Meltzer v Sanctuary Developments no.8 Limited

[2021] NZHC 889

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-2417

[2021] NZHC 889

UNDER

the Companies Act 1993

IN THE MATTER OF

the liquidation of Sanctuary Developments No.8 Limited

BETWEEN

JEFFREY PHILIP MELTZER and

MICHAEL LAMACRAFT as Liquidators of Sanctuary Developments No.8 Ltd Applicants

AND

SANCTUARY DEVELOPMENTS NO.8 LIMITED

Respondent

Hearing:	23 April 2021
Appearances:	Lynne M Van and Richard Idoine for the Applicants
Judgment:	23 April 2021

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 23 April 2021 at 4:00pm

pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

Solicitors:

Anthony Harper (Lynne Van/Richard Idoine), Auckland, for the Applicants

Copy for:

Victoria Young, Senor Journalist at BusinessDesk, Auckland

MELTZER LAMACRAFT v SANCTUARY DEVELOPMENTS NO.8 LIMITED [2021] NZHC 889 [23 April 2021]

[1]    Sanctuary Developments  (No.8) Ltd went into voluntary administration on   9 December 2020. At the watershed meeting on 15 March 2021, it went into liquidation.   The  administrators  are  now  the  liquidators.    In  his  decision  of    11 December 2020, Associate Judge Andrew gave directions deferring advertising and notification of the administration and made a confidentiality order under r 5 of the Senior Courts (Access to Court Documents) Rules 2017.

[2]    Ms Young, Senior Journalist at BusinessDesk, has requested access to the documents on the file. She made an earlier request, before the watershed meeting. In my minute of 11 March 2021, I provided her with a copy of Associate Judge Andrew’s redacted judgment. I said that if there were further developments, she could apply afresh later. Ms Young now seeks access to all the documents on the court file.

[3]    The liquidators oppose. They say that commercial sensitivity attaches to some of the information in the affidavits on file and that some of the documents on the court file are confidential to contracting parties. They also say that any relevant information that creditors require can be reported by the liquidators through the normal liquidation process.

[4]    Because of the order under r 5 of the Senior Courts (Access to Court Documents) Rules 2017, none of the documents on the court file may be accessed without permission of a Judge. That includes the formal court record which would otherwise be accessible as of right under r 8. Ms Young’s request to access the documents is considered under rr 11—14 of the Rules. Rule 11(1) says that r 11 applies to persons not entitled to access a document under rr 8 or 9. In this case, access as of right is not available because of Associate Judge Andrew’s decision under r 5. There is nothing in the Rules to suggest that other provisions apply once an order has been made under r 5.

[5]    This is a media application. Ms Young has reported on the administration and liquidation of Sanctuary Developments (No.8) Ltd. The administration and

liquidation of insolvent companies are matters of legitimate interest on which the media may report.

[6]    Publicity is a normal consequence of a company being put into voluntary administration under Part 15A of the Companies Act 1993. That is consistent with the general approach in insolvency law, that insolvency should not be kept a secret. Notwithstanding that general approach, Associate Judge Andrew held that the voluntary administration of Sanctuary Developments (No.8) Ltd should be kept confidential for a short time in the interest of obtaining the best possible prices for unsold units in the development.

[7]In his affidavit of 9 December 2020, Mr Meltzer said:

26.Confidentiality is key to protecting asset value which in turn will likely result in creditors receiving a better return through the administration process, than through one of the alternative options such as liquidation.

27.It is my belief, having regard to the above, that it is in the interests of all creditors for the settlements and remaining sales to proceed without public notification/advertisement of the administration. This will ensure that the realisable value of the business can be maximised.

…

28.Having regard to the current status of the sales and the imminent settlement of those expected to get CCC and PC, it is my belief that it is in the best interests of the company and the general body of creditors, for the administration to be kept confidential for a brief period of time to allow an orderly sell-down. This will ensure that the purchase price can be maximised without the stigma of an insolvency process.

Mr Meltzer did not say in that affidavit or later affidavits that the information as to particular creditors was confidential and should not be disclosed.

[8]    I gave interim rulings during the administration for certain information relating to some of the secured creditors to be kept confidential, but I did not say that those rulings should continue after the administration came to an end.

[9]    Now that the company is in liquidation, the earlier confidentiality rulings can be reviewed. They were made while the company was in administration, in the hope that keeping the administration confidential would assist in selling unsold units. There

is, however, no confidentiality over the facts of administration and liquidation. The company’s insolvency is public knowledge. There is no longer any need for a blanket restriction on access to the court file. The original reason for the order under r 5 no longer applies.

[10]   Rule 13 provides that different considerations carry different weight, according to which stage the proceeding has reached: before the substantive hearing, during the substantive hearing and afterwards. There was not, however, any formal substantive hearing in this case. Instead, the administrators sought without notice directions as to the conduct of the administration. Once the company went into liquidation at the watershed meeting, the administration came to an end. There is little prospect of further directions under  Part  15A  for  the  administration.  Under  r  13,  I regard Ms Young’s request as coming “after the substantive hearing”. At that stage, open justice has greater weight in relation to documents that have been relied on in a determination than other documents; and the protection of confidentiality and privacy interests has greater weight than would be the case during the substantive hearing. For this decision I treat “matters that are commercially sensitive” under r 12(c) as an aspect of confidentiality.

[11]Under r 12, these considerations are important for this request for access:

12       Matters to be considered

In determining a request for access under rule 11, the Judge must consider the nature of, and the reasons given for, the request and take into account each of the following matters that is relevant to the request or any objection to the request:

(a)the orderly and fair administration of justice:

…

(c) the right to bring and defend civil proceedings without the disclosure of any more information about the private lives of individuals, or matters that are commercially sensitive, than is necessary to satisfy the principle of open justice:

…

(e)the principle of open justice (including the encouragement of fair and accurate reporting of, and comment on, court hearings and decisions):

(f)the freedom to seek, receive, and impart information:

[12]   These factors favour disclosure of all documents on the court file, except to the extent that there are any matters of commercial sensitivity under r 12(c). Ms Young legitimately seeks access to report on the company and thereby keep the public informed. Fair trial rights are not in issue.

[13]   The question then is whether certain information on the court file ought to be redacted because of commercial sensitivity. The only area where such considerations could arise is the secured creditors. Their identity is already known and has been publicly reported. So far however the amounts they claim are due to them has been kept under wraps. That information was redacted in the version of Associate Judge Andrew’s judgment released to Ms Young in my minute of 11 March 2021.

[14]   I understand that the amounts claimed by the secured creditors may not yet be established nor the extent of their securities. Some of them may be partly or wholly unsecured. These matters will affect the conduct of the liquidation and the distributions (if any) to unsecured creditors. Ordinarily secured creditors may not wish the public to know how much they have lent and the extent of any shortfall, but there is not any special commercial sensitivity over these matters. That information may be included in the liquidators’ six-monthly reports to creditors. Those reports are filed with the Companies Office and the information will be publicly available. I see no reason why the public cannot have that information before the liquidators make their reports. Overall, the considerations of commercial sensitivity are not strong enough to warrant keeping that information covered up. With that, no matters count against disclosure of the information on the court file.

[15]Accordingly, Ms Young may have access to all the documents on the court file.

…………………………………….

Associate Judge R M Bell