Finnigan v Ellis - [2017] NZHC 1397

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2017-404-000141 [2017] NZHC 1397

BETWEEN
PERI MICHAEL FINNIGAN

First Applicant

AND

BORIS VAN DELDEN Second Applicant

AND

BRIAN ROBERT ELLIS Respondent

Hearing: 11 May 2017

Appearances:

K J Crossland and W Buckham for First and Second Applicants
R B Hucker and D J D Van Haut for Respondent

Judgment:

23 June 2017

JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 23 June 2017 at 10.30 a.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

Richard Wood, Auckland Hucker Law, Auckland Shieff Angland, Auckland

G Bogiatto, Auckland

FINNIGAN & Anor v ELLIS [2017] NZHC 1397 [23 June 2017]

[1] Fishing expeditions are a popular pastime for many people. The fisher does not know, of course, what he or she might reel in – trout, salmon, or nothing at all. Nonetheless, the line is thrown out in the hope, and the expectation, that something will bite. And then there is the alluring possibility that today, or maybe tomorrow, the hook will find that ‘perfect catch’.

[2] The liquidators in this case, Ms Finnigan and Mr Van Delden, are said to be

‘going on a fishing expedition’. In this legal context, the idiom has rather less cheerful connotations. This is especially so in the context of functionaries exercising tightly-constrained and essentially inquisitorial statutory powers, as in the present case. In this case, the liquidators want to fish in the lake of Mr Ellis’ personal accounts. The ‘perfect catch’ would be evidence that Mr Ellis has the assets to satisfy any judgment made against him.

[3] Mr Ellis is a former director of a now liquidated company, Wenztrou Cooperation Ltd, formerly called Trojan Foods (NZ) Ltd. The liquidators and a creditor of Wenztrou have issued substantive proceedings against Mr Ellis and two other former co-directors for various alleged breaches of their director duties. The liquidators seek an order under s 266 of the Companies Act 1933 that Mr Ellis provide them with personal financial documents.

[4] The liquidators’ reasons for wanting these documents are essentially that they want to know whether Mr Ellis is ‘judgment-worthy’. The trial promises to be lengthy and expensive. Quite understandably, therefore, the liquidators want some reassurance that the costs and risks associated with continuing proceedings are outweighed by the possible return to the creditors.

[5] But understandable or not, the application is novel and controversial. No New Zealand court has expressly addressed the issue of whether liquidators are statutorily empowered to enquire into the financial position of potential or actual defendants. The liquidators invite the court to do so now.

[6] The starting point, as always, is the statutory framework. The liquidators rely on s 266(2)(b) of the Companies Act in this application. The provision is laid out in full, with the specific wording relied upon highlighted in bold print:

266 Powers of court

(1) The court may, on the application of the liquidator, order a person who has failed to…

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] NZHC 1397
Case: [2017] NZHC 1397
Decision Date: 23 June 2017

CaseChat Overview and Summary

In Finnigan v Ellis, the liquidators of Wenztrou Cooperation Ltd sought an order for Brian Robert Ellis, a former director, to provide them with personal financial documents. The primary issue was whether the court had the jurisdiction and discretion to grant such an order. The court found that the liquidators' application was too broad and did not adequately justify the necessity of the extensive documentation sought. The court was also hesitant to extend the liquidators' powers beyond what was intended by Parliament, particularly in the absence of a comprehensive discussion on the boundaries and principles guiding such an extension. As a result, the court declined the application and suggested that the liquidators should bear the costs of the proceedings. This decision preserves the status quo regarding liquidators' powers and emphasizes the importance of a balanced approach in exercising such powers.

Orders