Jason Payne and Laurence van Dam, co-founders of Auckland’s Beer Spot, fell out and Payne is entitled to immediate payment of $171,500 lent to their business as an unsecured loan the High Court ruled. Van Dam is resisting payment, needing free cash flow to finance expansion including purchase of their Morningside site near Eden Park.
Beer Spot was founded in 2014 to sell keg-fresh, independently brewed beer from around New Zealand. Outlets at Huapai and Morningside were opened in 2019. Payne and van Dam are 50/50 owners with separate companies handling various parts of their Beer Spot operations. The High Court was told refinancing in 2016 saw the two giving personal guarantees for new funds from Westpac with van Dam in addition giving Westpac a mortgage over his family home. This mortgage became a bone of contention; van Dam saying use of his home as security and the differing level of funding each put in meant their ownership ratios should be adjusted. No agreement was reached.
Payn was dismissed as an employee and van Dam’s offer in 2021 to buy him out at $1.2 million was turned down. Payne demanded $2.1 million.
Early 2022, Payne made formal demand for repayment of $171,500 standing to his credit in the accounts of various Beer Spot companies. Van Dam said this money was part of Payne’s capital contributions to the business, not loans repayable on demand.
Justice van Bohemen ruled Payne’s $171,500 were loans from him as a shareholder, repayable on demand. The amount was recorded in the various companies’ financial statements as shareholder’s advances and listed as a liability, not as capital contributions. There was no evidence of an agreement between shareholders that this money could not be withdrawn as and when demanded, Justice van Bohemen ruled.
The companies were given thirty working days to make payment or otherwise face court-ordered liquidation.
The Beer Spot Ltd v. Payn – High Court (8.08.22)
22.137