New Zealand Case Law: Decisions & Judgments

Topic

Running account

Legal area

Court

20 May 2015

V J MADSEN REIS AND H D LEVIN v DONOVAN DRAINAGE AND EARTH MOVING LIMITED [2015] NZHC 1081

Citation

[2015] NZCCLR 13
Court

High Court

The application was dismissed because the respondent demonstrated it acted in good faith, gave value and a reasonable person in the respondent's position would not have had reasonable grounds to suspect the Company's insolvency given the commercial context and industry practices; therefore the s296(3) defence applies and the payments are not recoverable.
24 Apr 2015

TIMBERWORLD LIMITED V HENRY DAVID LEVIN AND VIVIENNE JUDITH MADSEN-RIES as liquidators of Northside Construction Limited (In Liquidation) CA842/2013 AND HENRY DAVID LEVIN AND VIVIENNE JUDITH MADSEN-RIES as liquidators of Tarsealing 2000 Limited (In Liquid

Citation

openlaw-49939176_20ee_493e_bbad_0e8e684ab9cb.pdf
Court

Court of Appeal

Section 292(4B) must be applied by netting all transactions forming part of the continuing business relationship that occur within the specified period; the peak indebtedness rule is not part of New Zealand law and a liquidator may not select a peak date within the period to exclude earlier transactions from the single transaction assessment; policy choices to adopt such a rule are for Parliament.
7 Apr 2014

LEVIN & Anor v Z ENERGY LIMITED [2014] NZHC 688

Citation

[2014] NZHC 688
Court

High Court

The specified period commenced two years before the original application date (21 November 2009); the dealings between the parties constituted a continuing business relationship/running account under s292(4B) so all transactions are treated as a single transaction and netted; netting produced a neutral result (no net benefit to the respondent) so there was no insolvent transaction or voidable preference; peak indebtedness measurement was rejected in these circumstances; application dismissed.
20 Dec 2013

FISK v GALVANISING (H.B.) LIMITED [2013] NZHC 3543

Citation

[2013] NZHC 3543
Court

High Court

East Quip was insolvent for the entire specified period (5 May 2007–10 July 2009). The payments, set‑offs and transfers identified were transactions within s 292(3) and, viewed at the time they were entered into, enabled Galvanising, the Easton Property Trust, Hooked on Transport and the Eastons to receive more than they would in liquidation. Respondents' defences — that transactions were with the Eastons personally via a shareholders' current account, that they were in the ordinary course of business, part of a running account, or offset by later repayments — were rejected on the evidence. A…
29 Nov 2013

LEVIN & ANOR v TIMBERWORLD LIMITED [2013] NZHC 3180

Citation

[2013] NZHC 3180
Court

High Court

The liquidators proved Northside was insolvent during the specified period; s292(4B) is to be applied to transactions within the specified period (not from the start of the trading relationship) and the peak indebtedness rule is not adopted; Timberworld failed the s296(3) defence because a reasonable creditor in its position had grounds to suspect insolvency; accordingly the specified transactions are voidable and Timberworld must repay $73,490.46 plus interest and costs.
6 May 2013

JEFFREY PHILIP MELTZER AND LLOYD JAMES HAYWARD AS LIQUIDATORS OF WINDOW HOLDINGS LIMITED (IN LIQUIDATION) V ALLIED CONCRETE LIMITED HC AK CIV 2012-404-003170

Citation

openlaw-5a450c15_3cbe_47b3_8b82_e86cc970c62a.pdf
Court

High Court

Allied established the first two limbs of the s 296(3) defence (it acted in good faith and had no reasonable grounds to suspect insolvency) but failed the third limb because it did not prove it gave value at the time the payment was received; under s 296(3)(c) value must be given at receipt (subject only to the separate alteration-of-position exception), so $63,649.50 of the payment is a voidable preference and must be repaid to the liquidators with interest and costs.
1 Sept 2011

LEVIN AND JORDAN V ITI & SYDDALL ENTERPRISES LIMITED HC AK CIV 2011-404-405

Citation

openlaw-bb490cd0_582d_4fbb_8971_695056b763c9.pdf
Court

High Court

Except for the ledger entry totalling $23,144.42 (found not paid), the challenged payments were made in the ordinary course of the parties' commercial dealings (contractor/subcontractor relationship) and therefore were not voidable under s 292; the liquidators' application to set aside the payments is refused.
21 Aug 2009

GERALD STANLEY REA AND PAUL GRAHAM SARGISON V NEIL ALBERT WOLFGRAM HC AK CIV 2008-404-005635

Citation

openlaw-9f66ccac_128f_445c_b707_70f5fbbeab9a.pdf
Court

High Court

The court concluded on the evidence that Claybrook was insolvent in August 2007 and the payments were therefore presumptively voidable; the respondent failed to rebut the presumption because the repayments were informal, poorly documented, not in the ordinary course of business and not part of an integral continuing business relationship; accordingly the payments are set aside and the respondent ordered to repay $160,000 pursuant to s 295(a).
6 Jun 2008

FISHERIES CONSULTANCY (NZ) LIMITED V EXCPL LIMITED (PREVIOUSLY CHEQUER PACKAGING LIMITED (IN LIQUIDATION)) HC CHCH CIV 2008 409 629

Citation

openlaw-35c6d189_7e78_40ed_8d72_ce26a97d014a.pdf
Court

High Court

Signing the credit application and terms of trade on 25 January 2007 determined Fishcon's post‑receivership contractual liability to Chequer such that Fishcon could not avoid liability for invoices totaling $30,056.76; however, there is an arguable genuine and substantial dispute about pre‑receivership arrangements and allocation of earlier payments that requires further investigation, so the statutory demand is only partly sustained and not wholly set aside.