Sharechat Logo

Steel & Tube appeals ruling to avoid defunct subsidiary's unpaid rental debt

Wednesday 20th April 2016

Text too small?

Steel & Tube Holdings wants to strike out a ruling that left it responsible for outstanding rent payments owed by a now-defunct subsidiary company that it had put into liquidation. 

The Lower Hutt-based steel products maker is appealing a September 2015 High Court decision that it was responsible for its Stube subsidiary's lease on an Auckland property owned by Lewis Holdings.

Steel & Tube had directly paid Stube's rents and rates since at least 2003 and renewed the Lewis property leases in 2009 at a rate of $195,000 per year for 21 years. However, it put Stube into liquidation in June 2013. In the ensuing dispute over breaking the lease, the High Court ruled that Steel & Tube owed Lewis $750,000, or 46 months rent, plus interest. 

In the Court of Appeal today, counsel for Steel & Tube David Chisholm said the issue of causation had been ignored by the High Court judge, and underpinned the appeal.

"One has to establish disentitling conduct which causes loss to the plaintiff," Chisholm said. "In the context of liquidation, there has to be conduct detrimental to creditors. We say there has been no damage caused by the conduct of the parent. There have been voluntary contributions made that actually benefited this creditor, there is no culpability."

In response to questioning that Lewis Holdings was always a creditor of Steel & Tube, rather than the subsidiary, Chisholm replied: "Everyone involved knew contractual liability was with Stube."

However, Justice Stephen Kos said "everyone knew Stube couldn't perform without Steel & Tube, and Steel & Tube was happy to prop it up until 2009." 

Kalev Crossland, counsel for Lewis Holdings, said causation had not been discussed in the High Court's judgment because Steel & Tube's legal team had not argued it. Instead, they had submitted four affirmative defences in their statement of defence, none of which were causation, and in their 196-page closing had talked about causation for one and a half pages.

"I appreciate my friend has to deal with the cards he was dealt," Crossland said.

The trial continues this afternoon with Crossland presenting his arguments.

BusinessDesk.co.nz

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Gold Report 21st May 2019
NZ dollar falls after RBA governor flags potential rate cut
ASB reviews ownership of Aegis
Auckland Airport kicks off next phase of expansion
Cashed-up Plexure eyes acquisitions to accelerate growth as loss shrinks
Tower turns to 1H profit, lifts FY guidance
IRD should have doubled claim against Watson's Cullen Group - Professor
Investore FY profit falls 16% on smaller valuation gain, signals flat dividend for 2020
Synlait receives cease and desist letter regarding Pokeno plant
21st May 2019 Morning Report

IRG See IRG research reports