New Zealand High Court rules money cannot be recovered from Tongan company

'Oku taupotu 'i lalo ha fakamatala faka-Tonga

Funds paid to a company in Tonga cannot be recovered by a liquidator seeking to recover more than $800,000,  the New Zealand High Court has ruled.

The liquidator applied for an order to recover $803,517.28  from Knut Klavenes and his wife Melenau as well as $16,030.26  from their son.

The liquidator argued that more money had been disbursed to the Klavenes’ own accounts from company funds than had been received by the company.

Mr Knut Klavenes Snr is the sole director and shareholder in KCL, which operated a labour hire business for construction in Auckland. In 2011 another company, Klavenes Construction (Tonga) Ltd (KCL Tonga), was incorporated in Tonga and operated a construction business.

KCL turned over more than $2 million in the 2015 and 2016 financial years. A large part of that money was into the Klaveneses’ personal bank accounts without formal records or accounting. KCL funds were used for KCL Tonga expenditure.

The funds were mixed, without formal accounts or records aside from bank statements. KCL never filed tax returns or paid tax. It did not have an accountant or prepare any financial accounts.

In  September  2015,  KCL  ceased  trading after defaulting on a debt of $253,000 to Dayle Timber Ltd for building materials supplied for KCL Tonga’s building projects.

KCL Tonga was placed in liquidation on October 14, 2016 and two days later KCL was placed in liquidation on application by Dayle Timber Ltd.

Significant payments were made towards KCL Tonga’s operating costs, with $439,096.85 being passed from KCL to KCL Tonga’s suppliers.   Similarly, the Klavenes Jnr received $236,295.44 from KCL and paid it to KCL Tonga.

Mr Justice Palmer said money passed on from KCL to KCL Tonga could not be recovered from Mr and Mrs Klavenes  because they did  not receive the money.

The judge allowed the recovery of $128,124.99 from the Klaveneses and $16,030.26 from Mr Klavenes Jnr, plus interest.

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