In our last newsletter we reported on three decisions from the High Court on the good faith defence under section 296(3) of the Companies Act 1993 to voidable transaction claims, amongst others.
Late last week the Court of Appeal issued its judgment in Farrell and Rogan as Liquidators of Contract Engineering Limited (in receivership and liquidation) v Fences and Kerbs Limited  NZCA 91 on the interpretation of the meaning of the words "gave value" in that subsection. Section 296(3) stipulates a transaction cannot be set aside if the recipient of property shows that the creditor acted in good faith, did not suspect insolvency, and that gave value for the property or altered its position in reliance on receiving it.
On 7 February 2012 the Court of Appeal had heard three appeals by the liquidators. In all of the cases the High Court had held that a creditor could be considered to have "given value" where goods or services were provided prior to payment.
The Court of Appeal overturned these rulings and held that an antecedent debt or value given prior to receipt of property by the creditor did not constitute giving of value under section 296(3)(c). In reaching this conclusion it focussed on differences between New Zealand and Australian provisions that appeared to indicate Parliament intended to adopt a much narrower interpretation in a temporal sense, by constraining the giving of value to value given at the time of payment.
The creditors are entitled to apply for leave to appeal to the Supreme Court, although the judgment of the court is an interim judgment, so any appeal might be some time away.
See court decision here.