.
14 Dec 2012

AUCKLAND COUNCIL V FOREST TRUSTEE LTD HC AK CIV-2012-404-003253

Citation

openlaw-a54de1e3_8cf9_43ee_b57a_19eea86c052e.pdf
Court

High Court

The application to liquidate failed because the statutory demand was not validly served on the company's registered office and the Council had not pleaded or given adequate notice that it would proceed on alternative grounds (inability to pay or just and equitable), so the Court would not decide those grounds on the material before it; additionally the alleged standing of the shareholder trustee was unsupported by production of the trust deed and the counterclaim did not justify refusing liquidation on the material before the Court.