High profile employee advocate Allan Halse has been ordered to repay $165,000 drawn down from his company Culturesafe NZ Ltd, now in liquidation insolvent.
Culturesafe was ordered into liquidation by the High Court in August 2022 following failure to pay a $67,000 costs order imposed by the Employment Court.
Mr Halse was ordered jointly liable to pay these costs. In October 2022, he personally paid the $67,000 debt to avoid being bankrupted.
Meanwhile, he had lost control of his Hamilton-based company; now in the hands of liquidators.
They identified that the company’s major asset is a loan to Mr Halse, in the form of current account drawings where Mr Halse had used company cash to meet personal expenses.
He disputed owing his company any money. He claimed to be unpaid for holiday pay and overtime, plus hours worked, given that he had never drawn a salary. Personal drawings from the company bank account were payment for work done on behalf of his company, he claimed.
Companies Act rules governing ‘one-man’ companies require payment for work done on behalf of their company be confirmed, with a formal resolution approving a shareholder salary or director remuneration plus a supporting certificate stating that this payment is ‘fair and reasonable.’
The High Court was told Mr Halse failed to arrange this paperwork whilst in control of his company. Payments he received were unsecured borrowings, repayable on demand.
To prove the amount due, liquidators relied on the dollar amount of shareholder drawings, marked as a debt owed to Culturesafe, in financial statements approved by Mr Halse and filed with Inland Revenue for tax purposes. Adjustments were made for subsequent drawings, post-balance date.
Justice Andrew ordered Mr Halse pay Culturesafe liquidators $165,200 in repayment of his overdrawn shareholder current account.
Separately, Mr Halse claimed a set-off; being given credit for the $67,000 adverse costs order he paid personally, for which Culturesafe was also liable.
For a set-off to apply, Companies Act insolvency rules required Mr Halse as director to prove his company was not insolvent in the two years prior to payment he made on Culturesafe’s behalf. Clearly, Culturesafe was insolvent when payment was made, Justice Andrew said.
Culturesafe NZ Ltd v. Halse – High Court (24.11.25)
26.022