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Dalton v Hong

Dalton v Hong

Case [2018] NZHC 2266 30 August 2018

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-0957

[2018] NZHC 2266

BETWEEN
SIMON DALTON and MATTHEW KEMP

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

AND

BOON GUNN HONG

Respondent

Hearing: 31 July 2018

Appearances:

A Ho for the Applicants Respondent in person

Judgment:

30 August 2018

JUDGMENT OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 30 August 2018 at 11.30am, 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 [2018] NZHC 2266 [30 August 2018]

[1] The applicants (the liquidators) are the liquidators of Charming Group (NZ) Ltd (Charming Group). Charming Group was put into liquidation by order of the Court on 13 December 2017.

[2] The respondent (Mr Hong) is a solicitor who conducts a general practice in Auckland under the name B G Hong Law Firm. Mr Hong represented Charming Group in a court proceeding before its liquidation, and he had also acted for Ms Chi Ying Cheng and Ms Ricki Li, who were the directors of Charming Group.

[3] The liquidators now apply for an order under s 266 of the Companies Act 1993 (the Act) that Mr Hong produce documents relating to the business, accounts and affairs of Charming Group.

The liquidators ask Mr Hong for documents

[4] On 13 December 2017 the liquidators sent a letter to Mr Hong, urgently requiring access to the records of Charming Group, including documents and records held by Mr Hong on its behalf. They also asked for contact details for Charming Group's directors. The request was made under s 261(1) of the Act, and compliance was required within seven days.

[5] When no reply was received by 19 December, Mr Francis, an insolvency manager employed by the liquidators' firm, sent a reminder email to Mr Hong. Mr Hong replied the following day, advising that he had only acted for Charming Group in certain litigation (the landlord litigation) in which damages had been sought against the landlord of certain restaurant premises Charming Group had occupied in Mairangi Bay. Mr Hong said that the only asset Charming Group had had was its restaurant business, but the landlord had terminated the relevant lease and sold all Charming Group's belongings.

[6] On 20 December 2017 Mr Francis acknowledged Mr Hong's response, but said that the liquidators would still need his files on the matter he had handled. Mr Hong replied immediately, saying: "Sorry on the litigation files such is legally privileged".

[7] Later the same day, Mr Francis responded by email, contending that any privilege would be owned by Charming Group, and would not prevent the liquidators compelling delivery of the file. Mr Hong replied, also on 20 December 2017, saying:

Sorry, as you can get the file from the director or the Court or would you cover me for the costs incurred?

Yes, otherwise serve me with any application …

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 [2018] NZHC 2266
Case: [2018] NZHC 2266
Decision Date: 30 August 2018

CaseChat Overview and Summary

In the High Court of New Zealand, the liquidators of Charming Group (NZ) Ltd sought an order under section 266 of the Companies Act 1993, compelling Boon Gunn Hong, a solicitor who had acted for the company, to produce documents relating to the business, accounts, and affairs of Charming Group. The court held that Mr Hong had in his possession documents that he had not produced to the liquidators, and the liquidators were entitled to those documents as proper custodians of the company's documents from the time of liquidation. The court found that the liquidators had not been motivated by any ulterior purpose in making their request for the documents, and that ordering production would not be unnecessary, unreasonable, or oppressive to Mr Hong. The court ordered Mr Hong to review all documents prepared for Charming Group or any of its directors, and to produce the relevant documents to the liquidators within a specified period. The court also ordered Mr Hong to file a memorandum listing any documents for which a claim to confidentiality or privilege is made, and to file copies of these documents in a sealed envelope. Costs on the application were reserved.

Orders