New Zealand Case Law: Decisions & Judgments

Topic

Insolvent transactions

Legal area

Court

15 Oct 2019

THOMAS v REINFORCING STEEL AND MESH LIMITED [2019] NZHC 2629

Citation

[2019] NZHC 2629
Court

High Court

The February and March payments were payments under new, direct contracts and invoices between Ganellen and RSM after RSM ceased supplying Bishop and therefore were not transactions by Bishop or payments by a debtor of Bishop at Bishop's direction or consent and so not voidable under s 292. RSM established the s 296(3) defence for the January payment: it acted in good faith, had no reasonable grounds to suspect Bishop's insolvency at the time of receipt (taking account of timing and industry practice), and gave value, so recovery under s 292 is barred. The liquidator's claim is dismissed.
6 Dec 2018

ROBT JONES HOLDINGS LIMITED v McCULLAGH [2018] NZSC 120

Citation

[2018] NZSC 120
Court

Supreme Court

The Supreme Court granted leave to appeal and approved a focused question for determination: whether the payments totalling $262,758.05 were insolvent transactions within s292 of the Companies Act 1993 and whether an additional requirement that such transactions diminish assets available to creditors or disadvantage the general body of creditors is necessary to satisfy s292.
8 Oct 2018

SOUTH BRITISH NOMINEES LTD v REGISTRAR OF COMPANIES [2018] NZHC 2621

Citation

[2018] NZHC 2621
Court

High Court

The Court ordered that CDZNT01 Limited not be removed from the Companies Register because the applicant, as a creditor with an undischarged claim, demonstrated a justified belief and commitment to fund recovery actions in respect of identified insolvent transactions, and cancellation of the liquidator's purported final report was necessary to allow further recovery and reporting.
8 Sept 2017

MCCULLAGH v ROBT JONES HOLDINGS LIMITED [2017] NZHC 2182

Citation

[2017] NZHC 2182
Court

High Court

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…
25 May 2016

EBR HOLDINGS LTD (IN LIQUIDATION) v VAN DUYN & OTHERS [2016] NZHC 1112

Citation

[2016] NZHC 1112
Court

High Court

Leave to amend the defendants' statement of defence and third party claim was granted but conditional: the trial was adjourned and the defendants were ordered to pay specified sums and provide an undertaking as to limitation by a fixed deadline; failure to comply would result in debarment from defending the plaintiffs' claim or striking out the third party claim and revocation of the leave to amend.
11 Nov 2015

GALVANISING (HB) LTD & ORS v FISK AND ANOR AS LIQUIDATORS OF EAST QUIP LIMITED (IN LIQUIDATION) [2015] NZCA 529

Citation

(2015) 14 TCLR 204
Court

Court of Appeal

The Court held s 292(4B) did not apply because the impugned payments were transactions between EQL and the other group entities, not transactions with the Eastons as creditors within the meaning of s 292(4B); funding by the Eastons constituted separate transactions (if at all) and the payments were not made to induce further credit but to preserve group business, so the payments were voidable insolvent transactions recoverable by the liquidators.
28 Nov 2014

REYNOLDS AS THE LIQUIDATOR OF JAMES DEVELOPMENTS LTD (IN LIQUIDATION) v JAMES CA608/2012 [2014] NZCA 578

Citation

[2014] NZCA 578
Court

Court of Appeal

The Court upheld the finding that Mr James paid or procured payments (including via OREL) which met liquidator remuneration and litigation costs properly incurred for the company in liquidation; those payments fell within Schedule 7 cl 1(a) and by subrogation and equity offset the preferential receipts of $60,904, and it was appropriate under s295 to deny the liquidator repayment in this rare case.
17 Dec 2013

D GRANT AND S KHOV v WESTCON GROUP NZ LIMITED 2013 [NZHC] 3419

Citation

openlaw-8de11fef_4d26_4678_bdf9_8b0b211dff37.pdf
Court

High Court

The rescheduling agreements reached with major creditors were binding and altered when debts fell due; payments made in accordance with those agreements were not insolvent transactions under s292 despite balance sheet deficits, and therefore the liquidators failed to prove inability to pay as debts became due and the application was dismissed.
20 Dec 2012

VIVIEN JUDITH MADSEN-RIES AND HENRY DAVID LEVIN V RAPID CONSTRUCTION LIMITED HC AK CIV 2012-404-001044

Citation

openlaw-bd54bc13_9ea2_4533_a2b1_0e5d1cd857f8.pdf
Court

High Court

Rapid proved the cumulative s296(3) defence to the extent of $90,713.50 because it received the payment in good faith, had no reasonable grounds to suspect Giant's insolvency, and altered its position by issuing its cheque in conscious reliance on the payment; accordingly the court ordered recovery only of the balance $22,838.34 payable to the liquidators.
5 Dec 2012

MELTZER AND ANOR V HIWAY STABILIZERS NEW ZEALAND LIMITED HC AK CIV-2012-404-3172

Citation

openlaw-73c2590a_abba_4770_b3d0_71667b9b3566.pdf
Court

High Court

The court held that under s 296(3) 'gave value' can include antecedent value given in the transaction (including acceptance of payment in satisfaction and release of an antecedent debt) so a creditor who acted in good faith and had no reasonable grounds to suspect insolvency is protected and the liquidators' recovery claim fails.