Grant v Jesse & Associates Barristers & Solicitors - [2020] NZHC 168

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-002394

[2020] NZHC 168

UNDER Section 266 of the Companies Act 1993

IN THE MATTER

of the liquidation of Carlton Capital Limited (In Liquidation) and GEP Limited (In

Liquidation)

BETWEEN

DAMIEN GRANT as liquidator of GEP

Limited (In Liquidation) and Carlton Capital Limited (In Liquidation)

Applicant

AND

JESSE & ASSOCIATES BARRISTERS & SOLICITORS

First Respondent

AND

JESSE SEANG TY NGUY

Second Respondent

Hearing: 13 February 2020

Appearances:

A S Botterill and S Chambers for Applicant P Napier for Defendant

Judgment:

14 February 2020

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 14 February 2020 at 10.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

GRANT v JESSE & ASSOCIATES BARRISTERS & SOLICITORS [2020] NZHC 168 [14 February 2020]

[1] The applicant is the liquidator of GEP Ltd (In Liquidation) and Carlton Capital Ltd (In Liquidation) (GEP and Carlton Capital respectively).

[2]The first respondent is a firm of solicitors.

[3]The second respondent is the principal of the first respondent (Mr Nguy).

[4] At various times the respondents have acted as solicitors for both GEP and Carlton Capital. Their instructions apparently included acting in respect of some large loan transactions.

[5] The applicant applies under s 266 of the Companies Act 1993 (the Act) for orders that:

(a)The respondents produce to the applicant all books, records, correspondence, notes, trust account bank statements and documents relating to the business, accounts or affairs of GEP and Carlton Capital that are in their possession or under their control; and

(b)Mr Nguy attend the High Court at Auckland for an examination on matters relating to the business, accounts or affairs of the companies.

[6] The application is made to further the applicant’s investigation into the loans, to unravel inter-company transactions and to seek recovery of monies owing to the companies.

[7] In his affidavit, the applicant describes a history of requests of the respondents for documents and/or information concerning GEP and Carlton Capital and non- compliance with those requests. I do not need to set out the evidence. It is largely unchallenged.

[8] The applicant says that whilst the respondents have provided some of the companies’ documents, they have not provided bank statements to verify the first respondent’s trust account ledger (the accuracy of which is a matter that the applicant

wishes to investigate) and there is a surprising absence of email correspondence and file notes.

[9] Mr Nguy was interviewed by the applicant on 25 June 2019 pursuant to a request made of him under s 261 of the Act. At that time, he said he was not able to answer questions in relation to Carlton Capital as he did not have access to files. Since then he has not attended for a further interview despite requests.

[10]The relevant provision of the Act is s 266(2) that provides:

The Court may, on the application of a liquidator, order…

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.

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Details

Case: [2020] NZHC 168
Decision Date: 14 February 2020

CaseChat Overview and Summary

The case of Grant v Jesse & Associates Barristers & Solicitors concerns an application by the liquidator of two companies, GEP Limited and Carlton Capital Limited, for orders under Section 266 of the Companies Act 1993. The applicant, Damien Grant, seeks to compel the respondents, a firm of solicitors and its principal, to produce documents and for the principal to attend an examination regarding the business, accounts, and affairs of the companies. The respondents have acted as solicitors for both companies, including in relation to large loan transactions. The application aims to further the investigation into the loans, unravel inter-company transactions, and seek recovery of monies owed to the companies.

The primary legal issues before the court were whether the orders sought by the applicant were justified and whether the respondents' failure to produce certain documents and information warranted such orders. The respondents argued that they had provided documents and were willing to attend further interviews. However, the applicant maintained that critical documents, particularly bank statements and email correspondence, were still outstanding and necessary for the investigation. The court had to balance the applicant's need for information to carry out his duties against the potential inconvenience to the respondents.

The court found that the respondents had failed to provide essential documents and information despite repeated requests, which was unreasonable and obstructed the applicant's investigation. The absence of bank statements and other correspondence was particularly concerning given the nature of the transactions involved. The court concluded that the orders were necessary to facilitate the applicant's investigation and ordered the respondents to produce the specified documents by a certain date. Regarding the examination of the principal solicitor, the court decided to adjourn the matter to allow the principal an opportunity to voluntarily submit to an interview by the applicant. If the principal cooperated fully and no legal issues arose, the examination application might be withdrawn.

In summary, the court made an order for the respondents to produce specified documents by 9 March 2020 and adjourned the examination application with a further hearing scheduled for 30 March 2020. The liquidator was to advise the court by 26 March 2020 whether to proceed with the examination. Costs were reserved for a later hearing.

Orders