Lewis v Hyde
| Jurisdiction | UK Non-devolved |
| Judgment Date | 07 October 1997 |
| Date | 07 October 1997 |
| Court | Privy Council |
Judicial Committee of the Privy Council
Before Lord Browne-Wilkinson, Lord Slynn of Hadley, Lord Lloyd of Berwick, Lord Hope of Craighead and Lord Hutton
Privy Council - New Zealand - insolvency - payment not a voidable preference
A payment made by a debtor with the intention of preferring a creditor was not unlawful as a voidable preference under section 309 of the Companies Act 1955, of New Zealand, if, in the event, the creditor was not preferred.
The Privy Council so held in upholding the order of the Court of Appeal of New Zealand (Justice Thomas, Justice Blanchard and Justice Doogue) reversing the decision of Justice Holland ordering the respondents, the trustees in the estate of Bruce Russell Hyde, deceased, and a company in which he had invested, to pay $76,059 to the liquidators of the Prudential Building and Investment Society of Canterbury.
On February 2, 1989 Mr Hyde's brother-in-law, who was involved in the management of Prudential, had arranged for immediate repayment to Mr Hyde, by way of bank cheques, of deposits requiring seven days' notice of withdrawal.
On February 23, 1989 an application was filed to wind up Prudential and the liquidators sought to recover the deposits repaid to Mr Hyde as being voidable preferences within section 309 of the 1955 Act:
Section 309 of the 1955 Act provides: "Every…payment made…by any company unable to pay its debts as they become due from its own money, shall be voidable as against the liquidator, if - (a) it is in favour of any creditor…with a view to giving that creditor…a preference over the other creditors; and (b) (the payment occurred within two years of the commencement of the winding up)."
Mr W J Palmer, of the New Zealand Bar, for the liquidators; Mr P F Whiteside, of the New Zealand Bar, for the respondents.
LORD BROWNE-WILKINSON, giving the judgment of the Board, said that in January and February 1989 Prudential had been in financial difficulties, but had continued to trade until February 21, 1989.
Therefore, even if Mr Hyde had been required to wait for seven days for repayment and also for a further period in order to enable a cheque drawn by Prudential itself to be cleared, that is, the period of accelerated payment, he would have been repaid his deposits in full before the application to wind up was made.
The basis of Mr Palmer's...
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