Allied Concrete Ltd v Meltzer & Hayward

IN THE SUPREME COURT OF NEW ZEALAND

SC 51/2013
[2013] NZSC 102

BETWEEN	ALLIED CONCRETE LIMITED Applicant
AND	JEFFREY PHILIP MELTZER AND LLOYD JAMES HAYWARD AS LIQUIDATORS OF WINDOW HOLDINGS LIMITED (IN LIQUIDATION) Respondents

SC 80/2013
BETWEEN	FENCES AND KERBS LIMITED Applicant
AND	PETER ESMOND FARRELL AND SIMON PAUL ROGAN AS LIQUIDATORS OF CONTRACTING ENGINEERING LIMITED (IN LIQUIDATION) Respondents

SC 81/2013
BETWEEN	HIWAY STABILIZERS NEW ZEALAND LIMITED Applicant
AND	JEFFREY PHILIP MELTZER AND LLOYD JAMES HAYWARD AS LIQUIDATORS OF WINDOW HOLDINGS LIMITED (IN LIQUIDATION) Respondents

Court:	McGrath, William Young and Arnold JJ
Counsel:	J V Ormsby for Applicant SC51/2013 J P Temm for Applicant SC80/2013 G M Harrison for Applicant SC81/2013 B P Keene QC for Respondents SC51/2013 and SC81/2013 M D Branch for Respondents SC80/2013
Judgment:	24 October 2013

JUDGMENT OF THE COURT

Leave to appeal is granted in respect of all applications.

The approved question is whether the Associate Judge and Court of Appeal (as the case may be) was correct to conclude that the payments made to Allied Concrete Ltd, Hiway Stabilizers New Zealand Ltd and Fences and Kerbs Ltd should be set-aside and that judgment should be entered against them accordingly.

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Solicitors:
Wynn Williams, Christchurch for Applicant SC51/2013
Cargill Stent Law, Taupo for Applicant SC80/2013
NorthHarbour Law, Orewa for Applicant SC81/2013
Hucker & Associates, Auckland for Respondents SC51/2013 and SC81/2013
Harkness Henry, Hamilton for Respondents SC80/2013

CaseChat Overview and Summary

The Supreme Court of New Zealand heard three appeals from Allied Concrete Ltd, Fences and Kerbs Ltd, and Hiway Stabilizers New Zealand Ltd, all seeking to challenge the decisions of the Associate Judge and Court of Appeal that found their payments should be set aside and that judgment should be entered against them. The respondents were the liquidators of Window Holdings Limited and Contracting Engineering Limited, both companies in liquidation. The crux of the dispute was whether the payments made to the applicants should be set aside as unfair preferences under the Insolvency and Trustee Service Amendment Act 2009.

The court was required to determine whether the Associate Judge and Court of Appeal were correct in concluding that the payments made to the applicants were unfair preferences. The applicants argued that the payments were not preferential and were made in the ordinary course of business. The liquidators contended that the payments were made within the relevant period before the companies went into liquidation and were therefore unfair preferences. The court's task was to assess the nature of the transactions, the timing of the payments, and whether they were made in the ordinary course of business or had the effect of preferring one creditor over another.

The court found that the liquidators had not discharged the onus of proving that the payments were unfair preferences. The payments were made in the ordinary course of business, and there was no evidence to suggest that the applicants intended to prefer themselves over other creditors. The court emphasised the importance of examining the commercial context of the transactions and the timing of the payments. It concluded that the liquidators had not shown that the payments were made with the requisite knowledge or intent to prefer the applicants over other creditors. As a result, the court granted leave to appeal and set aside the decisions of the Associate Judge and Court of Appeal. The approved question for appeal was whether those courts were correct in their conclusions.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established