Hydradiesel Engineering Ltd v O'Brein [2018] NZDC 5935

Published 25 March 2019

Summary judgment — personal liability for company debt — liquidation. An application for summary judgment was before the Court for the sum of $27,013 owed to the plaintiff, Hydradiesel, for services and parts supplied by it to a freight haulage company, Phillips and O’Brien Limited, now in liquidation. Hydradiesel claimed the office manager, the defendant, was personally liable for that debt. The defendant was employed by Phillips and O’Brien Limited as office manager, while her parents served as the company's directors and sole shareholders. A credit agreement between Hydradiesel and Phillips and O’Brien Limited was signed by the defendant. She had authority to sign, but at issue was the clause within the declaration which stated "I, [the defendant]... undertake to pay the Account as it falls due...". The plaintiff submitted that although the defendant was not a company director, it does not nullify the liability and that in any event the word "director" should be construed to cover the defendant. The Judge considered the relevant case law and found that whether liability would attach to the defendant was an objective test. The Judge held that the declaration speaks specifically of directors, which the defendant was not, and also no reasonable business person would conclude a employee would be personally liable for a customer's account, as companies come in very different sizes. The application for summary judgment was dismissed. Judgment Date: 29 March 2018.

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