Grant v Guo - [2015] NZHC 2480

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-000213 [2015] NZHC 2480

UNDER the Companies Act 1993

IN THE MATTER OF

the liquidation of O's Construction
Limited (In Liquidation)

BETWEEN

DAMIEN GRANT AND STEVEN KHOV AS LIQUIDATORS OF O'S CONSTRUCTION LIMITED (IN LIQUIDATION)

Plaintiffs

AND

TIANJIAO GUO Defendant

Hearing: 1 October 2015

Appearances:

A Cherkashina and B J Norling for Plaintiffs
Defendant in person

Judgment:

9 October 2015

JUDGMENT OF WOOLFORD J

This judgment was delivered by me on Friday, 9 October 2015 at 3:00 p.m. pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel: A Cherkashina, Waterstone Insolvency, Auckland
B J Norling, Waterstone Insolvency, Auckland

Copy to: A Guo

GRANT & ANOR v GUO [2015] NZHC 2480 [9 October 2015]

Summary

[1] The applicants, Messrs Grant and Khov, are the liquidators of O’s Construction Limited (OCL or the company). The defendant, Tianjiao Guo, is the sole director of the company. OCL traded as a construction company from incorporation on 27 April 2010, until it was put into liquidation on 8 February 2013. OCL currently has five creditors who are owed $60,872.38.

[2] The liquidators claim that Ms Guo has breached the requirements of s 194 of the Companies Act 1993, and s 10 of the Financial Reporting Act 1993 by failing to keep proper accounting records for OCL. They seek an order pursuant to s
300(1)(b)(i) and (ii) of the Companies Act that Ms Guo is personally liable for the debts and liabilities of the company, and an order that Ms Guo pay the net liquidator fees and disbursements in liquidating the company of $12,992.18.

[3] No defence was filed within the requisite time limit after receiving the statement of claim. The claim has therefore proceeded as a formal proof hearing under High Court Rule 15.9.

[4] When the case was first called in Court on 1 October 2015, Ms Guo appeared in person and sought to defend the claim. When I asked her why she had not taken any steps earlier to defend the claim, she said that she did not have a lawyer and did not read the documents with which she was served. She then told me that she had paid some creditors already and complained that the liquidators had taken some personal assets when they had seized the company’s assets.

[5] Rule 15.9(3) provides that after a proceeding is listed for a formal proof hearing no statement of defence may be filed without the leave of a judge, granted on the ground that there will or may be a miscarriage of justice if judgment by default is entered. I therefore outlined the nature of the liquidators’ case to Ms Guo and asked her whether she had any defence to the claim brought by them. Ms Guo said no. In those circumstances, I advised her that she was not able to defend the claim. I invited her to stay and listen the case, but she chose to leave the Court at that…

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 Grant v Guo

Details

AGLC: Grant v Guo [2015] NZHC 2480
Case: [2015] NZHC 2480
Decision Date: 9 October 2015

CaseChat Overview and Summary

The case of Grant v Guo was heard by Woolford J in the High Court of New Zealand. The plaintiffs, Messrs Grant and Khov, are liquidators of O’s Construction Limited (OCL), and the defendant is Tianjiao Guo, the sole director of the company. OCL traded as a construction company from incorporation until it was put into liquidation. The liquidators claim that Ms Guo breached her duties under the Companies Act 1993 and the Financial Reporting Act 1993 by failing to keep proper accounting records for OCL, and seek a declaration that she is personally liable for the debts of the company and an order that she pay the liquidators' fees and disbursements.

The court found that Ms Guo failed to comply with her obligations to keep proper accounting records as required by sections 194 of the Companies Act and 10 of the Financial Reporting Act. The failure to keep proper records has adversely affected the liquidation, resulting in uncertainty as to OCL’s assets and liabilities. The court held that the lack of record keeping impeded the orderly winding up of the business and created substantial uncertainty as to OCL’s assets and liabilities. The court found that Ms Guo was personally responsible for all the debts of OCL, and ordered her to pay the liquidators' fees and disbursements. The court also awarded costs of the proceeding to the plaintiffs on a 2B basis.

Orders