Bishop v Logan - [2024] NZCA 596

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA138/2024
[2024] NZCA 596

BETWEEN

SPENCER MCKENZIE GILLINGHAM BISHOP

First Appellant

AND

RAYMOND VINCENT BISHOP
Second Appellant

AND

LARISSA HELEN LOGAN AND RHYS JAMES CAIN AS LIQUIDATORS OF BF7 TRADING LIMITED (IN LIQUIDATION)
Respondents

Hearing:	10 October 2024
Court:	Katz, Brewer, and Osborne JJ
Counsel:	R B Hucker for Appellants A J Steel for Respondent
Judgment:	18 November 2024 at 11.00 am

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellants must pay costs to the respondents for a standard appeal on a band A basis and usual disbursements.
____________________________________________________________________

REASONS OF THE COURT

(Given by Osborne J)

Introduction

The appellants appeal an order made in the High Court under s 266(2) of the Companies Act 1993 requiring them to produce documents and to attend before the Court for an examination (the s 266(2) order).[1] They seek orders quashing the s 266(2) order and dismissing the respondents’ originating application.

Background

[1]Logan v Bishop [2024] NZHC 46 [judgment under appeal].

The respondents are the liquidators of BF7 Trading Ltd (in liq) (BF7).
The appellants (brothers) are shareholders of BF7. The first appellant is also a director of BF7.
In 2019 (before BF7 was put into liquidation), current account debts owed by the appellants totalling $314,933 were journalled to become a debt owed by the Bishop Family Trust.
In 2021, the liquidators identified the claim BF7 has against the Trust. Through to 2022, the liquidators sought repayment of the debt from the first appellant. When that did not occur, they required the appellants under s 261 of the Companies Act to identify the trustees of the Trust. When the appellants did not comply with that demand, the liquidators applied to the High Court for an order under s 266(2) of the Companies Act. The appellants recorded 19 grounds of opposition.

The s 266(2) order

Following the hearing, Associate Judge Sussock ordered:[2]
[2]At [97] (emphasis in original).
(a)the [appellants] are to produce to the [liquidators] and the Court by 15 March 2024 any books, records or documents in their possession or control relating to:
(i)the indebtedness of the trustees of the Trust to BF7; and
(ii)the trustees’ names and contact details;
(b)the [appellants] are to attend before the Court and be examined on oath or affirmation by the court, the liquidators, or a barrister or solicitor acting for the liquidators, relating to the trustees’ names and indebtedness to BF7 at a time to be confirmed by the Registry but no earlier than 19 April 2024;
(c)the orders in (a) and (b) do not require the [appellants] to produce documents or information that BF7 would not have been aware of if all proper steps had been taken to document any loans or other indebtedness owed by the trustees of the Trust to BF7; and
(d)leave is reserved to apply for clarification or amendment of the orders or to seek a determination in respect of particular documents.

The…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Bishop v Logan

Details

AGLC: Bishop v Logan [2024] NZCA 596
Case: [2024] NZCA 596
Decision Date: 18 November 2024 at 11.00 am

CaseChat Overview and Summary

Spencer McKenzie Gillingham Bishop and Raymond Vincent Bishop, both shareholders and directors of BF7 Trading Ltd, appealed a High Court order requiring them to produce documents and attend for examination. The respondents, liquidators of BF7 Trading Ltd, sought the order under s 266(2) of the Companies Act 1993 to recover a debt owed by the Bishop Family Trust to BF7 Trading Ltd. The Court of Appeal considered two issues: whether the High Court had jurisdiction to make the order and whether the Court correctly exercised its discretion in doing so.

The Court found the High Court correctly determined it had jurisdiction to make the s 266(2) order, as the documents sought related to the business, accounts, or affairs of BF7 Trading Ltd. The appellants' argument that the Trusts Act 2019 should prevent such an order was rejected, as the Court held that the test under s 266 of the Companies Act is possession or control of the documents, not ownership. The Court also found the Judge correctly exercised her discretion in favour of the liquidators, considering the necessity of the information for the liquidators' functions, the limited burden on the appellants, and the public interest in the recovery of the debt.

The appeal was dismissed, and the appellants were ordered to pay costs to the respondents for a standard appeal on a band A basis and usual disbursements.

Orders