Dalton v Hong - [2019] NZHC 1473

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-0957

[2019] NZHC 1473

UNDER the Companies Act 1993, Part 16 (Liquidations)

IN THE MATTER

of an application pursuant to s 261 and s 266 by applicants for order to produce AND a cross-application for directions declaratory orders against the Applicant Liquidators

BETWEEN

SIMON DALTON and MATTHEW KEMP

as liquidators of CHARMING GROUP (NZ) LIMITED (In Liquidation)
Applicants

AND

BOON GUNN HONG

Respondent

Hearing: On the papers

Counsel:

A Ho for the Applicants Respondent in person

Judgment:

26 June 2019

RESERVED JUDGMENT (NO. 2) OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 26 June 2019 at 4.00pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors / Counsel:
Martelli McKegg, Auckland B G Hong, Auckland

DALTON v HONG [2019] NZHC 1473 [26 June 2019]

[1] The applicants are the liquidators of Charming Group (NZ) Ltd (In Liquidation) — "Charming Group". The applicants, who I will refer to as "the liquidators", applied under s 266 of the Companies Act 1993 (the Act) for an order that Mr Hong, an Auckland solicitor who had acted for Charming Group and its directors, produce documents relating to the business, accounts and affairs of Charming Group.

[2] In my judgment delivered on 30 August 2018,1 I ordered Mr Hong to review all documents on his computer(s) in the period 1 January 2010 to 13 December 2017 prepared for Charming Group or any of its directors, or passing between himself and Charming Group or any of its directors. I directed that any documents relating to Charming Group or its business, accounts or affairs that were documents of Charming Group (ie owned by or held for Charming Group) were to be delivered to the liquidators, and (in respect of remaining documents relating to the business, accounts or affairs of Charming Group) directed Mr Hong to ascertain whether any claims to privilege or confidentiality were asserted, whether by a director or directors of Charming Group,2 or by any other party.

[3] I required Mr Hong to file and serve a memorandum listing all documents within the stipulated date range relating to Charming Group or its business, accounts or affairs for which a claim to confidentiality or privilege was made, identifying in each case the names of the parties and the dates of the documents, and stating the basis on which the document was said to be the subject of privilege or an entitlement to confidentiality that was not owned by Charming Group. Mr Hong was directed to file those documents in Court in a sealed envelope marked for my attention, and to advise the Court whether any person who had asserted a claim to privilege or confidentiality wished to be heard in support of that claim, or wished to make submissions on it.

[4] Mr Hong filed two memoranda, dated 20 November 2018 and 17 December 2018. Following his review of the documents on…

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 Dalton v Hong

Details

AGLC: Dalton v Hong [2019] NZHC 1473
Case: [2019] NZHC 1473
Decision Date: 26 June 2019

CaseChat Overview and Summary

The applicants, Simon Dalton and Matthew Kemp, liquidators of Charming Group (NZ) Ltd (In Liquidation), sought an order under the Companies Act 1993 for Mr Hong, an Auckland solicitor who had acted for Charming Group and its directors, to produce documents relating to the business, accounts, and affairs of Charming Group. Mr Hong, in turn, cross-applied for directions and declaratory orders against the liquidators. The case involved the review of documents from Mr Hong's computer spanning from 1 January 2010 to 13 December 2017, prepared for Charming Group or any of its directors. The court had previously ordered Mr Hong to review these documents, and he was required to deliver documents owned by or held for Charming Group to the liquidators while assessing claims of privilege or confidentiality for other documents.

The legal issues in this case revolved around the ownership of privilege for certain documents, their relevance to the liquidators' functions, and whether Mr Hong should be compelled to produce specific documents to the liquidators. The court needed to determine whether Mr Hong was required to produce documents claimed to be privileged or confidential, and if so, whether these documents pertained to the business, accounts, or affairs of Charming Group.

In its judgment, the court examined each document in detail, distinguishing between those that were subject to privilege and those that were not. The court found that some documents, such as those relating to personal legal advice to the directors, were subject to legal professional privilege and did not need to be produced. Other documents, which pertained to the business, accounts, or affairs of Charming Group, were considered for privilege claims. The court identified that some documents appeared to be jointly privileged by Charming Group and its directors. However, due to incomplete submissions from Mr Hong, the court directed him to file supplementary written submissions clarifying the ownership of privilege and the reasons why certain documents should not be produced to the liquidators. The court also noted that some documents fell outside the stipulated date range and need not be produced.

The court made several orders regarding the production of documents. It directed that certain documents need not be produced as they were either unrelated to the business, accounts, or affairs of Charming Group, or were subject to legal professional privilege. In respect of other documents, Mr Hong was required to file supplementary submissions to clarify the ownership of privilege and the rationale for withholding these documents from the liquidators. Costs were reserved for further consideration.

Orders