Para No
Introduction [1]
The relevant history [4]
Trust distributions [16]
Was the business undertaking of OPC settled on the OPC Trust?
The Judge’s finding [19]
The arguments in relation to the settlement [21]
Evaluation: did OPC declare itself trustee of its business
undertaking for the benefit of OPC Trust? [28]
Evaluation: was the ACC agreement able to be settled? [32]
Conclusions [39]
The s 298(2) claim
The statutory provision [47]
Heath J’s decision on this cause of action [50]
The argument for the liquidators [51]
Evaluation: does s 298(2) catch these dispositions? [53]
The claim based on breach of directors’ duties
The basis of the claim [55]
Heath J’s decision on these causes of action [57]
The arguments for the liquidators [59]
Evaluation: were the directors in breach of their
statutory or fiduciary duties? [62]
The cross appeal as to the directors’ liability to pay $8,000.80
Heath J’s finding [70]
Evaluation [73]
The ACC debt: issue estoppel [74]
The statutory demand proceeding [75]

The Judge’s finding [79]
The respective arguments [85]
Evaluation [89]
The costs decision [96]
Result [99]

Introduction

[1] The first named appellants are the liquidators of OPC Managed Rehab Limited (OPC). Throughout the period relevant to this case OPC operated as the corporate trustee of the OPC Managed Rehab Trust (the OPC Trust). The business of OPC comprised the provision of case management services to the Accident Compensation Corporation (ACC). Following the liquidation of OPC proofs of debt were filed by ACC based on alleged overpayments made in relation to the provision of case management services.
[2] Subsequently the liquidators filed this proceeding in the High Court. They challenged the actions of Messrs Ikiua and Apa, the first and second respondents, as directors of OPC in distributing all profits derived by the Company to the OPC Trust. Recovery of the amount paid was sought from both the directors and the trustees of three trusts which were the ultimate recipients of the funds. In large measure the claim by the liquidators failed. Heath J gave judgment in favour of the liquidators in the sum of $8,000.80 against both the directors and the trustees.^[1]
[3] The liquidators appeal against various aspects of the High Court judgment, while the respondents cross-appeal in relation to two aspects. In broad terms six matters require determination. These are:

(a) Whether the directors of OPC validly settled the business undertaking of the company upon the OPC Trust.

(b) Whether Heath J erred in concluding that s 298(2) of the Companies Act 1993^[2] did not apply to the subsequent dispositions of profits made by OPC to the OPC Trust.

(c) Whether the Judge erred in finding that Messrs Ikiua and Apa were not in breach of their statutory or fiduciary duties as directors of OPC in making distributions to the OPC Trust.

(d) Whether the Judge was correct in finding that Messrs Ikiua and Apa, as directors of OPC, paid $8000.80 to the OPC Trust in breach of the duty owed to external creditors of OPC.

(e) Whether the Judge was correct in concluding that issue estoppel arose in relation to a sum of $386,909.91 payable by OPC to ACC on account of overpayments for services by virtue of a finding made in an earlier statutory demand proceeding.

(f) Whether the Judge erred in awarding costs and disbursements in favour of the liquidators in the sum of $76,029.30.

The relevant history

[4] In early 1999 Mr Ikiua and Mr Apa formed Oceania Pacific Corporation Limited. They were the directors of OPC and held the shares equally. The company entered into a contract with ACC to provide rehabilitation case management services in relation to members of Pacific Island community living in the areas serviced by the Papakura, Manukau, Henderson, Auckland and Takapuna offices of ACC. The agreement was for a one year term expiring on 1 May 2000.
[5] In April 2000 OPC was incorporated. Mr Ikiua and Mr Apa were appointed its directors. Oceania Pacific Corporation Limited was its sole shareholder.
[6] On 15 May 2000 OPC entered into a new service contract with ACC, again for a one year period, ending on 23 June 2001.
[7] In late 2000 Mr Ikiua and Mr Apa obtained legal and accountancy advice concerning the establishment of a trading trust. Their aim was for OPC to continue in business but as a corporate trustee. The OPC Managed Rehab Trust was to be settled and to become the recipient of the trading profits.
[8] The OPC Trust was established by a trust deed dated 1 December 2000 (although signed somewhat later that month). The settlor was Mr Kennerley, OPC’s accountant. OPC was a party to the deed in that it consented to and was appointed trustee of the OPC Trust. The beneficiaries were two related family trusts and a charitable trust.
[9] These were:

Name Settled Trustees

Keneti and Tessa Apa 10 June 1999 Keneti Apa
Family Trust Tessa Apa

Ikiua Family Trust 8 December 2000 Patrick Ikiua

Keneti Apa

Mark Crosbie

The Pacifica Life Trust 4 January 2001 Keneti Apa
Patrick Ikiua

Andrew Smith

We shall refer to the three trusts as “the residuary trusts”, as did Heath J. As can be seen the five trustees of the residuary trusts are the respondents in this proceeding, although Mr Ikiua and Mr Apa are also parties in their capacity as directors of OPC. The Pacifica Life Trust organised events for members of the Pacific Island community which were funded from OPC distributions.

[10] Following the settlement of the OPC Trust changes to the business operation occurred. OPC filed a business cessation notice with the Inland Revenue Department (IRD), and subsequently filed nil taxation returns. The OPC Trust obtained an IRD number; and GST and employer registration. OPC continued to operate as previously, but in the capacity of a corporate trustee. Periodic and annual financial statements of the OPC Trust showed the business undertaking as an asset of the OPC Trust. The trading income was likewise shown as income of the OPC Trust. The minutes described the trading activity as undertaken by OPC as a corporate trustee on behalf of the OPC Trust.
[11] On 24 June 2001 the contract with ACC was renewed for a further one year term. In the event the agreement ran on until 22 August 2002. That day it was terminated by written notice earlier given by ACC.
[12] Following the termination ACC conducted an audit of the payment claims lodged by OPC during the course of the relationship. ACC formed the view that $695,190, exclusive of GST, had been overpaid to OPC. On 13 August 2003 ACC issued a statutory demand in relation to the alleged overpayment.
[13] On 28 August 2003 OPC applied to set aside the statutory demand. Over a two year period the validity of the statutory demand was contested in the High Court^[3] and in this Court, culminating in an appeal decision dated 4 October 2005.^[4] The statutory demand was upheld, but in the sum of $377,520 as opposed to the full amount.
[14] Following the earlier decision of Associate Judge Gendall in which he upheld the statutory demand in part, ACC commenced liquidation proceedings against OPC on 5 August 2004. The finalisation of that proceeding was delayed on account of the appeal in relation to the statutory demand dispute. But, on 26 January 2006, OPC was placed in liquidation. Messrs Levin and Jordan were appointed liquidators.
[15] ACC lodged two proofs of claim in the liquidation. They totalled $715,684.75. A claim based on this Court’s judgment in relation to the statutory demand was admitted in the sum of $386,909.91 inclusive of costs awarded in favour of ACC.

Trust distributions

[16] In the High Court Mr Levin gave evidence that in the period from 13 July 2000 to 28 August 2002 ACC paid OPC over $3.4m for case management services. From 20 December 2000 to 30 January 2003 Mr Levin calculated that OPC made the following distributions to the residuary trusts:

(a) the Apa Trust - $717,846.44

(b) the Ikiua Family Trust - $742,507.06

The amounts received by the residuary trusts were expended on general living costs in the case of the two family trusts, and to meet expenses incurred in relation to weekly events organised by the Pacifica Trust.

[17] OPC and the OPC Trust operated what was termed in the High Court an “empty shell” policy. On a monthly basis Mr Ikiua and Mr Apa met, reviewed the financial report for the previous month and approved distributions to be made to the residuary trusts. We note that the minutes of these meetings were headed “OPC Managed Rehab Trading Trust”, but the meeting was described as one of the “directors of the Corporate Trustee” and the minutes were signed by Messrs Ikiua and Apa in the role of “Trustee Director”.
[18] In the result OPC held no surplus funds from month to month. Likewise, the financial statements for the OPC Trust confirmed that it too operated an “empty-shell” policy.

Was the business undertaking of OPC settled on the OPC Trust?

The Judge’s finding

[19] Heath J found:

[79] I reject Mr Dickey’s submission that the undertaking of OPC was not validly settled on the OPC Trust. In doing so, I act on the principle that all that is required is an expression of an intention to transfer property to a person for a specific purpose. The words and acts of the two directors amount to conduct from which a corporate intent can be inferred. Therefore, even though the property was not transferred to OPC (as trustee) by the settlor, it was open to OPC (in its own right) to direct transfer of the property to itself, for the purpose of holding it on trust for the beneficiaries of the OPC Trust.

[80] I am satisfied, from the evidence of Messrs Ikiua and Apa, the contemporaneous documentation and their conduct after the OPC Trust was formed in late 2000, that there was a clear intention that the undertaking of OPC be held on trust for the beneficiaries. The fact that beneficial ownership in the undertaking was transferred is supported also by contemporaneous financial statements which, from January 2001, show the business as being operated by OPC, as corporate trustee for the OPC Trust. ...

[20] The trust deed between Mr Kennerley as settlor and OPC as trustee included a recital:

B The Settlor has paid the sum of $100 into the name of the Trustee to be held by the Trustee upon trust and it is contemplated that further money investments and property may from time to time be paid to or transferred into or vested in the name or control of the Trustee.

Hence, when the Judge referred to the undertaking of OPC not having been transferred “to OPC (as trustee) by the settlor”, he had this recital in mind. Nonetheless he found that the directors by their conduct evinced an intention that the undertaking of OPC be held on trust for the beneficiaries of the OPC Trust from early 2001.

The arguments in relation to the settlement

[21] Mr Cooke QC accepted that a trust over personal property may be established by an oral declaration of trust, or may even be inferred from conduct. However, he did not accept that this occurred here.
[22] Various arguments were advanced:

(a) The business undertaking of OPC was not settled on the OPC Trust under the 5 December 2000 trust deed, although its terms contemplated the acquisition of further trust assets.

(b) The legal advice received by the directors prior to the signing of the trust deed pointed to a conventional settlement of the business undertaking upon the OPC Trust through the conclusion of an agreement for sale and purchase.

(c) Yet, a sale and purchase agreement was not concluded, and there was no adequate evidence explaining the directors’ abandonment of this approach.

(d) The evidence of Messrs Ikiua and Apa concerning their effecting a settlement of the business undertaking by a declaration of trust was unconvincing and insufficient to support that contention.

(e) There were no directors’ or shareholders’ resolutions authorising the settlement of OPC’s business undertaking on the OPC Trust, when these were required as any settlement was a major transaction in terms of s 129 and a transaction with an entity in which the directors had an interest in terms of s 139 of the Act.

(f) The ACC agreement included a non-assignment clause and ACC did not consent to OPC assigning its rights and obligations under the agreement to another party.

(g) Nor were the fruits of the agreement (future profits) assignable, unless for valuable consideration and consideration was not provided by the OPC Trust.

[23] On the basis of these arguments Mr Cooke submitted that there was no basis for the Judge’s finding that beneficial ownership of the business undertaking was settled upon the OPC Trust. While the directors of OPC had acted as if a settlement of the business assets upon the Trust had occurred, their assumption was misplaced. At most the profits of OPC were transferred to the OPC Trust periodically, as and when the directors made monthly distributions to the beneficiaries of the Trust.
[24] Mr Walker naturally supported the Judge’s finding that the business undertaking was held on trust for the beneficiaries of the OPC Trust after the signing of the trust deed in late December 2000. Counsel contended that there was evidence of a declaration of trust made by the OPC directors, and equally evidence of conduct which demonstrated an intention to operate a trading trust and in that context to hold the business assets on trust.
[25] The classic statement of Turner J in Milroy v Lord, was cited:^[5]

I take the law of this Court to be well settled, that, in order to render a voluntary settlement valid and effectual, the settler must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him. He may of course do this by actually transferring the property to the persons for whom he intends to provide, and the provision will then be effectual, and it will be equally effectual if he transfers the property to a trustee for the purposes of the settlement, or declares that he himself holds it in trust for those purposes; and if the property be personal, the trust may, as I apprehend, be declared either in writing or by parol; but, in order to render the settlement binding, one or other of these modes must, as I understand the law of this Court, be resorted to, for there is no equity in this Court to perfect an imperfect gift. The cases I think go further to this extent, that if the settlement is intended to be effectuated by one of the modes to which I have referred, the Court will not give effect to it by applying another of those modes. If it is intended to take effect by transfer, the Court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust. These are the principles by which, as I conceive, this case must be tried. (Emphasis added.)

[26] Mr Walker also relied upon Dhingra v Dhingra, in which Lindsay J said at:^[6]

[77] .... Mr Dhingra, the appellant, has mentioned Snells Equity 29^th ed. which, of course, is a very standard work. There are five brief propositions that one ought to have in mind as stemming from that work. First of all, as far as concerns personalty, which is what we are here concerned with, a declaration of trust may be by word of mouth or even inferred from conduct, (Snells Equity page 123); secondly, no particular form of words is necessary, (Snells Equity page 124); thirdly, where the property in relation to which the trust is declared is already in the name of the declarer of the trust, the trust is, as it is put, “Completely constituted the moment that the trust is declared”, (Snells Equity page 121); fourthly, once the trust is completely constituted it can be enforced by a beneficiary even if he or she is a mere volunteer (Snells Equity page 120). The notion that equity will not assist a volunteer therefore has no application in this case because this is a case where a trust was declared and therefore was completely constituted from its first moment of existence; fifthly and lastly, in general a completely constituted trust cannot be revoked by the settlor unless the settlor has reserved a power of revocation in the settlement itself, (Snells Equity page 127). Those are elementary propositions which need to be borne in mind as the story unfolds. (Emphasis added.)

[27] We were also referred to the Privy Council decision in T Choithram International SA & Ors v Pagarani & Ors.^[7] The case has some parallels with the present one. Mr Pagarani was a wealthy businessman. He wished to leave extensive business assets to a philanthropic foundation established by trust deed. Mr Pagarani was both the settler, and one of several trustees, of the foundation. At the time the trust deed was signed Mr Pagarani told those present that he gave his wealth and shares to the trust. The gifted assets, however, had not been legally transferred to the foundation at the time of Mr Pagarani’s death. The Privy Council in a judgment delivered by Lord Browne-Wilkinson reversed the decisions below holding that the gift to the foundation was imperfect, since it was held that Mr Pagarani’s words could only be taken to mean “I give to the trustees of the foundation trust deed [the assets] to be held by them on the trusts of the foundation trust deed”.^[8] Hence, the settlor’s spoken words gave rise to a declaration of trust by which a gift on trust to the foundation was effected. His Lordship added that it would have been unconscionable and contrary to the principles of equity for Mr Pagarani to have sought to resile from his gift to the foundation.

Evaluation: did OPC declare itself trustee of its business undertaking for the benefit of OPC Trust?

[28] Despite Mr Walker’s argument to the contrary we do not accept that there was an effective spoken declaration of trust in this case. Both Mr Ikiua and Mr Apa said in evidence-in-chief that following completion of the trust deed in December 2000 “OPC declared itself trustee of the assets it then held for the benefit of the beneficiaries of that Trust”, or words to that effect. There was no more elaboration than this. The common assertion was contained in prepared briefs of evidence. Cross-examination of the two men revealed that the assertion of a spoken declaration lacked substance, and certainly there were no minutes or resolutions of OPC, or its shareholder, confirmatory of the making of a declaration of trust.
[29] Of course the legal owner of assets may retain legal ownership of them and at the same time declare a trust in favour of another. But when OPC instigated the settlement of the OPC Trust by its accountant Mr Kennerley, that was plainly not the intention of the directors. Legal and accounting advice was obtained. Mr Ikiua and Mr Apa received advice from their solicitor by letter dated 20 December 2000 that they would need to conclude an agreement for sale and purchase by which the trustees would acquire the existing assets of OPC. They were told there would be taxation and accountancy issues arising in relation to the transaction. In cross-examination no explanation was provided concerning the change from a conventional sale of the assets to the OPC Trust in favour of a declaration of trust methodology. Mr Kennerley, who according to the directors provided the final advice in relation to establishment of the trading trust, did not give evidence.
[30] It follows that there is substance in Mr Cooke’s argument that the evidence concerning the evolution of the trust deed is at odds with the directors’ subsequent course of conduct. No sale and purchase agreement was concluded. Nor were steps taken in an endeavour to comply with the formal requirements of the Act. Yet, Heath J made a strong finding that the “words and acts of the two directors” amounted to conduct from which a corporate intent could be inferred.^[9] His finding, we think, was founded on conduct as opposed to a joint declaration of trust.
[31] Before we continue with an evaluation of the settlement question it is first necessary to consider whether, given the nature of the assets in question, there was any impediment to their settlement upon the OPC Trust. Of particular importance in this regard is the agreement with ACC. This was undoubtedly the key business asset.

Evaluation: was the ACC agreement able to be settled?

[32] The nature of the assets which comprised the business undertaking of OPC was an aspect not explored in evidence in the High Court, nor for that matter in the judgment. The financial statements of OPC show that the assets included a lease of premises, a modest amount of office equipment, one or more vehicle leases and, the key asset, the ACC agreement. There were approximately nine OPC employees responsible for the management of case files relating to ACC claimants. Mr Ikiua managed the operation, while Mr Apa had a less hands-on role.
[33] There is no evidence as to any arrangements made in relation to the business assets following establishment of the trading trust. Mr Cooke pointed out that the office equipment was treated as an asset of the OPC Trust and depreciation was claimed in the financial statements, albeit a purchase price was neither fixed nor paid for these items.
[34] ACC was not advised of the move to a trading trust method of operation. The 2000 and 2001 versions of the case management services agreement contained a standard condition in schedule 5, cl 2.1:

2. PARTIES REMAIN RESPONSIBLE

2.1 Assignment / Subcontracting

Neither party shall assign, transfer, novate, subcontract, or otherwise dispose of any benefits, rights, liabilities or obligations under this Agreement or any part of this Agreement without the prior written consent of the other party.

Clause 2.2 provided that an assignment of a party’s obligations under the agreement without consent was not effective to relieve that party from their contractual obligations.

[35] It was common ground that a breach of the non-assignment clause would give rise to a breach of contract and, in addition, the purported assignment would be ineffective. Such clauses are generally specifically enforced as between the immediate parties, unless there are strong reasons against adoption of that course. For example, a non-assignment clause in a lease may not be specifically enforced because an interest in the land, as well as contractual rights, are involved. Otherwise, courts ordinarily treat purported assignments for which there is no consent as invalid and of no effect: Linden Gardens Trust Limited v Lenesta Sludge Disposals Limited^[10] and New Zealand Payroll Software Systems Limited v Advanced Management Systems Limited.^[11]
[36] Mr Walker, however, relied upon In Re Turcan^[12] and Don King Productions Inc v Warren^[13] as authority for the proposition that a settlement on trust is not an assignment. Here, OPC had not purported to assign its rights under the ACC agreement to the OPC Trust. Rather, by conduct OPC evinced an intention to hold its business undertaking (including the ACC agreement) on trust for the OPC Trust. This, counsel submitted, was not in breach of the non-assignment clause.
[37] Mr Cooke responded by reference to authorities which confirm that an equitable assignment of an expectancy (future property) requires consideration passing from the assignee to the assignor: Williams v Commissioner of Inland Revenue^[14] and Hadlee v Commissioner of Inland Revenue.^[15] In Hadlee, for example, the Court accepted that a deed of assignment by which part of a taxpayer’s ongoing professional income was assigned to a family trust for value was valid in equity. As and when the assigned portion of the income came into existence the family trust automatically acquired a beneficial interest in the money (although this did not avail the taxpayer in avoiding liability for income tax).
[38] Mr Walker contended that likewise these authorities were not relevant to OPC’s situation. OPC had not purported to assign its rights under the ACC agreement, nor the future profits of the agreement to the OPC Trust. Instead, the argument continued, OPC by its conduct clearly evinced an intention to hold the agreement on trust for the OPC Trust. And, it was the existence of a trust in relation to the business assets, including the agreement, which explained why OPC paid the revenue profits to the beneficiaries of the OPC Trust.

Conclusions

[39] The first question is what method of approach did OPC adopt when it set out to establish a trading trust? It is clear that the legal advice received by the directors in December 2000 contemplated an actual transfer of the business undertaking to OPC as trustee for the OPC Trust. Under the trust deed OPC was appointed trustee. For OPC to acquire the business undertaking in its capacity as trustee, a transfer of the assets from OPC in its own right to OPC as trustee, was required. But the advice to this effect was not followed.
[40] A situation arose where the words of Turner LJ in Milroy v Lord could well apply:^[16]

If [a settlement] is intended to take effect by transfer, the Court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be effectual by being converted into a perfect trust.

Most of the cases concern trusts which were to be effected by a transfer of the trust property to a trustee, where however the settlor failed to do everything necessary to effect the transfer and render the settlement binding upon him. The facts of Milroy v Lord provide an example of this.

[41] However, in this case, aside from the legal advice, there is no evidence of any steps taken to transfer the business undertaking to OPC as trustee. On the other hand, there is compelling evidence that from January 2001 OPC conducted its business operation as a corporate trustee for the OPC Trust. Do these circumstances indicate that, despite the legal advice received by the directors, they abandoned any intention to proceed by way of a transfer of the business undertaking to the OPC Trust in favour of a declaration of trust?
[42] In Pennington v Waine^[17] Arden LJ referred to a helpful passage from Maitland, Lectures on Equity (1909) at 73-74 concerning the distinction between an enforceable gift and a declaration of trust:

The two intentions are very different – the giver means to get rid of his rights, the man who is intending to make himself a trustee intends to retain his rights but to come under an onerous obligation. The latter intention is far rarer than the former. Men often mean to give things to their kinsfolk, they don’t often mean to constitute themselves trustees. An imperfect gift is no declaration of trust.

[43] Despite the fact that Messrs Ikiua and Apa arranged the settlement of the OPC Trust, and obtained legal advice concerning a transfer of the business undertaking, we are satisfied that their subsequent conduct can only be viewed as giving rise to a declaration of trust. The changes to the business operation of OPC to which we have already referred (at [10]) provide convincing evidence of an intention to operate OPC as a corporate trustee conducting its business for the benefit of the OPC Trust. Indeed, in our view this is the only sensible construction which can be placed upon the corporate conduct of OPC from January 2001 and thereafter. Interactions with the IRD, the financial statements for OPC and the OPC Trust and the directors’ minutes all point to the existence of a trading trust.
[44] It may be that the trust obligation assumed by OPC was not pursuant to the terms of the express trust, but via a constructive trust as an adjunct to the express trust. As to this see the discussion of Arden LJ in Pennington v Waine concerning h^[18]er interpretation of the Privy Council judgment in Pagarani.^[19]
[45] For completeness we also record our acceptance of Mr Walker’s argument in relation to whether the ACC agreement was held by OPC on trust for the OPC Trust. Halsbury’s Laws of England neatly summarises the position:

Modes of assignment of choses in action in equity. Apart from assignments in the narrower sense of express transfers, with which this title is primarily concerned, it should be observed that another person may become entitled in equity to a chose or thing in action by other means than express transfer. First, the owner of the chose in action may declare that he holds it in trust for another. Secondly, the owner may enter into a contract for valuable consideration to assign to another. Thirdly, a beneficiary under a trust may direct the trustees henceforward to hold the trust property on trust for another instead of for him.

[46] Given our agreement with Heath J’s finding that there was a declaration of trust by conduct, we do not find it necessary to consider all of the arguments advanced by Mr Cooke. However, we do not regard the absence of resolutions by which OPC, and its shareholder, approved the settlement of the business undertaking upon the OPC Trust as fatal. Messrs Ikiua and Apa clearly were the directors of both Oceania Pacific Corporation Limited and OPC. Their assent to the settlement is self-evident and bound both companies regardless of the absence of formal resolutions: Re Duomatic Limited,^[20] as applied in Nicholson v Permakraft (NZ) Limited.^[21]

The s 298(2) claim

The statutory provision

[47] The section relevantly provides:

Transactions for inadequate or excessive consideration with directors and certain other persons

(2) Where, within the specified period, a company has disposed of a business or property, or provided services, or issued shares, to –

(a) a person who was, at the time of the disposition, provision, or issue, a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or

(b) a person, or a relative or a person, who, at the time of the disposition, provision, or issue, had control of the company; or

(d) ...

the liquidator may recover from the person, relative, company, or related company, as the case may be, any amount by which the value of the business, property, or services, or the value of the shares, at the time of the disposition, provision, or issue exceeded the value of any consideration received by the company.

Section 298(3) provides that the value of a business or property includes the value of any goodwill which attaches. Subsection (4) defines the “specified period”. In this case the relevant period is three years from the filing of the liquidation proceedings in the High Court. Since ACC filed its proceeding on 5 August 2004 the specified period relates back to 5 August 2001.

[48] It is common ground that the distributions made to the residuary trusts were payments to “insiders” as defined in s 298(2). Messrs Ikiua and Apa were directors of OPC and the persons who had control it. The other respondents were trustees for a director of OPC and/or trustees for a relative of a director of OPC.
[49] The claim was against the trustees of the three residuary trusts for the total amount each trust had received during the specified period. The full amount claimed was $927,538.

Heath J’s decision on this cause of action

[50] The Judge’s finding that the undertaking of OPC was validly settled on the OPC Trust was pivotal to the view which he formed concerning the s 298 claim. He held:

[85] In my view, it is self-evident that property held on trust by a company does not form part of its assets. The point is best illustrated by reference to a company to which the Trustee Companies Act 1967 applies. Such a company is entitled to administer deceased estates. But, if a trustee company goes into liquidation, the assets it controls on behalf of the beneficiaries of the deceased’s estate cannot be used as part of the assets available for distribution among creditors by a liquidator.

[86] That being so, there is a fatal flaw in the liquidators’ claim under s 298. There is no “property” of the company on which s 298(2) can bite. On that narrow ground, the s 298(2) application fails.

The argument for the liquidators

[51] If the Judge’s finding that the OPC Trust was the beneficial owner of the business undertaking was sustained, Mr Cooke nonetheless submitted that OPC as a trustee, retained a beneficial interest in the trust property (relevantly the trading profits) with reference to its right of indemnity in relation to liabilities incurred in the performance of its corporate trustee role.^[22]On this basis counsel argued that the Judge was wrong to reject the application of s 298(2) on the narrow ground that there was no disposition of “property” of the company to which the section could apply.
[52] Building on the indemnity point, counsel argued that within the specified period property of OPC was disposed of to “insiders” without any consideration received by OPC in recognition of the value of the dispositions. Adopting a literal approach to the elements identified in s 298(2) Mr Cooke submitted that interpreted in light of its purpose the section caught the present transactions. The purpose was characterised as prevention of creditors’ claims being compromised by transactions occurring in the specified period where the dealing was not at market value. In this case, the argument continued, no consideration was received in exchange for the distributions and accordingly the liquidators were entitled to recover the total amount paid to the beneficiaries over the relevant period.

Evaluation: does s 298(2) catch these dispositions?

[53] We of course accept the principle that OPC had a proprietary interest in the profits which were distributed, at least to the extent of its right to be indemnified in relation to expenses it had properly incurred as trustee. Whether, in fact, OPC was out of pocket when the monthly distributions were made does not emerge from the evidence. If that was the case, at least some part of the money paid to the beneficiaries was property of OPC upon which s 298(2) could potentially bite. But, it was for the liquidators to establish the extent of any right of indemnity enjoyed by OPC. They have not done so.
[54] Otherwise, we are in agreement with Heath J’s analysis. The purpose of the section is to enable liquidators to claw back inadequate or excessive consideration arising in the context of a transaction with an insider. As Heath J pointed out at [82] the settlement of OPC’s business undertaking on trust for the beneficiaries without consideration, may have been open to challenge under the subsection. But the distribution of trading profits to its beneficial owners is another matter. In our view the subsection can only sensibly apply to transactions where the directors are duty bound in the Company’s interests to obtain fair value in return for the disposition. That was not so here where the directors of a corporate trustee paid trading profits to beneficiaries.

The claim based on breach of directors’ duties

The basis of the claim

[55] This aspect was framed under two causes of action. The first was pursuant to s 301 of the Act whereby liquidators may claim against directors (and others) in relation to any negligence, default or breach of duty or trust in relation to the company. Here it was alleged that the directors failed to act in good faith and in the best interests of OPC contrary to s 131, caused the business of OPC to be conducted in a manner likely to create a serious risk of loss to creditors (s 135), failed to exercise the care, diligence and skill of a reasonable director (s 137) and failed to exercise their powers other than for a proper purpose (s 133).
[56] The companion cause of action was based upon a breach of the fiduciary duties owed by the directors to OPC. The same defaults as for the previous cause of action were relied upon; and the claim against Messrs Ikiua and Apa was for a similar amount, namely $1.45m.

Heath J’s decision on these causes of action

[57] The Judge considered that the allegations made in support of both claims were premised on the so-called “empty shell” policy. At an early point in his judgment he made three findings of fact:

[46] Mr Ikiua and Mr Apa were naϊve businessmen who decided to alter the basis on which OPC traded, on advice from their accountant. They followed the advice of the accountant and adopted most of the suggestions of the solicitor to whom they referred the draft Trust Deed. They exercised care in embarking on the establishment of the OPC Trust, believing it was a genuine (and better) method of carrying on business. They had no intention to defeat OPC’s creditors. They were careful to ensure that all known creditors were paid in full before they authorised distributions to the recipient trusts.

[47] As a result of the arrangements that were put in place after the 2001 allegations of overpayments (see para [53] below) neither Mr Ikiua nor Mr Apa knew (or ought to have known) that a debt to ACC was accumulating. As a result, after ensuring current creditors were paid, they were entitled to distribute wealth to beneficiaries of the OPC Trust.

[48] Mr Ikiua and Mr Apa first became aware of the alleged overpayment that led to liquidation on 2 October 2002, when Mr Ikiua was interviewed by Mr Williscroft.

These findings, at a later point in the judgment, supplied the basis for findings that Messrs Ikiua and Apa acted in good faith, with due care and had proper regard to the interests of creditors throughout the relevant period.

[58] However, the third finding of fact afforded the basis for the award of $8,000.80. Mr Ikiua was interviewed on 2 October 2002 in relation to the alleged overpayments received by OPC from ACC. Distributions subsequent to that date were held to give rise to a breach of the directors’ duties to OPC, or equally to a breach of fiduciary duty, of the kind identified in Nicholson v Permakraft (NZ) Limited.^[23]

The arguments for the liquidators

[59] Mr Cooke submitted that the key factual findings made by the Judge missed the point. The fact that the directors were careful to ensure that operating liabilities were met before making the distributions to beneficiaries was no answer to the allegations. The fact remained that the directors gave away “significant funds that OPC would otherwise have [had]”. Hence, it was said they had not acted in the best interests of OPC.
[60] In addition the distribution policy adopted by the directors was treated as if it was a dividend policy. This case involved dispositions to external parties, associated with the directors, as opposed to payments to shareholders. In the result Messrs Ikiua and Apa preferred their personal interests, and those of the beneficiaries, at the expense of the interests of OPC.
[61] Reliance was also placed upon expert evidence given by Mr Grant Graham, an experienced chartered accountant. He considered that the empty shell policy operated by OPC was not prudent. The method of operation gave rise to a substantial risk of serious loss to creditors. OPC’s only source of income was from the ACC agreement. Non-renewal, or termination, of the agreement would put paid to OPC’s sole source of revenue. This circumstance, coupled with the empty shell policy, left OPC at risk of being unable to pay its trade creditors in the event of an unexpected business reversal. A significant business operation was conducted without any provision made to meet contingencies.

Evaluation: were the directors in breach of their statutory or fiduciary duties?

[62] There are two factual aspects which are of relevance. The first concerns the invoicing system adopted by OPC. Invoices were sent to ACC on a monthly basis. During the term of the agreement concluded in June 2000, and probably at about the time the OPC Trust was settled, ACC disputed the amount claimed in one or more monthly invoices. In the result an additional step was included in the billing process.
[63] Mr Joseph Sio was employed by OPC in a management role. He met with ACC officials and thereafter a draft invoicing report, or schedule, was sent to ACC each month. It listed new files which had been opened by OPC following a referral in the course of the month, current files for which a monthly charge was to be made and files which had been closed within the month. The schedule also identified the intended charge for that month. An ACC official checked the schedule and liaised with Mr Sio concerning any issues. Once these were resolved, a payment invoice was rendered.
[64] In light of this change to the billing system it was OPC’s case at trial that it had no reason to anticipate the claim for over-charging which was made in October 2002.
[65] The second aspect concerns OPC’s financial situation post liquidation. ACC is the only creditor. Despite the empty shell policy adopted by the directors, they were apparently in a position to meet all trade creditors and to rearrange, or compromise, OPC’s term commitments; in anticipation or following termination of the agreement with ACC in August 2002.
[66] Heath J’s analysis in relation to these two causes of action was commendably brief. He observed that although OPC was a corporate trustee, its directors continued to owe obligations as directors of OPC. He accepted that if a director knowingly made distributions to beneficiaries in priority to a creditor of OPC, the director may breach the duty recognised by this Court in Nicholson v Permakraft. Although that case involved a distribution by way of capital dividend to shareholders of the company, the Judge considered that the underlying principle applied equally in the present situation.
[67] In light of the operating policy adopted by Messrs Ikiua and Apa in making provision for payment of creditors’ salaries and GST each month, before distributions were made to the beneficiaries, Heath J considered that neither cause of action could withstand analysis.
[68] We are not persuaded that this conclusion was wrong. Clearly whether directors have breached duties owed to a company, whether statutory duties or equitable ones, must be assessed on a case specific basis. OPC invoiced ACC for a total of $1.63m under the agreement concluded in June 2000, and a further $1.81m under the 2001 agreement; a total of $3.4m. In the period from December 2000 to October 2002 OPC distributed over $1.6m to the beneficiaries of the OPC Trust. We accept this was a significant business operation. It was also a highly profitable one. OPC had no term liabilities, and only modest current liabilities. In essence it was a cash business.
[69] The various allegations that the directors were in breach of their duties to OPC must be evaluated with these features in mind. And, a further significant feature of the case is that the overpayment claim by ACC was made in October 2002, at a time when the business operation was at an end or nearly so. In substance Heath J’s findings concerning the method of operation adopted by the directors confirms that they took reasonable steps to protect the interests of creditors (save for some distributions made in early 2003). Their present predicament reflects the emergence of a disputed liability which they could not have reasonably anticipated. For these reasons we find no basis upon which to differ from the Judge’s evaluation.

The cross appeal as to the directors’ liability to pay $8,000.80

Heath J’s finding

[70] Having in substantial part rejected the claims against the directors, Heath J continued:

[146] However, once Mr Ikiua and Mr Apa became aware of the overcharging claim, both were in breach of their duties to the company in making distributions of $4000.40 to the Ikiua Family Trust and $4000.40 to Big Planet Corporation Ltd, on 31 January 2003. Such breaches could be put on the basis of breach of fiduciary duty or the principle established in Nicholson v Permakraft (NZ) Ltd. Although, Big Plant Corporation is not a party to this proceeding, Mr Ikiua and Mr Apa are both responsible for that payment. Therefore, $8000.80 was paid after 2 October 2002, at which time both Mr Ikiua and Mr Apa knew that OPC could not pay the ACC debt, if established. I see no reason why the liquidators should not recover that sum under s 301.

[71] The payment to Big Planet Corporation Limited was in relation to accountancy services provided to OPC. Apparently, Mr Apa had a connection to Big Planet Corporation Limited. His evidence included reference to invoicing work undertaken by him through this company. The significance of 2 October 2002 is that Mr Ikiua was interviewed by ACC officers on that day. He was confronted with comprehensive details of the alleged overpayment. This prompted Heath J’s finding that the directors were on notice as to the alleged overpayment from this point.
[72] Mr Walker challenged the Judge’s finding on a narrow ground. Counsel cited two passages from the judgment of Cooke J in Nicholson v Permakraft:

I would respectfully adopt the approach of Cumming Bruce and Templeman LJJ in Re Horsley & Weight Ltd [1982] CH 442, 454-456. Both Lord Justices favoured an objective test: whether at the time of the payment in question the directors “should have appreciated” or “ought to have known” that it was likely to cause loss to creditors or threatened the continued existence of the company. (250)

It is important to remember that directors have a legitimate sphere of discretion. Given good faith and a decision which could reasonably be regarded as in the interests of the company as a whole and not likely to cause loss to the creditors, the matter was one for the directors, not the Court. (253)

Mr Walker submitted that when the payments were made in January 2003 there was no actual debt. At most, the directors had knowledge of an alleged debt. Hence, the argument continued, a reasonable basis existed for them to conclude that the $8,000.80 payment would not cause loss to a creditor of OPC.

Evaluation

[73] We do not accept this argument. We prefer Heath J’s evaluation. By January 2003 Mr Ikiua had been interviewed twice by ACC. In addition, a formal demand for payment of $695,190 was made by ACC in a letter dated 8 November 2002. Schedules annexed to the letter particularised the overpayment claim in significant detail. Moreover, on 29 January 2003 Mr Ikiua wrote to ACC in terms which indicated the directors accepted that a “settlement sum” was likely to be payable. The letter, which was written with Mr Apa’s concurrence, disputed the total sum claimed and made various points in defence of OPC’s position. But, read as a whole the letter conveys that a significant sum was likely to be payable in settlement of the ACC claim. These circumstances support the conclusion that the January 2003 payments were made with knowledge they were likely to cause loss to ACC and at a time when making them was imprudent.

The ACC debt: issue estoppel

[74] An issue estoppel was asserted with reference to the finding of this Court in the statutory demand proceedings that $377,520 was owed by OPC to ACC. The contention was that the respondents were estopped from disputing this debt as they were the privies of OPC as a party in the earlier proceeding, while the liquidators were the privies of ACC.

The statutory demand proceeding

[75] When, in August 2003, ACC issued a statutory demand in the sum of $695,190 its underlying claim was one for monies had and received. ACC claimed that in error it had overpaid OPC the sum claimed. OPC applied to set aside the demand. Associate Judge Gendall rejected the application, but only upheld the demand in relation to a sum of $334,000. He found this amount was not seriously in dispute because ACC representatives and Messrs Ikiua and Apa reached a settlement agreement in February 2003 in relation to a $334,000 repayment.
[76] However, OPC appealed to this Court and in the course of argument counsel for ACC abandoned the settlement point. The appeal proceeded with reference to two issues: whether a claim for money had and received could support the existence of a “debt due” as required for the purposes of a statutory demand, and whether all or some part of the amount demanded was beyond serious dispute.
[77] The first point was resolved in favour of ACC. Its case in relation to whether the debt was beyond serious dispute was advanced with reference to a sum of $377,520. This figure represented service fees paid to OPC in relation to claimants after they had ceased to be in receipt of weekly compensation. The contract provided that the cessation of weekly compensation payments represented the cut-off point with regard to payment for management services provided by OPC.
[78] As this Court noted its task was not assisted by the fact that OPC (on the basis of its then legal advice) offered no substantive evidence in reply to ACC’s overpayment case. An affidavit sworn by Mr Ikiua recorded that while he did not accept the allegations upon which ACC’s case was based, OPC reserved its position. Hence, OPC’s challenge to the statutory demand was restricted to whether there was a debt due - without any fallback position. On the basis of ACC’s uncontested affidavit evidence the Court found that there was “no real or genuine dispute that there is a debt due by OPC to ACC for at least $377,520”.^[24]

The Judge’s finding

[79] Heath J considered issue estoppel in relation to the ACC debt as a preliminary question. This was before he turned his attention to the several causes of action asserted by the liquidators.
[80] The evidence at trial concerning the alleged overpayments was less than exhaustive. The liquidator called evidence from Mr Martin Williscroft, an examining officer with ACC. He gave evidence of the history of the trading relationship between ACC and OPC. He described his involvement in the October 2002 interviews with Mr Ikiua when, at least from an ACC standpoint, an admission was made that there had been a significant overpayment to OPC. But, chapter and verse evidence was not adduced in support of the overpayment claim.
[81] As previously mentioned Mr Sio gave evidence for the respondents concerning the billing system adopted by OPC (see [62]). In addition Mr Ikiua gave evidence that although some clients may not have fitted the contract criteria under which OPC was to be paid, management services were provided in relation to these people, and were invoiced to ACC. Moreover, Mr Ikiua said that the provision of services for these clients took place with ACC’s knowledge and approval. Hence, the defence case suggested a quantum meruit dimension – although there was no pleading to this effect.
[82] Save for noting that Messrs Ikiua and Apa denied the allegation of overcharging, the Judge made no express finding on the point. However, at [53] he said:

Mr Sio’s unchallenged evidence leaves me in real doubt about whether any debt in favour of ACC actually exists.

Immediately following this observation he referred to the liquidators having admitted ACC’s proof of claim for $377,520 and the absence of any challenge by the directors of OPC to the liquidators’ decision. An evaluation of the plea of issue estoppel followed.

[83] After reference to the competing arguments Heath J expressed his conclusions in these terms:

[68] In my view, there is a public interest in preventing re-litigation of the existence of a debt in the sum found by the Court of Appeal. The liquidators, funded by ACC, ought not to have been put to the time, trouble and expense of revisiting a point that has already gone to the Court of Appeal, on which the directors of OPC had ample opportunity to lead relevant evidence to show a genuine dispute.

[69] In my view, the admitted claim falls within the principle established in Shiels v Blakeley.^[25] In light of the controlling interest of OPC’s directors in the recipient trusts, there is a sufficient identity between the parties to the proceeding in the Court of Appeal and the present proceeding to justify a finding that the respondents are estopped from denying the existence of the debt found to exist. I must proceed on the basis that the debt admitted by the liquidators does exist.

[84] The Judge then made it clear that his issue estoppel finding was made on the express basis that in this proceeding:

(a) the liquidators were acting on behalf of a single creditor, namely ACC which was a party to the statutory demand proceeding, and

(b) although there were five trustees of the residuary trusts, including two independent trustees, all three of the trusts were “controlled by Mr Ikiua and Mr Apa” who had also controlled OPC.^[26]

These considerations were viewed as pertinent to the privity evaluations.

The respective arguments

[85] We understood Mr Walker to advance the cross appeal as to issue estoppel on the basis that, unless there was a debt due to ACC, the liquidators’ claims against the trustees and the directors were without purpose and should fail on this account. Counsel then submitted that Heath J was wrong in finding that the liquidators were privies of ACC and, equally, in finding that Messrs Ikiua and Apa, qua directors, were privies of OPC. But, even if the directors were privies of OPC, Mr Walker argued that they could not be privies in their capacity as trustees of the residuary trusts, much less could their fellow trustees be privies of OPC.
[86] Counsel also argued that the issue decided in the statutory demand proceeding concerned the existence of a debt; whereas the issue in this proceeding was whether Messrs Ikiua and Apa knew, or ought to have known, of the existence of a debt when they paid distributions to the residuary trusts. Finally, counsel submitted that, absent a finding of issue estoppel, the evidence at trial did not independently establish the existence of a sum owed by OPC to ACC.
[87] Mr Cooke questioned whether the cross appeal directed to the issue estoppel finding was of any relevance. He submitted that the liquidators’ claims were not dependent upon the existence of a debt payable by OPC to ACC. Proof of a debt was not an element of any of the claims.
[88] The debt due to ACC would only become relevant when the liquidators recovered funds and embarked upon the distribution phase of the liquidation. But in any case the Judge’s conclusion concerning issue estoppel was unassailable; and in addition the existence of the debt was subsequently confirmed by the admission of ACC’s claim in the liquidation in terms of the Companies Act.

Evaluation

[89] Logically the first question is whether proof of the liquidators’ claims required proof of the existence of a debt due to ACC. Or, as Mr Cooke submitted, is the underlying debt of no direct relevance to establishment of the causes of action, and only relevant at the distribution phase of the liquidation.
[90] We accept the argument that the liquidators did not have to establish the existence of the ACC debt in order to establish the statutory or fiduciary causes of action upon which they relied. In short, the existence of the debt was not a necessary element of the claims.
[91] That said, obviously unless there was a creditor in the liquidation the liquidators’ claims against the respondents served no apparent purpose. Plainly the liquidators remain satisfied that a substantial sum is owed to ACC and that, therefore, the claims have utility. We assume that Heath J was drawn into and made the issue estoppel finding because the parties were in dispute as to the fact and extent of the ACC debt. Although in the High Court the liquidators produced schedules in support of the overpayment claim and also adduced evidence of the October 2002 interviews with Mr Ikiua, otherwise they made no endeavour to substantiate the claim. Accordingly, if the underlying debt was considered to be relevant, the liquidators were dependent upon an issue estoppel finding.
[92] For their part the respondents denied the existence of the debt through the evidence of Messrs Ikiua and Apa, and Mr Sio was also called to provide evidence of the verification system which was implemented from about the beginning of 2001. Hence, we do not understand that the respondents’ case directly confronted the overpayment allegation either.
[93] In these circumstances the Judge found an estoppel based on this Court’s finding, and its award of costs, in the sum of $386,909.91; also being the amount of ACC’s proof of claim which was admitted in the liquidation.
[94] We consider there is no need to revisit the issue estoppel finding on appeal. Our acceptance of the argument that proof of the debt is not required in order to establish the causes of action, obviates the need to do so. Whilst the issue estoppel finding was apparently made to resolve the evidential impasse in the High Court, strictly speaking this was unnecessary.
[95] The point is lent emphasis by Heath J’s related finding concerning admission of the proof of claim lodged by ACC. The liquidators admitted the $386,909.91 claim pursuant to s 304 and there was no subsequent challenge to their decision under s 284(1)(b) of the Act. Hence, as matters stand, a significant sum is due to ACC in the liquidation. Whether the respondents are personally bound by the statutory demand finding, or by the liquidators’ decision to admit ACC’s proof of claim, does not seem to us to affect our evaluation of the claims. In any event, the liquidators’ claims were unsuccessful, save for their recovery of the sum of $8,000.80. In these circumstances no purpose is to be served by assessing the various arguments advanced in an issue estoppel context.

The costs decision

[96] As noted at ([3](f)) Heath J ordered costs and disbursements in favour of the liquidators in the sum of $76,029.30 despite the fact that they had enjoyed only limited success in relation to their claims. The respondents cross-appealed against the costs decision, essentially on the ground that they were the successful parties in the High Court and that the award is inappropriate on that ground.
[97] Counsel filed comprehensive submissions dated 16 August and 24 August 2010 in support, and in opposition, respectively. Regrettably, at the conclusion of the two day hearing in this Court there was insufficient time to hear oral submissions in relation to the cross-appeal. Mr Walker, in particular, wished to exercise his right of reply to the submissions filed on behalf of the liquidators. We indicated that this would be facilitated, but left open how it might be achieved.
[98] We consider that the appropriate course is to reserve our decision concerning the costs judgment and provide Mr Walker 10 working days within which to reply by memorandum to any points arising from Mr Cooke’s submissions. We also reserve leave for either counsel to revert to the Court in the event that the method we have adopted is considered inappropriate.

Result

[99] Both the appeal and the cross-appeal are dismissed, save that:

(i) we deem it unnecessary to determine the cross-appeal challenging Heath J’s issue estoppel finding, and

(ii) decision in relation to the cross-appeal challenging the Judge’s costs decision is reserved.

Costs in this Court shall be considered as part of the outstanding costs decision in the cross-appeal.

Solicitors:
Meredith Connell, Auckland for Appellants
Gilbert Walker, Auckland for Respondents

^[1] Levin v Ikiua [2009] NZHC 879; [2010] 1 NZLR 400 (HC).

^[2] All references to legislation in this judgment are to the Companies Act 1993 unless otherwise specified.

^[3] OPC Managed Rehab Limited v Accident Compensation Corporation HC Wellington CIV-2003-485-1839, 24 June 2004.
^[4] OPC Managed Rehab Limited v Accident Compensation Corporation [2005] NZCA 322; [2006] 1 NZLR 778 (CA).
^[5] Milroy v Lord [1862] EngR 951; (1862) 4 De GF & J 264 (CA) at 274-275.
^[6] Dhingra v Dhingra [1999] EWCA Civ 1899.

^[7] T Chothram International SA v Pagarani [2001] 1 WLR 1 (PC).
^[8] At 12.
^[9] At [79]-[80]; see [19] of this judgment above.
^[10] Linden Gardens Trust Limited v Lenesta Sludge Disposals Limited (1994) 1 AC 85 (HL).

^[11] New Zealand Payroll Software Systems Ltd v Advanced Management Systems Ltd [2002] NZCA 316; [2003] 3 NZLR 1 (CA).

^[12] In Re Turcan (1889) 40 Ch D 5 (CA).

^[13] Don King Productions Inc v Warren [2000] 1 Ch 291 (CA).

^[14] Williams v Commissioner of Inland Revenue [1965] NZLR 395 (CA).

^[15] Hadlee v Commissioner of Inland Revenue [1991] 3 NZLR 517 (CA).
^[16] At 274-275.
^[17] Pennington v Waine [2002] EWCA Civ 227, [2002] 1 WLR 2075 (CA) at [53].
^[18] Halsbury’s Laws of England (4th ed, 2003) vol 6 Choses in Action at [27].
^[19] At [59].
^[20] Re Duomatic Limited (1969) 2 Ch 365.
^[21] Nicholson v Permakraft (NZ) Limited [1985] NZCA 15; [1985] 1 NZLR 242 (CA).
^[22] Octavo Investments Pty Ltd v Knight [1979] HCA 61; (1979) 27 ALR 129 (HCA).
^[23] At [46].
^[24] At [68].
^[25] Shiels v Blakeley [1986] 2 NZLR 262 (CA).
^[26] At [70].

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