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Finnigan v Ellis

Finnigan v Ellis

Case [2017] NZCA 488 30 October 2017

Jurisdiction

Statutory Interpretation

Discretion

Corporate Law & Governance

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IN THE COURT OF APPEAL OF NEW ZEALAND

CA387/2017
[2017] NZCA 488

BETWEEN	PERI MICAELA FINNIGAN AND BORIS VAN DELDEN AS LIQUIDATORS OF WENZTRO CO‑OPERATION LIMITED Appellants
AND	BRIAN ROBERT ELLIS Respondent

Hearing:	31 August 2017
Court:	Harrison, Duffy and Williams JJ
Counsel:	K J Crossland and W D Buckham for Appellants R B Hucker and R F Selby for Respondent
Judgment:	30 October 2017 at 12 pm

JUDGMENT OF THE COURT

AThe application for leave to adduce new evidence is declined.
BThe appeal is dismissed.
CThe appellants are ordered to pay the respondent costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Duffy J)

Table of Contents

Introduction  [1]
Background  [4]
Jurisdiction  [8]

Statutory provisions  [11]
Legislative history  [13]
New Zealand case law  [19]
Australian case law  [21]
English case law  [26]
Analysis  [26]
(a)   Statutory interpretation  [38]
            (b)   Australian approach  [42]
            (c)    Privacy issues   [44]
            (d)   Jurisdiction and discretion  [47]
Conclusion  [48]

Discretion [51]
Result [52]

Introduction

The appellants are the liquidators of Wenztro Co-operation Ltd, formerly called Trojan Foods (NZ) Ltd. The respondent Brian Ellis is a former director of Wenztro. The liquidators have commenced legal proceedings against the respondent and other former directors of Wenztro alleging various breaches of their duties as directors. These proceedings are the sole remaining asset of the company.
Before they incur further litigation costs the liquidators want to ascertain the prospects of recovering any money judgment they may obtain against the former directors. Mr Ellis refused to provide the liquidators with information about his financial means. The liquidators applied to the High Court seeking orders for this disclosure. Mr Ellis successfully opposed the making of those orders.[1]
[1]Finnigan v Ellis [2017] NZHC 1397 [HC judgment].
The key questions on appeal are whether the High Court has jurisdiction under the Companies Act 1993 to order Mr Ellis to disclose privately-held personal financial information about his means (private financial information) for the purpose of establishing his judgment worthiness; and if so, whether the Court should exercise that power here. The issues these questions raise are novel. They have not been addressed in New Zealand before.

Background

On 9 October 2012 Wenztro went into voluntary liquidation. On 4 February 2016 the present liquidators were appointed. In July 2016 the liquidators joined forces with WH Trading Ltd, a creditor of Wenztro, to commence a civil claim against Mr Ellis and the other former directors seeking recovery of approximately $773,000 or such other sum as the High Court thinks just.
The liquidators are concerned that Mr Ellis may have taken or will yet take steps to dissipate his assets so that any judgment they obtain against him will not bear fruit. Hence their attempt to obtain information on his financial means. First they sought to obtain information from him and to examine him themselves pursuant to s 261 of the Companies Act.…

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 Finnigan v Ellis

Details

AGLC: Finnigan v Ellis [2017] NZCA 488
Case: [2017] NZCA 488
Decision Date: 30 October 2017 at 12 pm

CaseChat Overview and Summary

In Finnigan v Ellis, the Court of Appeal considered whether liquidators could require former directors of an insolvent company to disclose their financial means in order to ascertain whether they could meet any judgment obtained against them. The liquidators, Peri Micaela Finnigan and Boris Van Delden, sought orders under the Companies Act 1993 to obtain private financial information from Brian Robert Ellis, a former director of Wenztro Co-operation Limited. The Court of Appeal held that the High Court did not have jurisdiction to make such orders. The Court rejected the liquidators' argument that they should follow Australian case law which permits the gathering of such information. The Court found that the statutory provisions did not permit the examination of a former director's private financial information, and that privacy concerns weighed against allowing such information to be obtained. The Court held that the liquidators should apply for charging or freezing orders under the High Court Rules if they had concerns about a former director dissipating their assets. The appeal was dismissed and the liquidators were ordered to pay costs.

Orders