New Zealand Case Law: Decisions & Judgments

Topic

Insolvent trading

Legal area

Court

5 Jul 2023

OLLIVER v DEPUTY REGISTRAR OF COMPANIES [2023] NZHC 1721

Citation

[2023] NZHC 1721
Court

High Court

The High Court held on de novo appeal that appellant had engaged in mismanagement by commissioning and permitting contractor works and incurring significant liabilities without clear title or assured funding, failing to protect creditor interests and prioritising personal interests; that mismanagement contributed to BBG's failure and posed a future public risk; the Deputy Registrar's decision to prohibit was substantively correct but several factual findings overstated seriousness, so the prohibition was reduced from four years to three years.
16 Dec 2021

THE COMMISSIONER OF INLAND REVENUE v MSL CAPITAL MARKETS LIMITED [2021] NZHC 3516

Citation

[2021] NZHC 3516
Court

High Court

Although the statutory grounds for winding up were established, the court exercised its residual discretion to grant a short final opportunity to pay; absent full payment by the specified deadline the court ordered the company placed in liquidation, appointed named liquidators with individual powers, and awarded costs to the Commissioner to be paid from company assets.
2 Jul 2021

KELSTWORURAL LTD (IN LIQUIDATION) v MOUNSEY-ROSS [2021] NZHC 1632

Citation

[2021] NZHC 1632
Court

High Court

Directors breached duties under ss131,135 and137 by persistently trading while insolvent, failing to remit tax, appropriating sale proceeds and extracting substantial drawings; s136 was not engaged on the facts; those breaches caused the company's unmet tax liabilities and insolvency and, under s301, the directors must contribute to the company's assets in an amount equal to the company's loss caused by their breaches; accordingly defendants jointly and severally ordered to contribute $609,738.74 plus interest.
31 Mar 2021

YAN v MAINZEAL PROPERTY AND CONSTRUCTION LIMITED (IN LIQUIDATION) [2021] NZCA 99 [31 March 2021]

Citation

[2021] 3 NZLR 598
Court

Court of Appeal

The directors breached s135 by no later than 31 January 2011 by allowing Mainzeal to trade in a manner creating a substantial risk of serious loss to creditors, but on the facts that breach did not cause a net deterioration in the company's financial position so no compensation was recoverable for the s135 breach; the directors also breached s136 in respect of four major construction contracts entered after 31 January 2011 and all obligations incurred from 5 July 2012 onward, and compensation for breaches of s136 is to be assessed by reference to the new debt approach (net unsatisfied obligat…
20 Oct 2020

INDEPENDENT CARPETS LIMITED (IN LIQUIDATION) v CARPET CALL 2000 NZ LIMITED) [2020] NZHC 2757

Citation

[2020] NZHC 2757
Court

High Court

Court found on admissible evidence that a verbal employer-of-record arrangement existed; Carpet Call breached that arrangement from about 31 December 2015 causing ICL's tax debt; Mr Waugh breached duties under ss 131,135,136 and 137 and failed to ensure compliance with ss 194 and 201; causation and culpability established such that under s 301 Mr Waugh must contribute $191,259.54 by way of compensation and under s 300 he is personally liable for $10,000 of company debts; hearsay in examinations on oath was admissible under s 18(1); Carpet Call ordered to pay judgment debt with specified inter…
16 Sept 2019

FATUPAITO v MONTAGU [2019] NZHC 2333

Citation

[2019] NZHC 2333
Court

High Court

The defendant breached ss 131, 135 and 137 of the Companies Act 1993 by permitting the company to continue trading while insolvent and allowing a bankrupt related party unfettered access to company funds, which caused the creditors' losses after 31 March 2015; the defendant is personally liable to compensate the company/creditors for $268,971.35.
21 Aug 2019

HEAT PUMP CLEANING COMPANY LTD v TAYLOR [2019] NZHC 2057

Citation

[2019] NZHC 2057
Court

High Court

On the unchallenged affidavit evidence the plaintiffs proved the company made recoverable advances of approximately NZD130,000 to the defendant shareholder and that the directors authorised trading while insolvent causing creditor losses of about NZD140,000; therefore the plaintiffs are entitled to judgment for recovery of those amounts with interest and the court grants default judgment in favour of the plaintiffs.
29 Mar 2018

H INVESTMENTS LIMITED (IN LIQ) v OFFICIAL ASSIGNEE [2018] NZCA 76

Citation

[2018] NZCA 76
Court

Court of Appeal

The Assignee lawfully rejected the liquidators' proof because the liquidators failed, on the balance of probabilities, to adduce sufficient evidence to establish either cash‑flow insolvency or breach of directors' duties during the relevant period; the onus remained with the claimants, the deed of waiver did not estop the Assignee, and absent adequate evidence the Court would not displace the Assignee's decision, so the appeal was dismissed.
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.
19 Nov 2014

MCGREAL FLOOR COVERINGS LTD (IN LIQUIDATION) v MCGREAL [2014] NZHC 2884

Citation

[2014] NZHC 2884
Court

High Court

The company was insolvent from at least 31 March 2007 and unable to pay debts from end of December 2007; the defendant, as sole director, continued trading without responsible consideration of the company's financial position, breached duties under the Companies Act and caused loss to creditors; accordingly the defendant must contribute NZD 240,330.04 to the company, interest to run from issue of proceedings, and plaintiffs are entitled to costs on a 2B basis.