Clarke - [2021] NZHC 3017

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-001716

[2021] NZHC 3017

IN THE MATTER of s 382 Companies Act 1993

AND

IN THE MATTER

of an application for leave to be a director of and to take part in the management of three companies

BY

PAUL LAMBERT CLARKE

Applicant

Hearing: 4 November 2021

Appearances:

T J Shiels QC for Applicant

Judgment:

9 November 2021

JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie On 9 November 2021 at 11.00 am
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

Date:…………………………

Solicitors/counsel:
Downie Stewart, Dunedin

RE PAUL CLARKE [2021] NZHC 3017 [9 November 2021]

Introduction

[1] The applicant, Paul Clarke, seeks leave to be a director and to take part in the management of three companies, P L Clarke Ltd, Clarke Machinery Ltd and Valley Mechanical Ltd.

[2] Earlier this year, Mr Clarke was convicted and sentenced to six months’ community detention and a fine of $30,0001 in relation to the following charges:

(a)using altered documents with intent to deceive (representative) (x 2);2 and

(b)producing false documents (representative).3

As a result, he is automatically prohibited from managing and being a director of any company for a term of five years under s 382(1) of the Companies Act 1993 unless he first obtains the leave of the Court.

[3] Mr Clarke accepts that conditions will be imposed on any grant of leave. His offending related to the underpayment of GST to New Zealand Customs (“Customs”) on the importation of heavy machinery into this country. He suggests that all information and documents P L Clarke Ltd sends to its customs broker in the future should also be copied to the company’s accountants to verify. The accountant will then be required to certify to Customs that the supplier invoices match the bank payments.

[4] Customs is an interested non-party in these proceedings. It has filed two memoranda setting out considerations it suggests are relevant to the Court’s determination. It comments on the conditions Mr Clarke proposes. It suggests that an additional condition that could be imposed which would reduce the risk to the public, namely that an independent director be appointed to act alongside Mr Clarke. It submits that this would provide additional oversight of the companies’ operations from

1      New Zealand Customs Service v Clarke [2021] NZDC 15258.
2      Crimes Act 1961, s 259(1)(a) – maximum penalty 10 years’ imprisonment.
3      Customs and Excise Act 2018, s 368(1)(b) – maximum penalty six months’ imprisonment or a fine not exceeding $10,000 or three times the value of the goods to which the offence relates.

within which, when combined with the external oversight of the companies’ accountant, would help to protect against the risk of further offending. Subject to these comments, it has confirmed that it neither supports nor opposes Mr Clarke’s application.

[5] The Registrar of Companies was given notice of the proceedings as required by s 382. 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 Clarke

Details

AGLC: Clarke [2021] NZHC 3017
Case: [2021] NZHC 3017
Decision Date: 9 November 2021

CaseChat Overview and Summary

Paul Lambert Clarke sought leave to be a director and to take part in the management of three companies: P L Clarke Ltd, Clarke Machinery Ltd and Valley Mechanical Ltd. Mr Clarke was convicted of using altered documents with intent to deceive and producing false documents, and as a result, he is prohibited from managing and being a director of any company for a term of five years unless he obtains the leave of the Court. The Court was required to determine whether Mr Clarke should be granted leave to act as a director and to manage the companies, and if so, on what terms and conditions. The Court considered the interests of creditors, shareholders, company employees, investors and others who have dealings with the company, Mr Clarke's personal position and any hardship to him and to third parties, balanced against the core objective of protecting the public, the nature of the offending and Mr Clarke's involvement, the general character of Mr Clarke and, specifically, his remorse, the likelihood of further offending and whether the offending was an aberration or part of a pattern of sustained behaviour, the nature of the companies the applicant seeks leave to direct or manage, including its structure, its business model and its financial performance, the nature of the applicant’s intended role in the company and the risk posed to the public as a result, the business history of the applicant, in particular, whether fraud or losses to the public feature in that business history, and the recent conduct of the applicant. The Court concluded that it was appropriate to grant leave to Mr Clarke to act as a director of and to be involved in the management of the three companies, subject to certain conditions. The Court granted leave to Mr Clarke to act as a director of and to be involved in the management of the three companies, subject to the conditions set out in the judgment.

Orders