Dalton v Osmond
[2023] NZHC 282
•24 February 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-1382
[2023] NZHC 282
UNDER the Companies Act 1993 IN THE MATTER OF
the liquidation of DELTA SHARED
SERVICES LIMITED (IN LIQUIDATION)
BETWEEN
SIMON DALTON and BENJAMIN BRIAN
FRANCIS as liquidators of
DELTA SHARED SERVICES LTD (In liq)
ApplicantsAND
MURRAY ATHOL OSMOND
Respondent
Hearing: 21 November 2022 Appearances:
JRF Cochrane for the Applicants Respondent is self-represented
Date of judgment:
24 February 2023
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
This judgment was delivered by me on 24 February 2023 at 3.00pm.
Pursuant to Rule 11.5 of the High Court Rules.
………………………… Registrar/Deputy Registrar
Solicitors:
Lane Neave, Auckland
Copy to:
Respondent
DALTON v OSMOND [2023] NZHC 282 [24 February 2023]
Introduction
[1] The applicants, the joint liquidators of Delta Shared Services Ltd (Delta), seeks orders under s 266 of the Companies Act 1993 that the respondent, Murray Osmond, produce company records and attend for examination.
Background
[2] Mr Osmond is the sole director of Deltrust Ltd (Deltrust). Deltrust is the sole shareholder of Delta Private Equity Ltd (Delta PE), which in turn is the sole shareholder of Delta.
[3] Delta was placed into liquidation on 27 May 2022. Simon Dalton and Benjamin Francis were appointed joint liquidators of the company. They attempted to contact Mr Osmond in relation to Delta. Mr Osmond did not respond.
[4] The liquidators subsequently served on Mr Osmond a Request for Documents and Information Letter under s 261 of the Companies Act (the Notice). The Notice required Mr Osmond to provide financial records of Delta and attend on the liquidators to be examined on oath on 6 July 2022. But Mr Osmond did not comply with the Notice. He did not provide the required documents or make himself available for examination.
Originating application
[5]The liquidators apply for orders requiring Mr Osmond:1
(a)to produce and deliver up to the liquidators all books, records, documents and any other property of or relating to the business, accounts or affairs of Delta in his possession or under his control;
(b)to confirm on oath by way of affidavit that he has diligently searched for all books, records, documents and other property of Delta and delivered what he has in his possession or control to the liquidators;
1 Originating application on notice for orders to produce books, records and documents and to attend before the court for examination dated 3 August 2022 at [1].
(c)to list in a schedule to his affidavit the books, records, documents and other property of Delta in his possession or control that he has produced or delivered to the liquidators; and all books, records, documents, and other property of Delta that are no longer in his possession or control, or which were never in his possession or control, including their last known or suspected location, and the name of the person or persons in whose possession or control they are believed to be;
(d)to produce or deliver up the books, records, documents and other property of or relating to Delta and his affidavit to the liquidators immediately or within such other time as the Court considers reasonable before he is examined on oath;
(e)to attend before the Court and be examined on oath or affirmation on any matter relating to the business, accounts or affairs of Delta at such time as the Court directs; and
(f)to pay the liquidators costs and disbursements relating to this application and any related attendances.
[6]The grounds on which the orders are sought are:2
(a)the liquidators are liquidators of Delta;
(b)Mr Osmond is a person to whom s 261 of the Companies Act applies;
(c)Mr Osmond is the sole director and sole shareholder of Deltrust, the ultimate shareholder of Delta;
(d)the sole shareholder of Delta is Delta PE;
(e)Deltrust is the sole shareholder of Delta PE;
2 At [2].
(f)Mr Osmond is the sole director and sole shareholder of Deltrust, and therefore the ultimate owner and controller of Delta;
(g)Companies Office records demonstrate Mr Osmond had presented documents relating to Delta to the Companies Office;
(h)Mr Osmond’s personal residential address recorded on the Companies Office is the same as the registered office addresses for Delta PE, Deltrust, and, prior to its liquidation, Delta;
(i)Mr Osmond as a present or former director or employee of a company in liquidation has a duty to identify and deliver property of Delta to the liquidators;
(j)Mr Osmond has failed to comply with requests under s 261 of the Companies Act;
(k)the sought orders are necessary for the liquidators to perform their statutory duties under the Companies Act; and
(l)it is in the interests of creditors and the interests of justice that the orders be granted.
Affidavit of Benjamin Francis dated 2 August 2022
[7] Mr Francis has made an affidavit in support of the liquidators’ application. He deposes that Delta was placed into liquidation on 27 May 2022 and that Mr Osmond, purportedly on behalf of Delta PE, applied to recall the liquidation judgment. He says that on 3 June 2022, he left a voicemail message for Mr Osmond to tell him that he and Mr Dalton had been appointed as liquidators of Delta. Mr Francis says he emailed Mr Osmond confirming the appointments.3
3 Affidavit of Benjamin Brian Francis in support of originating application on notice for orders to produce books, records and documents and to attend before the court for examination dated 2 August 2022 at [5]–[6].
[8] Mr Francis says that on 10 June 2022, having not received a response, he sent a further email to Mr Osmond. He says the liquidators then served the Notice on Mr Osmond, requiring him to provide various information relating to Delta and to attend a meeting with the liquidators on 6 July 2022. Mr Francis deposes Mr Osmond did not provide the required documentation and information within the timeframe prescribed in the Notice and he did not attend on the liquidators for examination as required by the Notice.4
[9] Mr Francis deposes he believes Mr Osmond is a person to whom s 261 of the Companies Act applies. He says Mr Osmond is the sole director and shareholder of Delta’s ultimate shareholder, Deltrust — the sole shareholder of Delta being Delta PE, and the sole shareholder of Delta PE being Deltrust. Mr Francis says further that the liquidators have been in contract with the solicitors for Delta’s landlord, and that they have said the main person they dealt with in relation to Delta was Mr Osmond. And, he notes, Mr Osmond has filed a number of documents relating to Delta in the Companies Register.5
[10] Mr Francis says that the liquidators seek that Mr Osmond produce and deliver up to them all books, records, documents and any other property of or relating to the business, accounts or affairs of Delta in his possession or under his control. They also seek that he confirm by affidavit that he has diligently searched for and delivered all such material; and that he list in a schedule to that affidavit the material he has produced and delivered, and all material no longer in his possession or control or which was never in his possession in control, including the last known or suspected location of the material and the name of the person or persons in whose possession or control it is believed to be. Finally, Mr Francis says, the liquidators seek that Mr Osmond deliver up the material relating to Delta and his affidavit to the liquidators immediately or within such other time as the Court considers reasonable before he is examined on oath.6
4 At [7]–[11].
5 At [12]–[13].
6 At [17]–[18].
[11] Mr Francis says that once the sought material has been delivered up, the liquidators seek the attendance of Mr Osmond before the Court to be examined on oath or affirmation, and the ability to question Mr Osmond on any matter relating to the business, accounts or affairs of Delta.7
[12] Mr Francis says Mr Osmond has failed to comply with the Notice and that the liquidators consider that the orders sought are necessary to enable them to perform their statutory duties under the Companies Act. He says they also consider it is in the interests of creditors and the interests of justice that the orders be granted.8 Finally, Mr Francis says, the liquidators seek an order that Mr Osmond pay costs and disbursements relating to this application and any related attendances.9
Opposition
[13]Mr Osmond opposes the application on the following grounds:10
a.That the Respondent is not a director or shareholder of Delta Shared Services Limited (the Company).
b.The Respondent is not an employee of the Company
b.That the Respondent is not a person to whom section 261(2) applies.
c.That the Respondent does not hold any books, records or documents of the company other than letters relating to the petitioning creditor’s claim and service thereof, and email correspondence with the landlord all of which the Applicant has indicated or should have access to.
d.The Respondent’s business Consultus New Zealand limited was only contracted by the Company to assist in the dispute with the petitioning creditor and to deal with the Landlord in relation to notices the landlord had issued.
e.That the request to assist came from Dr Craig who at the time was unwell and had been admitted to hospital
f.That the Respondent resides in Cambridge and only rarely visited Auckland and the offices from which the Company operated.
7 At [19].
8 At [21].
9 At [20]–[22].
10 Notice of opposition dated 13 October 2022 at [3].
Affidavit of Murray Osmond dated 14 October 2022
[14] Mr Osmond has sworn an affidavit in support of his notice of opposition. He deposes he is not a director, shareholder or employee of Delta, and has never been. He says he does not believe, having completed a search, that he has financial documents of any kind in his possession relating to Delta. He confirms he does not have any access to any of Delta’s financial records.11
[15] Mr Osmond deposes he has carefully searched his records and he believes the only matters he has attended to for Delta were in his capacity as a director of his company Consultus New Zealand Ltd. Delta’s director, Graham Craig, had asked for assistance with two matters when he was ill and in hospital: a dispute with a petitioning creditor over alleged monies owed for car rental and correspondence by email with the landlord and its solicitors. Mr Osmond acknowledges that, in another capacity, he has also corresponded with the Court with respect to service of documents in the liquidation process and the application for recall.12
[16] Mr Osmond says he believes the liquidators must already have access to the sought documents as they refer to them in documents filed in support of the originating application. He deposes further that his company has not been paid for the work undertaken for Delta. And he says that in the preliminary hearing in relation to jurisdiction, he made it very clear that he believed he had no records of Delta that could assist the liquidators, but that the liquidators have proceeded regardless. He has therefore been put to the time and expense of contesting the application. Accordingly, Mr Osmond says, he seeks costs.13
Liquidators’ submissions
[17] James Cochrane, for the liquidators, submits there are two overarching issues for the Court to determine on this application. The first question is whether Mr Osmond is a person to whom ss 261, 266 and 274 of the Companies Act apply.
11 Affidavit of Murray Athol Osmond in support of notice of opposition dated 14 October 2022 at [1]-[5].
12 At [6]–[7].
13 At [8]–[10].
The second question is, if Mr Osmond is such a person, whether the Court ought to grant the sought orders.
[18] Mr Cochrane submits that Mr Osmond comes within the scope of the relevant provisions as a de facto director or employee. He says the Companies Act takes a broad view of “director”, encompassing persons occupying the position of director by whatever name called. Mr Cochrane, pointing to the evidence set out in Mr Francis’ affidavit, submits that Mr Osmond had effective directorship of Delta. And, even if Mr Osmond were not considered to be a de facto director or employee, his extensive involvement with Delta brings him within ss 261 and 266 because he is either a person involved in the promotion or formation of Delta or a person with knowledge of Delta’s affairs.14
[19] As to whether the Court should grant the sought orders, Mr Cochrane says the liquidators’ position is supported by a number of factors. He says the liquidators should be the proper custodians of Delta’s documents, the orders are reasonably necessary for the liquidators to discharge their functions and duties, the sought information is required to understand Delta’s financial position and for the liquidators to determine how to proceed, there is public interest in providing the sought information, the sought orders are not unduly onerous, and the sought orders are an appropriate legal procedure available to the liquidators. Mr Cochrane says the liquidators have strong grounds to believe Mr Osmond has further documents relating to Delta that he has not delivered up.15
[20] Mr Cochrane submits it is implausible that a director of a company’s immediate shareholder and ultimate shareholder does not have knowledge of matters relating to that company. It is therefore appropriate that orders for production of documents and property be made, and that Mr Osmond’s evidence be tested by way of examination before the Court. The liquidators’ application is reasonable, necessary, and fair and the sought orders should be granted.16
14 At [13]–[22].
15 At [23]–[25].
16 At [26]–[27].
[21] As to costs, Mr Cochrane submits the Court may award increased costs if the party opposing costs has contributed unnecessarily to the time or expense of the proceeding by pursuing arguments that lack merit. He says the liquidators have incurred costs because Mr Osmond failed to comply with his obligations under s 261, and now defends the application on implausible grounds. If the Court does not consider indemnity costs appropriate, Mr Cochrane says, the liquidators seek 2B costs.17
[22] Concluding, Mr Cochrane submits the liquidators have established that the relevant provisions of the Companies Act apply to Mr Osmond. He reiterates that the orders sought are necessary for the liquidators to discharge their statutory duties and to progress Delta’s liquidation in the best interests of the creditors.18
Mr Osmond’s submissions
[23] Mr Osmond, representing himself, says his position is very clear. It is that ss 261, 266 and 274 of the Companies Act do not apply to him. He submits that he is not a director of Delta, not involved in the promotion or formation of Delta, has not been an employee of Delta and does not have knowledge of the affairs of Delta. He submits that his position does not fall within the specific requirements of the information- gathering provisions, and reiterates that he holds no financial records of Delta. He says there is nothing for the liquidators to be provided with in relation to the material they seek.19
[24] Mr Osmond submits it is a long bow to draw to suggest that he is an employee or person who has knowledge of Delta’s affairs. He says that his being a director of a corporate trustee company that is several times removed from the liquidating company does not assist the liquidators. Mr Osmond also says he has the right, under s 21 of the New Zealand Bill of Rights Act 1990, to be secure against the liquidators’ “unreasonable” efforts to compel production of the sought material. The liquidators
17 At [28]–[30].
18 At [31]–[32].
19 Submissions of respondent dated 14 November 2022 at [1]–[5].
having failed to bring him under s 261, Mr Osmond submits, the application must fail.20
[25] Mr Osmond says some of the evidence the liquidators have put forward is hearsay and is not to be relied upon. Finally, he submits that for an order to be made it must be clear that the likely effect of the order is that the evidence and information to be obtained will provide the liquidators with financial information they do not already have, and which will assist them. He says the clear evidence is that the liquidators have access to all the possible evidence, documents or information that he has. In those circumstances, Mr Osmond submits, the application should be dismissed and the liquidators ordered to pay his reasonable costs.21
Legal principles
[26] Sections 261, 266 and 274 of the Companies Act 1993 are relevant to the present application. For convenience, I set out the relevant parts:
261 Power to obtain documents and information
(1)A liquidator may, from time to time, by notice in writing, require a director or shareholder of the company or any other person to deliver to the liquidator such books, records, or documents of the company in that person’s possession or under that person’s control as the liquidator requires.
(2)A liquidator may, from time to time, by notice in writing require—
(a)a director or former director of the company; or
(b)a shareholder of the company; or
(c)a person who was involved in the promotion or formation of the company; or
(d)a person who is, or has been, an employee of the company; or
(e)a receiver, accountant, auditor, bank officer, or other person having knowledge of the affairs of the company; or
(f)a person who is acting or who has at any time acted as a solicitor for the company—
to do any of the things referred to in subsection (3).
20 At [6]–[9].
21 At [10]–[13].
(3)A person referred to in subsection (2) may be required—
(a)to attend on the liquidator at such reasonable time or times and at such place as may be specified in the notice:
(b)to provide the liquidator with such information about the business, accounts, or affairs of the company as the liquidator requests:
(c)to be examined on oath or affirmation by the liquidator or by a barrister or solicitor acting on behalf of the liquidator on any matter relating to the business, accounts, or affairs of the company:
(d)to assist in the liquidation to the best of the person’s ability.
…
266 Powers of court
(1)The court may, on the application of the liquidator, order a person who has failed to comply with a requirement of the liquidator under section 261 to comply with that requirement.
(2)The court may, on the application of the liquidator, order a person to whom section 261 applies to—
(a)attend before the court and be examined on oath or affirmation by the court or the liquidator or a barrister or solicitor acting on behalf of the liquidator on any matter relating to the business, accounts, or affairs of the company:
(b)produce any books, records, or documents relating to the business, accounts, or affairs of the company in that person’s possession or under that person’s control.
…
274 Duty to identify and deliver property
(1)A present or former director or employee of a company in liquidation must,—
(a)forthwith after the company is put into liquidation, give the liquidator details of property of the company in his or her possession or under his or her control; and
(b)on being required to do so by the liquidator, forthwith or within such time as may be specified by the liquidator, deliver the property to the liquidator or such other person as the liquidator may direct, or dispose of the property in such manner as the liquidator may direct.
…
Analysis
[27]The two questions to be determined in this judgment are:
(a)Is Mr Osmond a person to whom ss 261, 266, and 274 of the Companies Act 1993 apply?
(b)If the answer to the question at [27](a) is “yes”, should the Court grant the orders sought by the applicant liquidators?
[28]I deal with each of these in turn.
Is Mr Osmond a person to whom ss 261, 266, and 274 of the Companies Act 1993 apply?
[29] Mr Cochrane submits that ss 261, 266, and 274 of the Companies Act 1993 apply to Mr Osmond for a number of reasons. He submits that Mr Osmond is a de facto director of Delta, that the Companies Act widely defines the term “director”22 and the term extends beyond those that have been formally appointed as directors and encompasses persons occupying the position of a director by whatever name called.
[30] Mr Cochrane submits that Osmond’s effective directorship and work with Delta is evidenced by the following:
(a)Mr Osmond is sole director and shareholder of Deltrust, which is Delta’s ultimate shareholder. Mr Osmond is also sole director and shareholder of Aniwaniwa Trustee Ltd, which was the shareholder of Delta prior to 3 July 2020.
(b)The Companies Register records Mr Osmond’s address as 73 Watkins Road, Cambridge 3434, which is the same registered address/office of Delta prior to its liquidation, of Delta’s sole shareholder Delta PE and of Delta PE’s sole shareholder Deltrust.
22 Companies Act 1993, s 126.
(c)Mr Osmond had previously titled himself as a director of Delta PE and confirmed that Delta is a wholly-owned subsidiary of Delta PE.
(d)Mr Osmond has presented a number of documents relating to Delta to the Companies Register including particulars of address, shareholders and directors and annual returns. Mr Cochrane submits that these demonstrate Mr Osmond’s involvement with Delta since its incorporation in March 2016. Annual returns have been filed by Mr Osmond for the years 2016 to 2021 which refer to him with the designation “authorised person”.
(e)The solicitors for the Delta’s landlord, Methanex New Zealand Ltd, confirmed that Mr Osmond was their key contact for Delta; and
(f)Mr Osmond appears to have witnessed Delta’s sole director, Grahame Craig, signing the deed of sublease with Methanex in or around 2021.
[31] Mr Cochrane then submits that even if Mr Osmond cannot be considered a de facto director or employee of Delta, his extensive involvement with Delta brings him within ss 261 and 266 as either:
(a)a person involved in the promotion or formation of Delta; and/or
(b)a person who has knowledge of Delta’s affairs.
[32] Mr Cochrane submits that on the face of Mr Osmond’s own evidence, he is a person with knowledge of affairs of Delta. He refers to at least three separate matters that demonstrate this knowledge:
(a)assisting with “a dispute with a petitioning creditor”,
(b)corresponding by email with the landlord and its solicitors over notices issued in relation to the lease; and
(c)corresponding with the Court in respect of the alleged service of the documents in the liquidation process and the application to recall.
[33] Mr Cochrane submits that these matters also demonstrate that Mr Osmond has in his possession, or tend to suggest that he might know the location of, documents relating to the affairs of Delta which the liquidators would consider the books and records of Delta.
[34] Mr Osmond on the other hand submits that ss 261, 266, and 274 of the Companies Act 1993 do not apply to him given the facts and circumstances. He submits that when viewing the requirements of s 261, he is not a director, not an employee, not involved in the promotion or formation of Delta, and does not have knowledge of the affairs of Delta. He submits that he does not, in any way, meet the criteria of a de facto director and that there is no proper evidence before the Court of him acting in any managerial capacity or any director-like capacity.
[35] Mr Osmond submits that the work he has been involved in is already known to the liquidators:
(a)the appointing creditor and its solicitor undertook the correspondence with him and so the liquidators should have access to this correspondence and the relevant affidavits; and
(b)the sublease correspondence was available via the landlords solicitors with whom the liquidators acknowledge they had been in touch.
[36] Mr Osmond relies on Lee v Lee’s Air Farming Ltd which he submits underlines the principle that companies have separate legal personalities and so do shareholders are in the same position.23 Mr Osmond submits he is not a shareholder of Delta and that is a specific requirement of s 261.
23 Lee v Lee’s Air Farming Ltd [1961] NZLR 325 (PC).
[37] Mr Osmond submits that witnessing a document does not involve a person in management of Delta and that being a director of a corporate trustee company several times removed from Delta does not assist the liquidators in their application.
[38] Mr Osmond submits that the Companies Act must be read and interpreted consistently with the New Zealand Bill of Rights Act 1990 (NZBOR) and that under the s 21 of NZBOR “everyone has the right to be secure against unreasonable search or seizure, whether of the person, property, or correspondence or otherwise”. Mr Osmond submits that the liquidators are taking an unreasonable approach in continuing the application when he has deposed to having no additional information to that which the liquidators are already aware and/or have control over and, particularly as he deposes he has no financial information or access to any financial information relating to Delta.
Conclusion on this issue:
[39] In my view, the liquidators have demonstrated that ss 261, 266, and 274 of the Companies Act 1993 apply to Mr Osmond either by his acting as a de facto director of Delta or if not, as a person with knowledge of the affairs of Delta. This is demonstrated by the actions of Mr Osmond as set out at [30] and [32].
If the answer to the question at [27](a) is “yes”, should the Court grant the orders sought by the applicant liquidators?
[40] Mr Cochrane submits that the orders sought by the liquidators ought to be granted for the following reasons:
(a)From the point of view of the liquidation, the liquidators should be the proper custodians of the company’s documents.24 As it is recognisably difficult for the liquidators to show how the information sought will assist in the liquidation (given the contents of the information is unknown to them) it is not necessary for the liquidators to demonstrate
24 Dalton v Hong [2018] NZHC 2266, [2018] NZAR 1497 at [62] and [90]–[92].
any particular purpose or objective in requesting delivery of information. The powers of the liquidators are necessarily broad.25
(b)The orders are reasonably necessary for the liquidators to discharge their functions and duties. Mr Cochrane submitted the liquidators have been unable to reconstitute knowledge which may be held by Delta’s company’s director, Mr Craig, due to his poor health and unknown location. Mr Osmond has failed to comply with the notice pursuant to s 261 and so failed to provide documents, property or information sought by the liquidators and has failed to reasonably assist them. Accordingly, Mr Cochrane submits the liquidator’s application is a genuine attempt to reconstruct knowledge of Delta and its affairs leading up to the liquidation.
(c)He submits that, given the lack of information currently available to the liquidators, this information is required to understand, among other things, Delta’s financials and determine how to proceed.
(d)As a liquidator is typically working with limited funds, it is in the public interest that they acquire relevant information with as limited expense as possible and in the most expeditious manner. Obtaining information from Mr Osmond will enable the liquidation to progress in the best interest of creditors.
(e)The orders will not impose unnecessary and unreasonable burden on Mr Osmond. It is not unreasonable to expect Mr Osmond to provide documents and property information under oath.
(f)The orders sought are an appropriate legal procedure available to the liquidators.
25 Concrete Structure Ltd v NMHB (in liq) [2020] NZHC 1218 at [22] citing Norrie v Sutich [2013] 2495 at [37].
[41] Mr Cochrane further submits that in opposition to the application, Mr Osmond attempts to hide behind the corporate veil claiming that the matters he attended to concerning Delta were as a director of Consultus New Zealand Ltd. Mr Cochrane submits that in the light of Mr Francis’s evidence, this assertion is disingenuous.
[42] Mr Cochrane further submits that although Mr Osmond advances that he did not believe he was in possession of any records that can assist the liquidators, on admission, he has attended to matters relating to Delta and corresponded with the Court of Appeal in respect of the application to recall. These documents have not been provided to liquidator and, given Mr Osmond’s involvement in Delta, the liquidators have strong grounds to believe that he has further documents and knowledge in relation to Delta.
[43] Finally, Mr Cochrane submits that it is implausible that someone who is a director (or former director) of Delta’s immediate shareholder and ultimate shareholder, does not have knowledge of the matters relating to the subsidiary company. He submits that it is appropriate that Mr Osmond’s evidence be tested by examination before the Court.
[44] Mr Osmond, on the other hand submits that for the order to be made, it must be clear that the likely effect of the order is that evidence and information to be obtained will provide the liquidator with financial information that they do not already have and which will assist them. He refers to Finnigan v Ellis26 and Walker v Angus27. Mr Osmond submits the clear evidence is that the liquidators have access to all the relevant evidence and documents that he has (such as original affidavits now with the Court and correspondence). He submits, therefore, that he has disclosed what involvement he has had with Delta which is not managerial and not financial, and the order will achieve nothing further for the liquidators.
[45] In my view, the decision in Finnigan v Ellis does not assist Mr Osmond. In that decision, the Court declined an order under s 266 as the liquidators were attempting to obtain information relating to the director’s personal financial situation
26 Finnigan v Ellis [2017] NZCA 488, [2018] 2 NZLR 123.
27 Walker v Angus [2018] NZHC 2354.
with a view to bringing a claim against him, rather than seeking information regarding the company. While Walker v Angus does make the point that there is no requirement to deliver documents already available to the liquidator, this begs the question as to whether Mr Osmond has further documents not currently available to the liquidators and which is the point of examining him on oath.
Conclusion on this issue:
[46] The orders sought by the liquidators should be made. It is apparent from Mr Francis’s evidence that there is a paucity of information regarding Delta’s financial situation and records. Such information is not available from Delta’s director, Mr Craig, due to his health and unknown location.
[47]In my view:
(a)There is sufficient evidence before the Court that Mr Osmond has had considerable involvement in Delta’s affairs and further inquiry as to any documents or records of knowledge he may have is justified.
(b)While Mr Osmond’s made much of the separate legal entities in the corporate chain from Delta up to Delta’s ultimate shareholder DelTrust, I agree with Mr Cochrane’s submission that it is not really plausible that as a director or former director of Delta’s intermediate shareholder and ultimate shareholder, he does not have knowledge of the matters of a wholly-owned subsidiary company.
(c)The liquidator’s requests are reasonable and necessary and, in my view, will not be unduly burdensome to Mr Osmond.
Result:
[48] As a result of the conclusions I have reached at [39], [46] and [47], the orders sought by the applicant liquidators should be made.
Orders:
[49]I order that Mr Osmond is to:
(a)produce and deliver up to the liquidators all books, records, documents and any other property of or relating to the business, accounts or affairs of Delta in his possession or under his control;
(b)confirm on oath by way of affidavit that he has diligently searched for all books, records, documents and other property of Delta and delivered what he has in his possession or control to the liquidators;
(c)to list in a schedule to his affidavit the books, records, documents and other property of Delta in his possession or control that he has produced or delivered to the liquidators; and all books, records, documents, and other property of Delta that are no longer in his possession or control, or which were never in his possession or control, including their last known or suspected location, and the name of the person or persons in whose possession or control they are believed to be;
(d)produce or deliver up the books, records, documents and other property of or relating to Delta and his affidavit to the liquidators within five working days before he is examined on oath; and
(e)attend before the Court and be examined on oath or affirmation on any matter relating to the business, accounts or affairs of Delta at such time as may be directed by the Court, in consultation with the liquidators and Mr Osmond.
[50] My preliminary view is that costs should follow the event and accordingly the liquidators should be entitled to costs calculated on a 2B basis plus disbursements against Mr Osmond. If costs cannot be agreed within 20 working days of the date of this judgment:
(a)counsel for the liquidators will file a memorandum as to costs (not exceeding 5 pages) within 5 working days of expiry of the 15 day period referred to above;
(b)Mr Osmond will file a memorandum as to costs (not exceeding 5 pages) within 5 working days of the counsel for the liquidators memorandum; and
(c)the costs will be decided on the papers.
…………………………….
Associate Judge Taylor
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