Jindal v Davies
[2022] NZHC 3181
•1 December 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-002280
[2022] NZHC 3181
UNDER Companies Act 1993 and Part 19 of the High Court Rules 2016 IN THE MATTER OF
An application under s 284
BETWEEN
GAUTAM JINDAL
Applicant
AND
KEVIN JOHN DAVIES
Respondent
Hearing: 19 September 2022 Appearances:
Applicant self-represented
J K Mahuta-Coyle for Respondent
Judgment:
1 December 2022
JUDGMENT OF ASSOCIATE JUDGE GARDINER
This judgment was delivered by me on 1 December 2022 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
Langford Law, Wellington
J K Mahuta-Coyle, Wellington
JINDAL v DAVIES [2022] NZHC 3181 [1 December 2022]
Introduction
[1] Gautam Jindal is the sole director and shareholder of Orange Capital Limited (in liquidation) (Orange Capital). Kevin John Davies is the liquidator of Orange Capital.
[2] Mr Jindal alleges that Mr Davies has acted unreasonably as liquidator of the company and his actions are damaging to Mr Jindal and the company’s creditors. He seeks a direction from the Court under s 284 of the Companies Act 1993 that Mr Davies promptly either accept or reject the creditor claims. Further, that Mr Davies be directed to provide a list of all the company documents in his possession.
[3] Mr Jindal also alleges that a report filed by the previous liquidator, Imran Kamal, should be rectified by Mr Davies because it contains false and defamatory statements about him.
[4] Mr Davies abides the decision of the Court on the report issue, as he was not in office at the time the report was filed and did not author it. He opposes the other directions sought by Mr Jindal. He submits that none of Mr Jindal’s claims are arguable, and he has brought this application in bad faith.
Background
[5] Orange Capital was a company that apparently conducted business trading commodities. Prior to its liquidation, it caused one of its clients, Adon Holdings Ltd (Adon), to suffer losses of approximately $96,000, of which Orange Capital agreed it was liable for some $80,000. Adon has filed a creditor’s claim for this amount.
[6] On 27 June 2017, Orange Capital entered voluntary liquidation. Mr Kamal was appointed as liquidator. The six-monthly liquidator’s reports issued by him have asserted that since 12 January 2018, there are six unsecured creditor claims against the company totalling $132,446.16.
[7] After assessing the company’s position, Mr Kamal applied for summary judgment against Mr Jindal in respect of an overdrawn shareholder’s current account.
On 31 May 2021, the District Court granted the application, determining that Mr Jindal’s net indebtedness to Orange Capital was $68,680,03.1
[8] In July 2021, Mr Kamal was disqualified from acting as liquidator due to failing to be accredited as an insolvency practitioner by RITANZ.2 Mr Jindal had been dissatisfied with Mr Kamal’s conduct and wrote to him later that month asking him to resign as liquidator of Orange Capital. He says that he queried the information Mr Kamal had provided regarding creditor claims in his liquidator’s reports, specifically, that there are six unsecured creditors with claims against the company. He says that Mr Kamal refused to clarify those “irregularities” in the reports and instead amended his report dated 23 July 2021 to include false and defamatory comments about Mr Jindal.
[9] Mr Kamal resigned as liquidator of Orange Capital on 31 August 2021 and Mr Davies was appointed in his place. Mr Jindal wrote to Mr Davies in November 2021 asking him to correct the reports Mr Kamal had written that contained the “false and damaging” material. He says that as he has recently been admitted to the legal profession, he is concerned about the impact the statements might have on his reputation. Mr Davies responded that Mr Jindal’s allegations were too vague, and he needed more specific detail about his objections to the material in the reports.
[10] Mr Jindal appealed the summary judgment decision against him in the District Court to this Court. In a decision issued on 29 October 2021, Whata J substantially upheld the District Court decision but reduced the amount owed by Mr Jindal to
$50,696.49.3 He subsequently granted Mr Jindal leave to appeal to the Court of
Appeal on the question of whether the District Court has jurisdiction to hear a liquidator’s common law debt claim against a director in respect of an overdrawn shareholder’s current account.4
1 Orange Capital Ltd (in liq) v Jindal DC Auckland CIV-2017-004-2856, 31 May 2021.
2 Kamal v Restructuring Insolvency & Turnaround Association of New Zealand Inc [2021] NZHC 1626.
3 Jindal v Orange Capital Ltd (in liq) [2021] NZHC 2917.
4 Jindal v Orange Capital Ltd (in liq) [2021] NZHC 3449.
[11] On 18 November 2021, Mr Jindal filed an originating application commencing these proceedings against Mr Davies.
[12] Mr Jindal’s application included a request for an order that Mr Davies be replaced with the Official Assignee as liquidator, but he abandoned that part of the application before the hearing.
Legal principles
Court supervision of liquidators
[13]Section 284 of the Companies Act relevantly provides:
284 Court supervision of liquidation
(1) On the application of the liquidator, a liquidation committee, or, with the leave of the court, a creditor, shareholder, other entitled person, or director of a company in liquidation, the court may—
(a) give directions in relation to any matter arising in connection with the liquidation:
(b) confirm, reverse, or modify an act or decision of the liquidator:
…
(2) The powers given by subsection (1) are in addition to any other powers a court may exercise in its jurisdiction relating to liquidators under this Part and may be exercised in relation to a matter occurring either before or after the commencement of the liquidation, or the removal of the company from the New Zealand register, and whether or not the liquidator has ceased to act as liquidator when the application or the order is made.
(emphasis added)
[14] This Court has said that in determining whether to grant leave, a court must strike a balance between protecting the rights of meritorious claimants while ensuring that a liquidated company’s assets are not wasted on claims that are unlikely to succeed.5 Heath J stated:6
Leave is required for a putative creditor to challenge a decision to reject a proof of debt. That is because of the Court’s reluctance to interfere with the good faith exercise of a liquidator’s discretionary powers and its desire to
5 Adaptable Solutions Ltd v Toon [2017] NZHC 753 at [17].
6 Manifest Capital Management Pty Ltd v Lawrence HC Auckland CIV-2010-404-7741, 20 December 2011 at [7].
avoid unnecessary challenges that might undermine a liquidator’s duty to carry out his or her functions in an efficient manner. In deciding whether to grant leave, the Court acts as a gatekeeper, to ensure that only appropriate challenges proceed to a full hearing.
[15] The courts will only intervene to reverse or modify a decision of a liquidator in limited cases, such as where the liquidator’s discretion has not been exercised in good faith or whether they have acted unreasonably.7
[16] In Trinity Foundation (Services No 1) Ltd v Downey, Associate Judge Lang stated:8
[21] I take the view that s 284 provides a filtering mechanism, and is designed to ensure that leave to challenge the acts and decisions of a liquidator is only given in appropriate cases. A creditor seeking leave under s 284 therefore needs to do more than merely demonstrate that its claim is sustainable. Instead, the creditor will need to show that it has an arguable case. In this context, an arguable case will have two characteristics. First, it must have a credible factual basis. Secondly, there must be a reasonable likelihood that, if the claim is established, the Court will disturb the act or decision in question. The Court is likely to take this step only if the act or decision is unreasonable.
[22] If this standard is applied, the object of the legislation will be met, because truly meritorious claims will be granted leave. Leave will not be granted, however, in circumstances where, even if the claim is established, it is unlikely that the Court would interfere with the act or decision in question. In this way the section strikes a balance between preserving the rights of meritorious claimants, whilst at the same time ensuring that the assets of a company in liquidation are not frittered away as a result of claims that are unlikely to succeed.
[17] This standard of review reflects that the liquidator’s principal duty is to act in a reasonable and efficient manner when distributing funds to creditors.9
[18] The Court will not interfere with matters of day-to-day administration or hold a liquidator accountable for an error of judgment.10 Serious and obvious lapses of judgment on the part of liquidators must be shown before the Courts will interfere.11
7 Vance v Vey Group Ltd (in liq and rec) [2022] NZHC 75 citing Consolidated Technologies Development (NZ) Ltd v McCullagh (2006) 9 NZCLC 264,056 (HC) at [15] and Callis v Pardington (1996) 7 NZCLC 261,211 (CA) at 261,216.
8 Trinity Foundation (Services No 1) Ltd v Downey (2005) 9 NZCLC 263,917 (HC) at [21].
9 Companies Act 1993, s 253.
10 Trinity Foundation (Services No.1) v Downey (2005) 9 NZCLC 263,917 at [19].
11 Young & Associates Ltd v Ruscoe [2012] NZHC 1438 at [8].
[19] The Court recognises that it is not well placed to perform the functions undertaken by liquidators in real time and in a real world.12
Inspection of documents by a creditor
[20]Section 256 relevantly provides:
256 Duties in relation to records
(1) The liquidator of a company must—
(a) keep accounting records and other documents of the liquidation and permit those records, and the records and other documents of the company, to be inspected by—
(i) any liquidation committee appointed under section 314, unless the liquidator believes on reasonable grounds that inspection would be prejudicial to the liquidation; and
(ii) if the court so orders, a creditor or shareholder;
…
[21] The basis upon which the Court will allow a creditor or shareholder to inspect accounts and records under s 256(1)(a)(ii) was discussed by the Court of Appeal in Levin v Lawrence.13 The Court endorsed the “good reason” test adopted by Toogood J in the High Court: 14
[T]here must be some good reason for the Court to order inspection in circumstances where the statutory scheme does not ordinarily permit it. The test of “good reason” does not require any further elaboration; whether the Court will exercise its discretion to order access to the records will depend on the particular circumstances of each case.
[22] The Court of Appeal commented that while no inflexible rules can or should be laid down, the “good reason” test may be elaborated to the following extent:15
(a)Mere suspicion or assertion by a creditor that a liquidator has not undertaken – or is not undertaking – the liquidator’s statutory task properly is not sufficient.
12 Young & Associates Ltd v Ruscoe [2012] NZHC 1438 at [8].
13 Levin v Lawrence [2013] NZCA 394, (2013) 11 NZCLC 98-018.
14 At [53]; see Levin v Lawrence [2012] NZHC 1452 at [56].
15 Levin v Lawrence [2013] NZCA 394, (2013) 11 NZCLC 98-018 at [53].
(b)It is not permissible for a creditor or shareholder to apply merely in order to embark on a fishing expedition – in order to sift through the accounts and records of the liquidation to see if that might turn something up.
(c)At a minimum, the applicant must put forward some persuasive, tangible or concrete reasons why inspection should be granted. An example might be where the creditor, from its own dealings with the company in liquidation, has a genuine concern about a particular aspect of the company’s affairs.
Should Mr Jindal have leave to make the application?
[23] Mr Jindal submits that the Court should grant leave under s 284(1). He says that as sole director and shareholder of Orange Capital, the issues that have arisen in its liquidation have a direct and adverse effect on him and his reputation. Alternatively, he submits that the Court should exercise its powers under s 284(2) given Mr Kamal’s “serious misuse” of his liquidator’s powers and Mr Davies’ refusal to correct Mr Kamal’s errors.
[24] Through his application, affidavit and written submissions Mr Jindal makes wide-ranging complaints about the actions of the Orange Capital’s former and current liquidator. However, in response to my questioning, Mr Jindal isolated the directions he sought to the following three:
(a)a direction under s 284(1)(a) and/or s 284(1)(b) that the six-monthly liquidator’s reports be rectified to:
(i)remove the “unsubstantiated, false, defamatory, and disparaging statements” in Mr Kamal’s report dated 23 July 2021;
(ii)identify any proportion of the legal and liquidator’s fees that relate to the period when Mr Kamal was liquidator;
(b)a direction to the liquidator to promptly accept or reject all claims made by unsecured creditors in the liquidation; and
(c)a direction to the liquidator to list all documents relating to the company within their control and to make those documents available for Mr Jindal to inspect under s 256.
[25] I will now consider Mr Jindal’s complaints as they relate to the specific directions he seeks. At this stage I am considering whether Mr Jindal should be granted leave to apply for the directions described. If I decide that Mr Jindal should have leave, I will then determine whether it is appropriate for the Court to make the directions.
Direction to promptly accept or reject creditors’ claims
[26] A debt against a company may be admitted as a claim against that company in liquidation.16 Following a claim by an unsecured creditor, the liquidator “must, as soon as practicable, either admit or reject a claim”.17
[27] Mr Jindal states that Orange Capital was placed in liquidation over five years ago. Mr Davies was appointed to replace Mr Kamal as liquidator on 31 August 2021. Mr Jindal complains that Mr Davies did not publish a six-monthly report until 4 July 2022, and then another on 10 August 2022.
[28] Relatedly, Mr Jindal complains that the statements in the reports by the current and former liquidator about the number of unsecured creditor claims and the total amount claimed is wrong. The statement is:18
The liquidator has received six unsecured creditor claims totalling
$132,446.16.
16 Companies Act 1993, s 303.
17 Section 304(3).
18 Liquidators’ Six Monthly Reports by Imran Mohammed Kamal dated 12 January 2018, 6 August 2018, 18 February 2019, 6 August 2019, 8 April 2020, 18 August 2020, 28 January 2021 and 23 July 2021; and by Kevin J Davies dated 30 June 2022 and 10 August 2022.
[29] Mr Jindal says that he does not believe that six unsecured creditors have in fact filed claims, or that the amount of $132,446.16 is correct. He suspects that the amount includes a loan from ASB. Mr Jindal says ASB never filed a claim, as confirmed by Mr Davies’ counsel to this Court in the hearing of his appeal.19
[30] Mr Jindal also complains about the liquidator’s approach to the claim by Adon. After some questioning, it became clear that Mr Jindal’s concern is that the liquidator has not properly quantified the claim. He says that he is not opposed to Adon’s claim being admitted in the liquidation but says it should only be admitted after it has been scrutinised with due diligence by the liquidator.
[31] Mr Davies addresses these matters in an updating affidavit filed shortly before the hearing. He explained that Mr Jindal’s concern about ASB only became clear to him once Mr Jindal had filed his written submissions for this hearing.
[32]Mr Davies states in evidence:20
6. With the benefit of Mr Jindal’s submissions, it has become apparent that he has made a factual assumption that is incorrect and requires clearing up.
7. For the avoidance of doubt, it is correct that ASB Bank has never filed a creditor claim in the liquidation of Orange Capital Limited (in liq). It was not one of the six creditor claims in mind when, in my affidavit of 10 December 2021, I said to the Court that there were six claims totalling approximately
$132,000. I confirm again that there are six claims, that none of them are from ASB and that they total approximately $132,000.
[33] Mr Davies surmises that Mr Jindal may have received the impression that ASB has made a claim because Mr Kamal’s first report recorded ASB as a creditor. However, his subsequent reports did not; and neither of Mr Davies’ reports have recorded ASB as a creditor.
[34] In this affidavit, Mr Davies also explains why no creditor claims have been formally admitted or rejected by him yet. He states:
10. … The job of determining claims and admitting or rejecting them is entirely moot at present because there has been no recovery in the liquidation. That is largely because Mr Jindal refuses to be accountable to the company
19 Jindal v Orange Capital Ltd (in liq) [2021] NZHC 2917 at [15].
20 Updating affidavit of Kevin John Davies affirmed 12 September 2022.
for the amounts the District and High Courts have said he owes to it while he continues to exhaust his appeal rights.
[35] Mr Jindal’s concern about Adon’s claim is misguided. As Mr Davies explains, he has not yet determined any of the creditor claims or formally admitted or rejected them. He considers this a pointless exercise at this stage because there has been no recovery in the liquidation. The claim by Adon is simply recorded as a claim that has been made in the liquidation.
[36] Furthermore, the submission that the liquidator has acted unreasonably by recording this claim is unsustainable given the deed of acknowledgement of debt by the company to Adon for $80,000, signed by Mr Jindal.21
[37] The question remains whether Mr Jindal should be granted leave to apply for a direction that Mr Davies promptly accept or reject the creditor claims. Mr Davis has deposed that there is no purpose in doing so because there are presently no assets in the liquidation to distribute to creditors. He deposes that this is largely because Mr Jindal, who has made the second largest claim behind Adon (for $44,104), has not paid the amount he was ordered to pay the company in liquidation, instead appealing the District Court judgment to the High Court and appealing the High Court judgment to the Court of Appeal.22
[38] As mentioned above, on 31 May 2021, Judge L I Hinton ordered summary judgment against Mr Jindal for $68,680.03.23 The Judge arrived at this sum after considering the company’s claim against Mr Jindal in relation to the overdrawn shareholder account; and crediting Mr Jindal an allowance of $10,000 “for some legitimate expenditure or benefit Mr Jindal may have provided to the company” but for which he had “been unable to provide evidence”.24
21 Deed of Understanding between Adon Holdings Limited and Orange Capital Limited dated 12 June 2017 (updating affidavit of Kevin John Davies affirmed 12 September 2022 at Supp-003).
22 Updating affidavit of Kevin John Davies affirmed 12 September 2022 at [10]; affidavit of Jevin John Davies affirmed 10 December 2021 at [13].
23 Orange Capital Ltd (in liq) v Jindal DC Auckland CIV-2017-004-2856, 31 May 2021.
24 At [64].
[39] Mr Jindal appealed, and on 29 October 2021 Whata J found that Mr Jindal had established a credible defence to the liquidator’s claim in respect of $18,033.54, upholding the summary judgment for the adjusted amount of $50,696.49.25
[40] Mr Jindal appealed that judgment on the question of whether the District Court has jurisdiction to hear a liquidator’s common law debt claim against a director of an overdrawn shareholder’s account. Very recently, and after the hearing of this application, the Court of Appeal dismissed Mr Jindal’s appeal, finding that the District Court had jurisdiction to determine the liquidator’s claim.26
[41] Against this backdrop, I do not consider that there is a tenable basis for the Court to direct the liquidator to promptly admit or reject the creditor claims. The Court is unlikely to direct the liquidator to take this step when the liquidator already has the assurance of a signed acknowledgement from Mr Jindal acknowledging a debt to Adon of $80,000, Mr Jindal’s claim against the company could not be determined because of his appeals, and the next largest claim is for only $10,000. Additionally, there has been no practical purpose, as there is no money to distribute to the creditors because Mr Jindal has not paid the judgment ordered by the District or High Courts. I note that this position may change with delivery of the Court of Appeal’s judgment.
[42] Mr Jindal’s application for leave to apply to the Court to review the liquidator in these respects is declined.
A direction to list the company documents and permit inspection
[43] Mr Jindal applies under s 284(1) for a direction to the liquidator to list the company documents in his possession; and under s 256(1) to inspect the documents.
[44] It appears that there was a delay in the liquidator obtaining the file concerning Orange Capital from the former liquidator. Mr Davies deposes that approximately 105 current liquidations were transferred to him by Mr Kamal on 31 August 2021.27 Mr Davies records that there was some administrative delay in having the necessary
25 Jindal v Orange Capital Ltd (in liq) [2021] NZHC 2917.
26 Jindal v Orange Capital Ltd (in liq) [2022] NZCA 540.
27 Affidavit of Kevin John Davies affirmed 22 August 2022 at [3].
files transferred, but that this had by now occurred. Consequently, he filed an updating six-monthly report on 4 July 2022 and a further six-monthly report on 10 August 2022.
[45] In response to my questions, Mr Jindal clarified his reasons for this part of his application. First, he says that Mr Kamal has a known propensity not to hand over documents or files. Second, he says if the liquidator had a proper record, he would not have had to double check whether ASB had filed a claim during the hearing of his application for leave to appeal the High Court judgment. In this regard, he conceded that a list of the documents would ease his concern that the liquidator has not received important company documents from Mr Kamal.
[46] Mr Jindal’s suspicion that the liquidator has not received all documents from the former liquidator is not enough to justify the Court interfering in the current liquidator’s conduct of the liquidation. Mr Jindal’s application has the flavour of a fishing expedition. Further, Mr Jindal’s concern is at least in part informed by his misunderstanding concerning the ASB claim, which Mr Davies has comprehensively addressed. Mr Davies has now filed two reports and I do not consider the circumstances warrant the interference of the Court.
[47] Similarly, in terms of his application under s 256, Mr Jindal has not presented “a good reason” for inspection.
Rectification of reports
[48] Mr Jindal asks the Court for leave to apply for a direction requiring Mr Davies to remove statements from Mr Kamal’s earlier report which he says contained “unsubstantiated, false, defamatory and disparaging statements”.
[49] Before considering this matter, I briefly address a further concern Mr Jindal raised for the first time at the hearing. Mr Jindal complains that Mr Davies has recorded liquidator’s fees of $42,774.25 and legal fees of $22,962.60 in his report dated 30 June 2022 (issued 4 July 2022) for the period 27 June 2021 to 27 December 2021. Mr Jindal argues that all the fees could not have been incurred during that period. He says that Mr Davies should have made it clear in his report (and should
now be directed to clarify) how much of the fees relate to 27 June 2021 to 27 December 2021, and how much relate to earlier periods when Mr Kamal was liquidator.
[50] As this was a new concern raised by Mr Jindal, Mr Davies had not addressed this issue in his evidence and his counsel was unable to assist the Court.
[51] In any event, I am not persuaded that there is an issue here that justifies the Court giving a direction to the liquidator under s 284. Mr Jindal’s question can be readily responded to by the liquidator through correspondence. I trust the liquidator will provide the appropriate clarification, if any is required, in his next report to creditors.
[52] I now turn to Mr Jindal’s main area of concern. Mr Jindal states that he wrote to Mr Davies on 15 November 2021 asking him to correct the six-monthly reports for Orange Capital authored by Mr Kamal to remove defamatory, false, reckless, or unsubstantiated material. He said:
Mr Kamal reacted by changing the contents of the six-monthly liquidator’s report in July 2021, and including false, misleading and defamatory statements within the six-monthly report.
…
It is hereby requested that all six-monthly liquidator’s reports issued and published, for Orange Capital Limited (in liq) must be rectified immediately. Any reports containing defamatory, false, reckless or unsubstantiated material must be taken down urgently.
[53]Mr Davies replied by email on 22 November 2021, stating:
In para 7 & 8 you espouse your communication with the last liquidator and his staff and claim “… false, misleading and defamatory statements” have been included in the liquidator’s six-monthly reports. Unfortunately, I am unable to respond to this allegation, as you have not provided me with specific details.
[54] Mr Davies says he will abide the decision of the Court but notes that he was not the author of the reports, not in office when they were filed, and did not undertake the work that led to the conclusions or opinions expressed in the reports. He observes that the application did not specify what the “unsubstantiated, false, defamatory or disparaging statements” that should be removed were, and that he pointed this out in
his notice of opposition. Mr Davies says that it was not until Mr Jindal served his written submissions on 5 September 2022 that he particularised the contents of the reports to which he objects.
[55] In his written submissions, Mr Jindal sets out the statements with which he is concerned. They appear in Mr Kamal’s report dated 23 July 2021:
(a) "the liquidator investigated that most of the claims made by the Director on the company website regarding its trading were not true".
(b) "Upon further review of the Company records and documentation, the Liquidator has concluded that the Director has breached Sections 131, 135, and 137 of the Companies Act 1993".
(c) "The Director misrepresented to the investor that he had been to Singapore to set up additional servers for Blackstone Singapore, as they were increasing their capital from $Sm to $Som [sic]. From my investigations, this was untrue
(d) The Director portrayed that he had business partners with reputable companies such as Ikea, Hettich International, Hansgohe, Daikin, Johnson, and Mile. From my investigations, none of this is true:
(e) There was no software to prove that the Director had a trading platform, contrary to his claim to investors.
(f) The Director knowingly continued business with the intent to defraud Adon (the creditor), by false pretenses, fully knowing that Orange did not have the capital to repay Adon.
(g) The Director made numerous misleading and false statements regarding his business and its credentials; this is a breach of the Fair Trading Act 1986
(h) The Director knowingly continued business with the intent to defraud Adon (the creditor), by false pretenses, fully knowing that Orange did not have the capital to repay Adon.
(i) The Director was not a member of the Financial Markets Authority (FMA) and, by providing financial advice, was in breach of the FMA rules and regulations. As an unregistered provider, his conduct was misleading and desceptive. A complaint has been made to FMA about the conduct and behavior of the Director.
(j) The financial statements sent to the Liquidator did not comply with the Financial Reporting Act, were incomplete, had no resolutions or minutes, and included expenses claimed that were of a personal nature - these were non- deductible for tax purposes and is tax evasion. Accordingly, a complaint has been made to Inland Revenue.
(k) The Liquidator has made a referral of the Director to the Enforcement and Integrity Unit of the Companies Office, regarding the conduct and behavior of the Director.
[56] There are two problems with Mr Jindal’s application as it relates to Mr Kamal’s 23 July 2021 report. First, Mr Jindal has not presented any evidence to support his contention that Mr Kamal’s statements are false, unsubstantiated or defamatory. Bare assertions that statements in a liquidator’s report are false, unsubstantiated, defamatory and disparaging are simply not enough to provide the Court with grounds to intervene and direct the liquidator to change the report. Second, Mr Jindal asks the Court to direct Mr Davies to alter the report when it was Mr Kamal who wrote the report and made the statements.
[57] Liquidators are statutory agents of the company who occupy a position that is fiduciary in some respects and who are bound by statutory duties imposed by the Companies Act.28 They carry out their statutory duties personally. Consequently, any application for the rectification of statements made by Mr Kamal when he was liquidator of Orange Capital should involve Mr Kamal.
[58] I note that Mr Kamal originally filed a memorandum as an interested party seeking to be added as a party.29 Mr Jindal opposed Mr Kamal being joined.30 Mr Kamal later withdrew his request.31
[59] In my view, the appropriate course is for Mr Jindal to bring proceedings against Mr Kamal as the author of the statements in question. Mr Davies, as the current liquidator, should be served as an interested party. Mr Jindal should note that leave is required to bring an application under s 284 by originating application under Part 19 of the High Court Rules 2016 (rather than by statement of claim under Part 5). If Mr Jindal applies for leave to bring a proceeding under Part 19, the Court will assess whether the Part 19 procedure is appropriate, namely whether it is in the interests of justice.32 I caution Mr Jindal that the originating application procedure is not suited to cases where factual issues are wide ranging and are in dispute. It is not a suitable procedure for a claim of defamation, which should be brought by statement of claim under Part 5.
28 Paul Heath and Michael Whale (eds) Heath and Whale on Insolvency (online ed, LexisNexis) at [22.1].
29 Memorandum of counsel for Imran Mohammed Kamal dated 8 December 2021.
30 Memorandum of Gautam Jindal dated 9 December 2021.
31 Memorandum of counsel for Imran Mohammed Kamal dated 1 February 2022.
32 Rule 19.5.
[60] For these reasons, Mr Jindal’s application for leave to bring a claim against Mr Davies for Mr Kamal’s statements in his 23 July 2021 report is declined. In terms of Trinity Woods, he has not shown that he has an arguable case for rectification or that there is a reasonable likelihood that the Court will disturb Mr Davies’ refusal to alter the report.
[61] Mr Jindal has failed to overcome the hurdle of persuading the Court to grant him leave to bring his application under s 284. That ends his application.
Result
[62] Mr Jindal’s application for leave to make an application under s 284 of the Companies Act 1993, and his application for directions under s 284 and 256, are dismissed.
[63] Mr Davies has been the successful party and would ordinarily be entitled to an award of costs on a Category 2B basis together with disbursements as fixed by the Registrar. If the parties cannot agree on costs they have leave to file and serve memoranda of up to five pages on that issue. I will then determine costs on the papers.
Associate Judge Gardiner
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