Harnish v Whittfield - [2018] NZHC 2791

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-1177 [2018] NZHC 2791

BETWEEN
OWEN CECIL ERIC HARNISH

Applicant

AND

JOHN TREVOR WHITTFIELD Respondent

Hearing: 19 September 2018

Appearances:

J A Browne for the Applicant
S J Nicolson for the Respondent

Judgment:

29 October 2018

JUDGMENT OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 29 October 2018 at 3,00pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors / Counsel:
Henderson Reeves Connell Rishworth, Whangarei
Lowndes Jordan, Auckland

HARNISH v WHITTFIELD [2018] NZHC 2791 [29 October 2018]

[1] The respondent, Mr Whittfield (the liquidator), is the liquidator of a company called Whitford Properties Limited (in liquidation) (Whitford). The liquidator was appointed liquidator by resolution of Whitford's shareholders, on 17 September 2014.

[2] The applicant, Mr Harnish, was then a director of, and shareholder in, Whitford. He signed the shareholders' resolution appointing Mr Whittfield liquidator of Whitford.

[3] Mr Harnish now applies for orders under s 256(1)(a)(ii) of the Companies Act

1993 (the Act) directing that the liquidator provide him with copies of the following documents:

(a) all creditors' claim forms; and

(b) all information supporting creditors' claim forms; and

(c) all correspondence between the liquidator and creditors.

[4] Mr Harnish says that he is prepared to pay the liquidator's reasonable costs of providing access to the documents, and that he is content for any privileged material to be redacted or removed.

[5] The liquidator opposes the application. He says:

(a)Mr Harnish has shown no good reason why he should be given leave to inspect or take copies of the documents he seeks;

(b)granting Mr Harnish leave to inspect or take copies of the documents would be likely to cause prejudice to the liquidation, to creditors, and to others; and

(c) the interests of justice favour the liquidator.

[6] The liquidator says that the documents in category (a) in paragraph [3] above comprise 16 sides of paper. The information supporting the creditors' claims (category

(b)) is in three lever arch files. Documents in category (c) are not separately filed. The liquidator says that they would need to be collated from more than two dozen boxes of hard copy files, and also from electronic records. Counsel for Mr Harnish has advised that he is only seeking correspondence in category (c) that concerns creditors' claims, but the liquidator says half of the creditors have other connections with the liquidation (eg as debtors, officers of Whitford, or advisors of Whitford), so if the Court directed that copies were to be provided, an exercise would need to be undertaken to isolate the documents that properly fall into category (c).

[7] Section 256 of the Act materially provides:

256 Duties in relation to accounts

(1) Subject to subsection (2), the liquidator of a company must—

(a)keep accounts and records of the liquidation and permit those accounts and records, and the accounts and records in the company, to be inspected by—

(i)…

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 Harnish v Whittfield

Details

AGLC: Harnish v Whittfield [2018] NZHC 2791
Case: [2018] NZHC 2791
Decision Date: 29 October 2018

CaseChat Overview and Summary

In the High Court of New Zealand, Mr Harnish, a former director and shareholder of Whitford Properties Limited, sought an order under s 256(1)(a)(ii) of the Companies Act 1993 for access to specific documents related to the liquidation of Whitford, which was overseen by Mr Whittfield, the appointed liquidator. Mr Harnish's primary concern was to ensure that his investment in Whitford was protected, particularly by scrutinizing creditors' claims. The court had to determine whether there was "good reason" to grant Mr Harnish access to the documents, and whether such access would prejudice the liquidation process. The court found that Mr Harnish's concerns were largely speculative and did not constitute a "good reason" for the requested access. The court also found that granting access would likely prejudice the liquidation by disrupting the liquidator's control over the assessment of creditors' claims. The application was dismissed, with costs awarded to the liquidator.

Orders