Callin Auto New Zealand Limited (in liquidation) v Fujisawa
[2025] NZHC 1264
•21 May 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-1204
[2025] NZHC 1264
UNDER Part 18 of the High Court Rules 2016 AND UNDER
the Companies Act 1993
BETWEEN
CALLIN AUTO NEW ZEALAND LIMITED (IN LIQUIDATION)
First Plaintiff
AND
DAVID RUSCOE AND ADELE HICKS
Second Plaintiffs
AND
YUJIRO FUJISAWA
Defendant
Hearing: 20 February 2025 Counsel:
J P Bell-Connell and S M Singh for plaintiffs No appearance by or on behalf of defendant
Judgment:
21 May 2025
JUDGMENT OF JOHNSTONE J
This judgment was delivered by me on 21 May 2025 at 4pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Dentons, Wellington
CALLIN AUTO NZ LTD (IN LIQ) v FUJISAWA [2025] NZHC 1264 [21 May 2025]
[1] Yujiro Fujisawa is the sole director of Callin Auto New Zealand Ltd (in liquidation). The company (Callin New Zealand) and its liquidators, seek orders that Mr Fujisawa contribute a sum exceeding $1,000,000 to the company’s assets, in compensation for his alleged breaches of duties owed under ss 131, 135, 136 and 137 of the Companies Act 1993 (the Act). They also seek awards of interest and costs.
[2] Mr Fujisawa did not file a statement of defence. The claim proceeded before me by way of formal proof under r 15.9 of the High Court Rules 2016. The company and its liquidators were required to provide sufficient evidence, establishing to the Court’s satisfaction that their claims are made out.
[3] I provide a more detailed outline of the plaintiffs’ claims against Mr Fujisawa, and of my views on whether their claims are made out, below. First, I summarise Callin New Zealand’s formation, its operations (as observed from Japan, where most of its shareholders are based), and the appointment of and investigation by the liquidators.
Callin New Zealand’s formation
[4] Through a holding company, Kazuhiro Sakuma owns a Japanese company named Callin Auto Co. Ltd (Callin Japan). Callin Japan buys and sells second-hand cars in the Japanese market, and exports them to other countries. Mr Fujisawa joined Callin Japan in August 2011, and worked for it for about a year. His job was to prepare cars for auction, by cleaning and polishing them.
[5] In December 2011, Mr Sakuma, Mr Fujisawa, and Callin Japan’s head of sales visited various vehicle dealerships in New Zealand. Mr Fujisawa and his wife had been students in New Zealand. Mr Fujisawa’s wife held a residence visa. Mr Sakuma was thinking about expanding Callin Japan’s business outside Japan.
[6] By June 2012, Mr Sakuma was aware that Mr Fujisawa and his wife had decided to move back to New Zealand.
[7] Callin New Zealand was incorporated, in New Zealand, on 11 June 2012. Initially, it issued a single, ordinary share. That share was issued to Mr Sakuma’s
holding company. Mr Fujisawa was appointed its sole director. Upon establishing himself in New Zealand, Mr Fujisawa ran and managed Callin New Zealand’s business affairs.
[8] Callin New Zealand’s business purpose was that of importing second-hand cars from Japan, and selling them in the New Zealand domestic market to both wholesale and retail customers.
Callin New Zealand’s operations, observed from Japan
[9] The initial arrangement was that Callin New Zealand would purchase second-cars from Callin Japan, paying the same amount Callin Japan had paid, plus shipping-related costs. During the years ended 31 March 2013 and 31 March 2014, Callin New Zealand bought around 125 cars from Callin Japan, paying for them in accordance with negotiated payment terms. In mid-2015, Callin New Zealand started to fall behind in meeting those payment terms. Between June 2015 and June 2016, it purchased 302 cars from Callin Japan. One of these purchases was cancelled. But, while the remaining cars were supplied, Callin New Zealand did not pay for 22.
[10] Around June 2016, when Mr Fujisawa was visiting Japan, he was informed that Callin Japan would, from that point onwards, supply cars on different terms; that is, at the Japanese market price. Mr Fujisawa was unhappy with the new arrangement. Mr Sakuma reports that Mr Fujisawa became less transparent in his dealings with Callin Japan, and increasingly difficult to communicate with. He also stopped supplying copies of Callin New Zealand’s monthly sales reports.
[11] In September 2016, Callin Japan and Callin New Zealand entered a further arrangement:
(a)the purchase price would remain the Japanese market price;
(b)but Callin Japan would endeavour to supply at least 30 cars per month, and would be responsible for them being inspected and shipped to New Zealand.
[12] Also in September 2016, the allocation of shares in Callin New Zealand was amended. It issued a further 99 shares. Of the new total of 100 shares, Mr Fujisawa obtained one share, with Mr Sakuma’s holding company retaining the balance.
[13] Nevertheless, Callin New Zealand fell further behind in paying for vehicles purchased from Callin Japan. In the year to 30 June 2017, Callin New Zealand purchased 199 vehicles, of which it paid for only 23.
[14] By 20 February 2018, Callin New Zealand owed JP¥64,986,550 to Callin Japan. On that day, Callin Japan’s finance director met Mr Fujisawa in New Zealand. The result was the entry by Callin Japan and Callin New Zealand into an amended payment agreement, providing for payment of 50 per cent of that debt, by way of JP¥100,000 monthly instalments, plus interest, with discussion to follow over the question whether the remaining debt might be forgiven.
[15] Callin New Zealand paid various amounts, but did not meet the monthly payment schedule. Callin Japan continued to supply cars, but Callin New Zealand fell further behind in paying for them.
[16] In November 2019, the registered ownership of all 99 of Mr Sakuma’s holding company’s shares was transferred to others: 91 to Mr Sakuma, and eight to Mr Fujisawa. The result was that Mr Sakuma held 91 of Callin New Zealand’s 100 shares. Mr Fujisawa held the other nine.
[17] In September 2020, Mr Fujisawa notified Callin Japan that he was resigning his position at Callin New Zealand. Employees of Callin Japan sought, during 2021, to discuss the payment of Callin New Zealand’s debt to Callin Japan. They requested access to Callin New Zealand’s banking records. Mr Fujisawa did not assist.
[18] For some time, Mr Sakuma’s access to financial reporting upon Callin New Zealand’s affairs had been limited. As noted above, Mr Fujisawa stopped supplying copies of its monthly sales reports in around June 2016. But that said, Mr Sakuma received Callin New Zealand’s annual financial statements, other than those for the year ended 31 March 2017. I return to this topic below.
[19] On 16 September 2022, Callin New Zealand’s shareholders appointed liquidators, by special resolution under s 241(2)(a) of the Act.
The liquidators’ investigation
[20] The liquidators obtained Callin New Zealand’s bank statements under Court order. And they reviewed these, alongside its annual financial statements, comparison records of Callin Japan, information supplied by Waka Kotahi under Official Information Act requests, and by Mr Fujisawa in various meetings.
[21]The liquidators’ review disclosed that:
(a)Callin New Zealand had no known assets. All cars imported from Japan had been sold prior to the liquidation.
(b)The company was balance sheet insolvent upon its liquidation. And it had been balance sheet insolvent at the end of each financial year for which annual financial statements were available (the years ended 31 March 2013 to 31 March 2019).
(c)Other than in the year ended 31 March 2015, when the company generated a surplus of $53,646, it had been loss-making from its inception. Total losses by 31 March 2019 amounted to $392,885.
(d)The company had been continuously behind on its payments to Callin Japan. And it had failed to pay significant amounts to other creditors. Losses to creditors, assessed by reference to amounts claimed in the liquidation, total $1,079,440.10.1
1 This sum was calculated with reference to the figure claimed by Callin Japan in Japanese Yen. It was converted to NZD at the conversion rate of JP¥ 1 = 0.01153 NZD said to be prevailing at the time submissions were drafted. As I turn to below, I prefer the conversion rate listed by the Reserve Bank of New Zealand prevailing on 20 February 2025, when I heard the liquidators’ claim by way of formal proof.
[22] Mr Fujisawa’s observations regarding Callin New Zealand’s financial performance, made during meetings with the liquidators were unsatisfactory:
(a)By the end of the year ended 31 March 2016, Callin New Zealand had been trading for four years, and had not broken even. Mr Fujisawa’s comment was that he looked to cut overheads by laying off a staff member (described as a “friend”), achieving a $60,000 saving per annum by doing the staff member’s work himself.
(b)In respect of the losses incurred in the years ended 31 March 2017 and
31 March 2018, Mr Fujisawa merely claimed, without providing documentary support, that Callin Japan was asking for more money than it was owed.
[23] Indeed, the liquidators were required to assess the amount Callin New Zealand owes to Callin Japan by reviewing “accounts receivable” documentation supplied to them by Callin Japan. Full reconciliation with Callin New Zealand’s records was not possible, because the latter records were inadequate. Mr Fujisawa did not use the “accounts payable” function in Callin New Zealand’s accounting software. Given the extent to which at least some degree of reconciliation has been achieved upon cross-referencing payments against Callin New Zealand’s bank statements, the liquidators have resolved to accept Callin Japan’s claim in the liquidation.
[24] The liquidators also identified numerous transfers from Callin New Zealand’s bank accounts to Mr Fujisawa’s personal accounts. He explained these by indicating they were reimbursements for Callin New Zealand expenditure, made on his personal credit card for the purpose of collecting loyalty credits (Airpoints). However, this reimbursed expenditure in the period between 31 March 2015 and 1 September 2022 included a total of $255,448, spent on what appears to be entertainment: restaurants, bars, golf and otherwise. Mr Fujisawa asserted that his use of company funds for entertainment was justified as it generated car servicing discounts of between $60 to
$80 per car.
The plaintiffs’ claims
[25] The plaintiffs’ claims were made pursuant to four pleaded causes of action, alleging breaches of ss 135, 136, 137 and 131 of the Act. In each case, their statement of claim sought the same relief: an inquiry into Mr Fujisawa’s conduct; an order that he be required to contribute to the assets of Callin New Zealand, by way of compensation, such sum as the Court thinks just; such other orders as the Court thinks appropriate; interest; and costs.
[26]This form of relief draws upon s 301(1) of the Act, which provides as follows:
If, in the course of the liquidation of a company, it appears to the court that a person who has taken part in the formation or promotion of the company, or a past or present director, manager, administrator, liquidator, or receiver of the company, has misapplied, or retained, or become liable or accountable for, money or property of the company, or been guilty of negligence, default, or breach of duty or trust in relation to the company, the court may, on the application of the liquidator or a creditor or shareholder,—
(a)inquire into the conduct of the promoter, director, manager, administrator, liquidator, or receiver; and
(b)order that person—
(i)to repay or restore the money or property or any part of it with interest at a rate the court thinks just; or
(ii)to contribute such sum to the assets of the company by way of compensation as the court thinks just; or
(c)where the application is made by a creditor, order that person to pay or transfer the money or property or any part of it with interest at a rate the court thinks just to the creditor.
Rules addressing liability and quantum
[27] The leading authority in respect of claims under ss 135 and 136, and entitlement to relief under s 301, is the Supreme Court’s judgment in Yan v Mainzeal Property and Construction Limited (in liquidation).2
2 Yan v Mainzeal Property and Construction Limited (in liquidation) [2023] NZSC 113, [2023] 1 NZLR 296.
Liability and measure of damages under s 135
[28]Section 135 provides as follows:
A director of a company must not—
(a)agree to the business of the company being carried on in a manner likely to create a substantial risk of serious loss to the company’s creditors; or
(b)cause or allow the business of the company to be carried on in a manner likely to create a substantial risk of serious loss to the company’s creditors.
[29]In Mainzeal, the Supreme Court concluded that:3
(a)An objective approach is to be taken in determining whether the business of the company was carried on in the prohibited manner (so that subjective awareness of the likelihood of substantial risk or serious loss is not necessary).
(b)However, when assessing whether the actions of the directors … were in breach of s 135, the courts will proceed on the basis of those facts and circumstances of which the directors were aware, or should have been aware, if exercising appropriate care, skill and diligence.
…
(c)As to the levels of care, skill and diligence required, the more complex the company the higher the level of skill and diligence expected of a director.
[30]The Supreme Court acknowledged that:
[215] … [T]he directors of an insolvent, or nearly insolvent, company are entitled to time to take stock of the situation of the company and, for this purpose, to obtain advice. For this reason, in the short term (determined by reference to what would be a reasonable time to take such stock), trading while insolvent may well be legitimate. The purpose of this assessment is to identify whether there is a path forward for the company so that the directors can be satisfied that trading on is not likely to create a substantial risk of serious loss to creditors. The period of time for directors to take stock will be what is reasonable in the particular circumstances (including the complexity of the company’s affairs and the urgency of the presenting situation).
[31]And in this connection it observed that:
[216] Assurances of support on which the directors can reasonably rely may be material to whether they can be appropriately satisfied that continued
3 At [211].
trading will not breach s 135. If assurances were not legally binding or practically enforceable and were not honoured (as in this case), there are likely to be questions as to the reasonableness of reliance on them.
[32] On the question of damages for a s 135 breach, the Supreme Court found that whether the appropriate measure is one of “net deterioration” (the extent, if any, to which the financial position of the company deteriorated between the breach date and the liquidation date) depends on whether the appropriate counterfactual assumes cessation of trading, and in practical terms, liquidation at the breach date.4 Since, in Mainzeal, liquidation at the breach date was the relevant counterfactual, the appropriate measure of damages in that case was the net deterioration measure, of loss suffered by the creditors collectively.5
Liability and measure of damages under s 136
[33]Section 136 provides that:
A director of a company must not agree to the company incurring an obligation unless the director believes at that time on reasonable grounds that the company will be able to perform the obligation when it is required to do so.
[34] Section 136 is premised on the basis that directors should not commit a company to obligations unless confident on reasonable grounds that they will be honoured.6
[35]In Mainzeal, the Supreme Court observed that:7
Whereas s 135 is concerned with the general conduct of the business of the company and the risk that such conduct poses to creditors, s 136 addresses the incurring of obligations to creditors. Section 135 is expressed in terms that are consistent with treating creditors as a class in relation to compensation. In contrast, s 136, as we construe it, does not treat all creditors as a class but rather contemplates both (a) an obligation-by-obligation, and thus a creditor- by-creditor, approach and (b) as we have found, an approach based on categories of obligations and therefore creditors. So, the wording is consistent with the view that the damage for which compensation should be available under s 136 is the incurring of obligations that were not met and that such damage is most logically measured by the deficiency in respect of those obligations.
4 At [282].
5 At [289].
6 At [244].
7 At [291].
[36] On this basis, and in accordance with the authority of its decision in Madsen-Ries (as liquidator of Debut Homes Ltd (in liq)) v Cooper,8 the Court found that relief calculated by reference to the losses incurred by creditors following the date of a breach of s 136 — a “new debt” basis, which might exceed the amount of “net deterioration” (see above) — is available.9
Quantum of relief
[37] That said, the Supreme Court in Debut Homes indicated that the courts should adopt a flexible approach to assessing the relief to be ordered, taking account of the applicable measure of damages, but considering other factors also:
[182] Where there have been breaches of duties, any relief ordered under s 301 must respond to and provide redress for the particular duty or combination of duties breached. Relief can be compensatory or restitutionary in nature and must take account of all of the circumstances, including the nature of the breach or breaches, the level of culpability of the director, causation, duration of the breach, holding the director to account and reversing the harm to the company.
[38] And in Mainzeal, the Supreme Court confirmed the appropriateness of flexibility in the remedial response for breaches of ss 135 and 136.10
Section 137
[39]Section 137 provides that:
A director of a company, when exercising powers or performing duties as a director, must exercise the care, diligence, and skill that a reasonable director would exercise in the same circumstances taking into account, but without limitation,—
(a)the nature of the company; and
(b)the nature of the decision; and
(c)the position of the director and the nature of the responsibilities undertaken by him or her.
8 Madsen-Ries (as liquidators of Debut Homes Ltd (in liq)) v Cooper [2020] NZSC 100, [2021] 1 NZLR 43.
9 Mainzeal, above n 2, at [290]–[296].
10 At [351].
Section 131
[40]Section 131 relevantly provides that:
(1) Subject to this section, a director of a company, when exercising powers or performing duties, must act in good faith and in what the director believes to be the best interests of the company.
…
(5) To avoid doubt, in considering the best interests of a company or holding company for the purposes of this section, a director may consider matters other than the maximisation of profit (for example, environmental, social, and governance matters).
[41] In Debut Homes, the Supreme Court confirmed that the test for breach of s 137 is subjective.11 However, “directors cannot subjectively believe they are acting in the best interests of the company if they have failed to consider the interests of the company or, where required, the interests of all of the creditors, including prospective creditors”.12 Further, it appears that s 137 will be breached when a director’s decision is “irrational”.13
Issues
[42]The liquidators now claim that:
(a)Mr Fujisawa breached ss 135 and 136 when he caused Callin New Zealand to continue trading, and therefore to incur further debts, beyond the end of the 2016 financial year (the liquidators’ first and second causes of action). This conduct of Mr Fujisawa falls short of the care, diligence and skill to be expected of Callin New Zealand’s sole director, and therefore amounts also to a breach of s 137 (the third cause of action).
11 Debut Homes, above n 8, at [112].
12 At [114].
13 At [113], the Supreme Court cites the following authorities and commentary giving rise to this proposition, leaving aside the question whether the proposition amounts to a “qualification or exception” to the subjectivity of the test: Hutton v West Cork Railway Co (1883) 23 Ch D 654 (CA) at 671 per Bowen LJ; Westpac Banking Corp v Bell Group Ltd (in liq) (No 3), [2012] WASCA 157, (2012) 44 WAR 1 at [2772] per Carr AJA; Morison’s Company Law (online ed, LexisNexis) at [24.9], where the authors adopt Lord Sumption’s explanation of irrationality in the context of criminal harassment (as in Hayes v Willoughby [2013] UKSC 17, [2013] 1 WLR 935 at [14]) and apply that to s 131 in the New Zealand context.
(b)The net deterioration in Callin New Zealand’s position, as between the end of the 2016 financial year and its date of liquidation, equals the total value of the debt obligations it incurred in that period; in the amount of $1,017,989.46.14 Mr Fujisawa should accordingly be ordered to compensate Callin New Zealand in that amount, whether because of a breach of ss 135, 136 or 137, or some combination of such breaches.
(c)Mr Fujisawa’s preparedness to have Callin New Zealand spend
$255,448 on entertainment (see [24] above) breached s 131, because his business rationale was untenable, demonstrating that he had failed to consider the interests of its creditors (the fourth cause of action). In their written submissions, the liquidators proposed that the Court make an additional restitutionary order in that amount. However, in oral argument, Mr Bell-Connell responsibly conceded that this part of the claim, to an additional order, could not be sustained. If funds had not been spent on these entertainment expenses, they would have been available and likely paid to creditors, reducing the amount of losses incurred by creditors accordingly. And if the company had been liquidated earlier, a related portion of the entertainment expenses would not have been incurred.
[43]In light of those claims, I consider that I should determine the following issues:
(a)Breach of ss 135, 136 and/or 137
As from the end of the 2016 financial year:
(i)Based on the facts and circumstances of which Mr Fujisawa was, or should have been (if exercising the care, skill and
14 This sum was calculated with reference to debt obligations in Japanese Yen. It was converted to NZD at the conversion rate of JP¥ 1 = 0.01153 NZD said to be prevailing at the time submissions were drafted. As I turn to below, I prefer the conversion rate listed by the Reserve Bank of New Zealand of JP¥ 1 = 0.01165 NZD prevailing on 20 May 2025, the most recent listed exchange rate of the Japanese Yen prior to release of this judgment.
diligence required of a sole director of a company of the scale and complexity of Callin New Zealand) aware, did he cause or allow its business to be carried on in a manner likely to create a substantial risk of serious loss to its creditors?
(ii)Did Mr Fujisawa agree to Callin New Zealand incurring debts to creditors without being confident on reasonable grounds that it would be able to meet those debts when they fell due?
(b)Measures of damage
What was the net deterioration in Callin New Zealand’s position, and the total value of new debt incurred, in that period?
(c)Quantum of relief
Taking a flexible approach to the question of relief, is there any reason its quantum should be less than that of the appropriate measure of damages, suffered by Callin New Zealand as a consequence of any breach by Mr Fujisawa of ss 135, 136 or 137?
Assessment
Breach of ss 135, 136 and/or 137
[44] At the end of the 2016 financial year (on 31 March 2016), given the available annual financial statements mentioned at [21](b), Callin New Zealand was balance sheet insolvent: it was balance sheet insolvent throughout. At that stage, Callin New Zealand was well beyond its initial establishment phase. Yet, after four years of trading, it had not become profitable: its net losses were $28,835.
[45] During the 2016 financial year, Callin New Zealand had entered an arrangement with iMotors Penrose Limited, renting a car yard from iMotors and sharing the revenue derived from sales of cars from the yard. But the arrangement had
not been successful: Callin New Zealand made a loss of $18,497 in the 2016 financial year.
[46] By the end of June 2016, the amount Callin New Zealand owed Callin Japan was JP¥5,241,607. And from that point, the net amount owed only increased. In the year ended June 2017, Callin New Zealand failed to pay for JP¥48,275,980 worth of cars purchased from Callin Japan, and in the year ended June 2018, it failed to pay for JP¥17,630,884 worth.
[47] Yet, as from 31 March 2016, Mr Fujisawa did not have a realistic strategy to improve the company’s financial position. By then, the arrangement with iMotors had been unsuccessful. And even if his strategy of laying off a staff member, and therefore cutting up to $60,000 per annum of overheads, might have had no negative impact on sales, it could not reasonably have been seen as a sufficient response to Callin New Zealand’s poor performance. The context at the time was one which, within the year, proved to give rise to a loss (for the 2017 financial year) of $103,822, despite the saving of $60,000 of staff costs.
[48] Mr Fujisawa was Callin New Zealand’s sole director. Exercising the care, skill and diligence required of the sole director of Callin New Zealand’s scale and complexity, he was, or at least should have been, aware of the matters at [44] to [47] above.
[49] In the affidavit of one of the liquidators (David Ruscoe), filed in support of their claim by way of formal proof, Mr Ruscoe responsibly notes that Callin New Zealand’s financial statements for the 2016, 2018 and 2019 financial years (its records do not include financial statements for the 2017 financial year) contain the following assertion:
At balance date the Company’s liabilities exceeded its total assets. The Shareholders undertake to meet all of the Company’s day to day obligations to allow the Company to continue as a going concern.
[50] But Mr Ruscoe has not, and nor have Callin Japan, Mr Sakuma or Mr Fujisawa, produced any other document which might support that proposition. While Mr Sakuma (who does not speak English) adopted the financial statements for the
2016 financial year, he has advised that they were sent to him in English, and that he signed them without the benefit of translation. And, although Mr Fujisawa asserted in correspondence with the liquidators that Mr Sakuma was the “de facto controller” of Callin New Zealand, Mr Fujisawa bore the official title and responsibilities of sole director. Any impression Mr Fujisawa might have had, to the effect that Callin New Zealand’s shareholders had assured him of their support, were not legally binding or practically enforceable, and could not reasonably be relied upon.
[51] Overall, the period of four years in which Callin New Zealand had been in a state of balance sheet insolvency without achieving an overall profit was more than enough time in which to “take stock of the situation” (per Mainzeal), particularly given the straightforward nature of its business. In my view, formed objectively on the basis of those matters, Mr Fujisawa caused Callin New Zealand’s business to be carried on, as from 31 March 2016, in a manner likely to create a substantial risk of serious loss to its creditors. He was accordingly, from that date, in breach of s 135.
[52] Similarly, from 31 March 2016 onwards, Mr Fujisawa agreed to Callin New Zealand incurring debts to creditors without being confident on reasonable grounds that it would be able to meet those debts when they fell due. He was accordingly, from that date, in breach of s 136.
[53] Mr Fujisawa’s breaches of ss 135 and 136 necessarily imply that, in terms of s 137 he failed “to exercise the care, diligence, and skill that a reasonable director would exercise in the same circumstances”. This is why I consider it unnecessary to consider the liquidators’ third cause of action. It adds nothing to their first two causes.
Measures of damage
[54] As discussed at [32], where (as in the present case) the relevant counterfactual assumes liquidation at the breach date, the assessment of loss upon breach of s 135 usually proceeds on the basis of net deterioration in the position of the creditors collectively, between breach date and liquidation.15 From 31 March 2016 to Callin
15 Mainzeal, above n 2, at [367].
New Zealand’s liquidation on 22 September 2022, the total value of its obligations to creditors deteriorated substantially.
[55] As discussed at [23], Callin New Zealand did not have complete records. Calculating the total amount that it owed Callin Japan at the time of liquidation in September of 2022, by reference to Callin Japan’s claim in the liquidation of JP¥83,205,651.60, the liquidators assessed the total owing at $973,856.42. By the time I heard the liquidators’ claims by way of formal proof and prepared this judgment for release, Callin Japan’s claim in the liquidation amounted in value to $969,345.84.16 This puts the total loss to creditors who have made claims in the liquidation at
$1,074,909.52. This total loss amount includes claims in the liquidation by Bank of New Zealand, Inland Revenue Department and Evolution Business Services. I note that, in regard to the sum of indebtedness to Bank of New Zealand, I prefer the evidence of Mr Ruscoe that the total sum owing is $36,335.12.17 This is more in line with the bank statements and creditor claim form annexed to Mr Ruscoe’s affidavit.
[56] By the end of June 2016, Callin New Zealand owed Callin Japan JP¥5,241,607. Assuming, in Mr Fujisawa’s favour that this debt was owed by 31 March 2016, the net deterioration in its liabilities to creditors, between the breach date and liquidation, was
$1,013,774.90. This figure represents the total amounts claimed in the liquidation of
$1,074,909.52 less the amount of $61,134.62 which was already owed to Callin Japan by the breach date at the end of the 2016 financial year.18
[57] Callin New Zealand’s net equity deteriorated in the period between 31 March 2016 and the liquidation date: from -$28,835 to -$292,885. So shareholder equity can be put to one side for the purpose of calculating the creditors’ position as a whole.
16 The total amounts claimed are in Japanese Yen, and have been converted to NZD at the conversion rate listed by the Reserve Bank of New Zealand of JP¥ 1 = 0.01165 NZD prevailing on 20 May 2025, the most recent listed exchange rate of the Japanese Yen prior to release of this judgment.
17 The statement of claim and written submissions of counsel suggest Callin New Zealand owed Bank of New Zealand the sum of $35,320.84 and $35,209.17 respectively.
18 The sum owing to Callin Japan by the end of June 2016 has been converted to NZD at the conversion rate of JP¥ 1 = 0.01165 NZD, as discussed at above n 16.
[58] Overall then, on the available evidence, it appears that the net deterioration in Callin New Zealand’s creditor position, from the time of the breach date in 2016 to the time of liquidation, was $1,013,774.90.
[59] As discussed at [36], the “new debt” measure of loss is available in respect of breaches of s 136. In the present case, the value of new debt undertaken following breach of s 136 is the very amount by which the net deterioration in the creditors’ position has been calculated. Accordingly, the measure of damage is the same, whether the question of compensation is being considered with reference to s 135 or to s 136.
Quantum of relief
[60] In my view, there is no reason the quantum of relief should be less than the amount by which Callin New Zealand’s obligations to creditors deteriorated (via new debt), in the amount of $1,013,774.90. Mr Fujisawa’s failures are clear. As the company’s sole director, he should take full responsibility for creditors’ losses arising after the point at which there was no realistic prospect of new debt being paid.
Result
[61] Pursuant to s 301, I order that Mr Fujisawa pay the liquidators of Callin New Zealand:
(a) $1,013,774.90;
(b)interest under the Interest on Money Claims Act 2016, for the period beginning on 20 February 2025 and ending on the day on which the above judgment debt is paid; and
(c)scale 2B costs, as certified by the Registrar in respect of one counsel.
Johnstone J
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