Boult v Cain - [2023] NZCA 542

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA511/2022
[2023] NZCA 542

BETWEEN	JAMES BOULT AND BRENT ALFRED METTRICK Appellants
AND	RHYS JAMES CAIN Respondent

Hearing:	19 July 2023
Court:	French, Thomas and Moore JJ
Counsel:	A R Galbraith KC and G J Ryan for Appellants J I Taylor and S M U Lee for Respondent
Judgment:	2 November 2023 at 2.30 pm

JUDGMENT OF THE COURT

AThe appeal is allowed. The decision of the High Court is quashed and an order is made under s 284(1) of the Companies Act 1993 reversing the respondent’s decision to permit inspection of the documents.
BThere will be no order as to costs.

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REASONS OF THE COURT

(Given by French J)

Introduction

Section 256(1)(a) of the Companies Act 1993 (the Act) states:
256     Duties in relation to records
(1)       The liquidator of a company must—
(a)keep accounting records and other documents of the liquidation and permit those records, and the records and other documents of the company, to be inspected by—
(i)any liquidation committee appointed under section 314, unless the liquidator believes on reasonable grounds that inspection would be prejudicial to the liquidation; and
(ii)       if the court so orders, a creditor or shareholder; and
…
The focus of this appeal is s 256(1)(a)(i). It concerns applications for the inspection of documents made by a liquidation committee, as distinct from applications by an individual creditor or shareholder which are governed by s 256(1)(a)(ii).
The key issue for determination is whether, correctly interpreted, s 256(1)(a)(i) means a liquidation committee’s purpose for seeking inspection cannot of itself be a ground for declining the application. Under this interpretation, the liquidator can only decline the application if they have a reasonable belief the requested inspection would be prejudicial to the liquidation. Otherwise, they are obligated to permit it.
The competing interpretation is that the right of inspection conferred on liquidation committees by s 256(1)(a)(i) is implicitly limited to requests made for a purpose connected with their statutory functions. Accordingly, a request made for a collateral purpose, outside the liquidation, is outside the scope of s 256(1)(a)(i) and must be declined — even in the absence of prejudice to the liquidation.
The interpretation issue arises in the context of a decision by the respondent liquidator to allow a request made ostensibly on behalf of a liquidation committee to access court documents. At the time the request was made, the assets had all been realised and the liquidation was ready to be ended. All that remained was for the liquidator to provide his final report. Given the liquidation was all but completed, it is accepted on appeal that disclosure of the documents could not be said to be prejudicial to the liquidation.[1]
[1]This was made clear in oral submissions by counsel for the appellants.
The court documents in question concerned a claim which the liquidator had brought against the directors of the company in liquidation and which had been settled. According to…

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 Boult v Cain

Details

AGLC: Boult v Cain [2023] NZCA 542
Case: [2023] NZCA 542
Decision Date: 2 November 2023 at 2.30 pm

CaseChat Overview and Summary

In the Court of Appeal, the appellants James Boult and Brent Alfred Mettrick sought to challenge a decision by the respondent Rhys James Cain, the liquidator of Stonewood Homes Ltd and Stonewood Homes New Zealand Ltd, to allow a liquidation committee to inspect certain court documents. The appeal centred on the interpretation of section 256(1)(a)(i) of the Companies Act 1993, which imposes on liquidators an obligation to permit inspection of records by liquidation committees unless the liquidator believes on reasonable grounds that inspection would be prejudicial to the liquidation. The appellants argued that the liquidation committee's purpose for seeking inspection could be a ground for declining the application, contrary to the High Court's decision. The Court of Appeal allowed the appeal, finding that the correct interpretation of section 256(1)(a)(i) was that a liquidation committee's request must be made for the purpose of and in furtherance of its statutory functions and powers. If not, inspection should be refused, regardless of whether inspection would not prejudice the liquidation. The Court quashed the decision of the High Court and made an order reversing the respondent's decision to permit inspection of the documents. There was no order as to costs.

Orders