Petterson v Gothard (No 3)
[2012] NZHC 666
•4 April 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2011-404-7069 [2012] NZHC 666
IN THE MATTER OF HURLSTONE EARTHMOVING LTD (IN RECEIVERSHIP AND IN LIQUIDATION), RIVER ISLAND SHINGLE COMPANY LTD (IN RECEIVERSHIP AND IN LIQUIDATION), NEW ZEALAND POLLUTION ENGINEERING LTD (IN RECEIVERSHIP AND IN
LIQUIDATION) AND HAYES EARTHMOVING SERVICES LTD (IN RECEIVERSHIP AND IN LIQUIDATION)
BETWEEN DAVID ROSS PETTERSON Applicant
ANDPETER JAMES GOTHARD AND RYAN REGINALD EAGLE
Respondents
Hearing: 2 March 2012
Counsel: B Gustafson for Applicant
M Kersey and S C Vickers for First Respondents
Judgment: 4 April 2012
JUDGMENT (NO. 3) OF HEATH J
This judgment was delivered by me on 4 April 2012 at 4.00pm pursuant to Rule 11.5 of the High
Court Rules
Registrar/Deputy Registrar
Solicitors:
Lowndes Jordan, PO Box 5966, Auckland
Russell McVeagh, PO Box 8, Auckland
Counsel:
B Gustafson, PO Box 1297, Shortland Street, Auckland
PETTERSON V GOTHARD AND EAGLE HC AK CIV 2011-404-7069 [4 April 2012]
Contents
Introduction [1] Background [3] Legal principles: ss 261 and 262 Companies Act 1993 [9] The requests for documents [14] The application under s 37 of the Receiverships Act [24] The issues [28] Service of the “notice of failure” [29] Did the liquidator use the correct mechanism to
obtain the documents? [43]
Did the receivers comply with the s 261(1) request? [57] Was the s 261 request “oppressive”? [60] Orders [64]
Introduction
[1] Section 261 of the Companies Act 19931 confers a number of powers on a liquidator to enable him or her to obtain access to the company’s documents and information about its affairs.2 The section envisages that a liquidator may seek documents from a receiver of the company.3
[2] In this case, there are four companies, each of which is in receivership and in liquidation. The liquidator has required the receivers to deliver certain documents to him. The receivers have not provided the documents requested. The liquidator takes the view that the receivers have failed to comply with his requirements. As a result, orders compelling the receivers to provide the documents are sought, under s 37 of
the Receiverships Act 1993.4
Background
[3] Hurlstone Earthmoving Ltd (Hurlstone) was placed in receivership on 13 July
2011 by the holder of a general security agreement, GE Finance and Insurance (GE).
1 Set out at para [9] below.
2 Companies Act 1993, s 261(2)(e).
3 Ibid, s 261(1) (“any other person”) and (2)(e).
4 It would also have been open to make an application under s 266 of the Companies Act 1993.
See Carrow Holdings Ltd (in liquidation) v Sadiq HC Auckland CIV 2007-404-2855, 5 June
2008 (Heath J) at paras [18]–[358.
Although Hurlstone was incorporated in New Zealand, Messrs Gothard and Eagle of Ferrier Hodgson (a firm of insolvency practitioners based in Sydney), were appointed as receivers. On 13 July 2011, GE put three of Hurlstone’s subsidiaries, River Island Single Co Ltd, Hayes Earthmoving Services Ltd and New Zealand Pollution Engineering Ltd, into receivership. Mr Gothard and Mr Eagle were also appointed as receivers of each of those companies.
[4] Hurlstone was put into liquidation by order of this Court on 9 September
2011. Mr Petterson, a practitioner who is based in New Zealand, is its liquidator. As a result of special shareholders’ resolutions (initiated by the liquidator of Hurlstone) passed on 26 September 2011, the three subsidiaries are now in liquidation. Mr Petterson is also the liquidator of each of those companies.5
[5] The receivers and the liquidator have become embroiled in litigation. The initial dispute concerned payments to be made by the receivers under s 30 of the Receiverships Act. In general terms, that provision requires a receiver to apply accounts receivable and inventory (circulating assets) to meet (with some minor exceptions) the preferential claims payable in a liquidation, as set out in Schedule 7 of the Companies Act 1993.6 Those disputes were resolved in judgments that I
delivered on 16 and 21 December 2011.7 Additional background can be found in
those judgments.
[6] After I resolved the s 30 dispute, there remained an outstanding issue about the extent to which the receivers were obliged to supply documents required by the liquidator. That issue had been raised on an application for discovery within the s 30 proceeding. I declined to make any order, preferring to leave the liquidator and the receivers (all of whom are subject to this Court’s supervision8) to reach agreement on
the provision of further information.9 I said:
5 Unless the context otherwise requires, I refer to the receivers and the liquidator respectively, without specifying a particular company. The issues arising on the present application are the same for each.
6 Receiverships Act 1993, s 30(2)(c).
7 Eagle and Gothard v Petterson HC Auckland CIV 2011-404-7387, 16 and 21 December 2011.
8 Companies Act 1993, s 284 and Receiverships Act 1993, s 34.
9 Eagle and Gothard v Petterson HC Auckland CIV 2011-404-7387, 21 December 2011 at paras
[4]–[7]. See also my judgment of 16 December 2011, at paras [61]–[71].
[7] The final point relates to the application for discovery. I have made it clear that I am uneasy about making a formal order, in these circumstances. A compromise position is to be preferred. The liquidator will write to the receivers asking for whatever further information may be required to satisfy the liquidator that there is no material error of the type in respect of which leave has been reserved. Whether the liquidator makes that request formally under s 261 of the Companies Act 1993 or informally is a matter for him. The receivers shall respond to any such letter on or before 3
February 2011.
I reserved leave for either party to seek further orders to adjust the amounts that I had directed to be paid, if, as a result of additional information or inquiries, any material error was found that justified that course.10
[7] The liquidator remains keen to satisfy himself that no material error has been made in the calculation of costs and expenses that I allowed to be paid out of the proceeds of circulating assets. On 5 January 2012, he made a formal request under s 261 of the Companies Act by which he required the receivers to provide specified
documents to him.11 The documents sought are relevant to the calculation of the
receivers’ costs and expenses and their allocation among the proceeds of realisation of circulating and non-circulating assets and general administration. By letter dated
1 February 2012, the receivers rejected any obligation to supply documents of the type requested.12 On 2 February 2012,13 the liquidator forwarded a further letter to the receivers requiring the documents, indicating that if the receivers failed to comply, an application would be made under s 37 of the Receiverships Act14 to compel them to do so.
[8] The liquidator did not receive a reply to that letter. On 16 February 2012, he filed a s 37 application. A prompt hearing was scheduled for 2 March 2012 to consider the application. I regret the delay in giving judgment. That has been caused both by other pressing judicial commitments and the fact that one or two of the points raised in argument proved to be of greater difficulty than I had initially
thought.
10 Ibid, at para [6].
11 See para [14] below.
12 See paras [15]–[18] below.
13 See para [19] below.
14 Section 37 of the Receiverships Act 1993 (in material respects) is set out at para [25] below.
Legal principles: ss 261 and 262 Companies Act 1993
[9] The liquidator based his requirement for delivery of the documents on s 261 of the Companies Act 1993:
261 Power to obtain documents and information
(1) A liquidator may, from time to time, by notice in writing, require a director or shareholder of the company or any other person to deliver to the liquidator such books, records, or documents of the company in that person's possession or under that person's control as the liquidator requires.
(2) A liquidator may, from time to time, by notice in writing require—
(a) A director or former director of the company; or
(b) A shareholder of the company; or
(c) A person who was involved in the promotion or formation of the company; or
(d) A person who is, or has been, an employee of the company;
or
(e) A receiver, accountant, auditor, bank officer, or other person having knowledge of the affairs of the company; or
(f) A person who is acting or who has at any time acted as a solicitor for the company—
to do any of the things specified in subsection (3) of this section.
(3) A person referred to in subsection (2) of this section may be required—
(a) To attend on the liquidator at such reasonable time or times and at such place as may be specified in the notice:
(b) To provide the liquidator with such information about the business, accounts, or affairs of the company as the liquidator requests:
(c) To be examined on oath or affirmation by the liquidator or by a barrister or solicitor acting on behalf of the liquidator on any matter relating to the business, accounts, or affairs of the company:
(d) Assist in the liquidation to the best of the person's ability. (3A) Without limiting subsection (3)(a) of this section, a person may be
required to attend on the liquidator under that subsection at a meeting of
creditors of the company.
(4) Without limiting subsection (5) of this section, the liquidator may pay to a person referred to in paragraph (d) or paragraph (e) or paragraph (f) of subsection (2) of this section, not being an employee of the company, reasonable travelling and other expenses in complying with a requirement of the liquidator under subsection (3) of this section.
(5) The Court may, on the application of the liquidator or a person referred to in paragraph (d) or paragraph (e) or paragraph (f) of subsection (2) of this section, not being an employee of the company, order that that person is entitled to receive reasonable remuneration and travelling and other expenses in complying with a requirement of the liquidator under subsection (3) of this section.
(6) A person referred to in paragraph (d) or paragraph (e) or paragraph (f) of subsection (2) of this section is not entitled to refuse to comply with a requirement of the liquidator under subsection (3) of this section by reason only that—
(a) An application to the Court to be paid remuneration or travelling and other expenses has not been made or determined; or
(b) Remuneration or travelling and other expenses to which that person is entitled have not been paid in advance; or
(c) The liquidator has not paid that person travelling or other expenses.
(6A) A person who fails to comply with a notice given under this section commits an offence and is liable on conviction to the penalty set out in section 373(3).
(7) Nothing in this section limits or affects section 260 of this Act.
[10] A number of distinct powers are conferred by s 261. Without careful identification of each, there is a risk that they may be conflated. In summary:
(a) Section 261(1) enables a liquidator to require a director or shareholder of the company or any other person to deliver to him or her such books, records, or documents “of the company” as are in that person’s possession or under his or her control. That power may be exercised to such extent “as the liquidator requires”. While there is no specific mention of “receivers” in s 261(1), they clearly fall under the rubric of “any other person”.
(b)A liquidator may require a receiver to attend on him or her and to provide the liquidator with information about the business, accounts
or affairs of the company, as the liquidator requests.15 The liquidator may also require a receiver to be examined on oath or affirmation on any matter relating to the business, accounts or affairs of the company16 or to assist generally in the liquidation to the best of his or her ability.17
(c) Section 261(3A) expressly allows a liquidator to require a receiver to attend on the liquidator at a meeting of creditors of the company.
[11] Section 261(4)–(6) deals with the circumstances in which a person required to do something under s 261 may have expenses or remuneration met out of the liquidation fund. So far as a receiver is concerned:
(a) Section 261(4) reposes a discretion in a liquidator to pay “reasonable travelling and other expenses”, in relation to a requirement to comply with s 261(3). Section 261(4) does not apply to compliance with a request for documents made under s 261(1).
(b)A receiver may apply to this Court for an order entitling him or her to receive “reasonable remuneration and travelling and other expenses” to comply with a s 263(3) requirement. No such ability extends to a request for documents under s 261(1).
(c) A receiver cannot refuse to comply with a requirement of the liquidator under s 261(3) by reason only of a failure to pay remuneration or other expenses or the existence of a pending application in this Court.18
(d)A receiver who fails to comply with any notice given under s 261 commits an offence.19
15 Companies Act 1993, s 261(3)(a) and (b). The ability to exercise that power against a receiver is expressly conferred by s 261(2)(e).
16 Ibid, s 261(3)(c).
17 Ibid, s 261(3)(d).
18 Ibid, s 261(6).
19 Ibid, s 261(6A).
[12] In general terms, s 261(1) evidences a Parliamentary intention that a liquidator is entitled to obtain delivery of books, records or documents of the company as of right, without the need to expend liquidation funds to pay remuneration or expenses of the person required to comply with the obligation. Section 262 ameliorates that position when documents are sought from a receiver. Section 262 states:
262 Documents in possession of receiver
(1) A receiver is not required to deliver to a liquidator under section 261 of this Act any books, records, or documents that the receiver requires for the purpose of exercising any powers or functions as receiver in relation to property of a company in liquidation.
(2) The liquidator may, from time to time, by notice in writing, require the receiver—
(a) To make such books, records, and documents available for inspection by the liquidator at any reasonable time or times; and
(b) To provide the liquidator with copies of such books, records, and documents or extracts from them.
(3) The liquidator may take copies of such books, records, and documents made available for inspection or extracts from them.
(4) The liquidator must pay the reasonable expenses of the receiver in complying with a requirement of the liquidator under subsection (2) of this section.
[13] The effect of s 262 is to allow a receiver to retain such records as he or she needs to administer the receivership, while allowing the liquidator to inspect the documents or to take copies. In this way, the ability for a liquidator to fulfil his or her duties is preserved without impinging on the receivers’ need to carry out their own functions.20 When s 262 applies, a liquidator is obliged to pay the “reasonable
expenses” incurred by the receivers in complying with his requirements.21 There is
20 As I indicated in my judgment of 16 December 2011 (albeit in a different context), there is an underlying expectation that receivers and liquidators will co-operate to ensure that their respective statutory duties can be fulfilled efficiently: see Eagle and Gothard v Petterson HC Auckland CIV 2011-404-7387, 16 December 2011 at paras [50]–[52].
21 Ibid, s 262(4).
an important difference between “remuneration” and “expenses”;22 s 262(4) requires payment of the latter but not the former.
The requests for documents
[14] I find that the liquidator’s letter of 5 January 2012 intended to invoke s 261(1). The language employed is consistent with a requirement of that type and is inconsistent with exercise of a s 261(3) power. The liquidator wrote:23
REQUEST FOR INFORMATION TO BE SUPPLIED PURSUANT TO SECTION 261 OF THE COMPANIES ACT 1993
1.Further to the hearing before Heath J on 21 December 2011, I hereby request from you as Receivers of Hurlstone Earthmoving Limited (In Receivership & Liquidation), River Island Shingle Company Limited (In Receivership & Liquidation) New Zealand Pollution Engineering Limited (In Receivership & Liquidation) and Hayes Earthmoving Services Limited (In Receivership & Liquidation) (“the companies”) the following documentation pursuant to section
261 of the Companies Act 1993.
1.1All invoices, time records (including narrations) in the Receivers’ possession of their solicitors that comprise or relate to the costs and disbursements of the Receivers listed in schedules 1A to 6 of the affidavit of Morgan Kelly dated
25 November 2011;
1.2All invoices, time records (including narrations) in the Receivers’ possession and the possession of their solicitors that comprise or relate to the costs and disbursements of the Receivers in realising the plant and equipment of the Companies;
1.3All documents including correspondence and working papers that relate to the tasks listed in schedule 1 of the affidavit of Morgan Kelly dated 16 November 2011;
1.4All documents including correspondence and working papers that relate to the following tasks and disbursements listed in schedule 2 of the affidavit of Morgan Kelly dated
16 November 2011;
22 By way of analogy, see Re Medforce Healthcare Services Ltd (in liquidation) [2001] 3 NZLR
145 (HC), at paras [18]–[20] and Flynn v McCallum HC Tauranga CIV 2005-470-611, 17
December 2009 (Heath and Venning JJ) at para [45].
23 References in the letter to Morgan Kelly are to the person who has primary responsibility for the day-to-day administration of the receiverships. He had sworn affidavits on the s 30 application.
1.4.1 General Insurance issues;
1.4.2 Travel time between sites in New Zealand
1.4.3Forensic IT Formatting and extracting MYOB files and extracting debtors
1.4.4 Airfares;
1.4.5 Meals;
1.4.6 Accommodation;
1.4.7 Other disbursements/miscellaneous travel costs;
1.4.8General Insurance Costs and premiums not relating to secured assets.
2.For the avoidance of doubt, the terms “documents” and “correspondence” should be construed in the widest possible terms to include all letters, emails, reports, correspondence, file notes, memoranda, expense claims, credit card statements, commission statements and includes both handwritten and computer generated advices, reports and summaries.
3.Please supply this information on or before 5pm New Zealand daylight saving time on Friday 3 February 2011.
(original emphasis in bold; emphasis in italics has been added)
[15] The receivers declined to comply with the liquidator’s request. Their reasons for taking that stance were set out in a letter of 1 February 2012, signed by Mr Kelly. In summary:
(a) Many of the documents requested were not books, records or documents of the companies;
(b)Many documents were not “truly information about the business, accounts or affairs of the companies”;
(c) The extent of documentation requested was oppressive;
(d) The documents requested contained information which was
“commercially sensitive, confidential and/or legally privileged”;
(e) Physical and electronic books and records of the companies had already been provided to the liquidator or made available for his collection; a scheduled was attached of the documents provided;
(f) The information and documents requested in para 1.2 of the liquidator’s letter24 were not relevant to any “proper purpose” of a s 261 request. In that regard, reference was made to my judgment of
21 December 2011,25 in particular my comment that there should be a
mechanism to revisit orders if some material error were found in the calculation of amounts involved. The receivers took the view that the request related to remuneration and expenses of realising non- circulating assets, which fell outside the scope of the s 30 proceeding.
[16] The receivers’ letter attached, in three schedules, a detailed breakdown of costs charged against the circulating assets. Mr Kelly said:
The schedules include a summary of professional fees and disbursements supported by detailed time cost records from Ferrier Hodgson’s time cost system. These records relate to costs deducted from the proceeds of inventory and accounts receivable (ie those professional fees and disbursements relating to circulating assets and the general costs).
Detailed time records relating to my solicitors’ time costs will be provided to you directly by my solicitors of my behalf. Please confirm that this is acceptable, otherwise I will have their records forwarded to my office and then on-forward to you under cover of a separate letter.
[17] Mr Kelly concluded by stating:
Both physical and electronic books and records of the Companies in the possession of the Receivers and Managers have already been provided to your office or made available for your collection. To assist in referencing the delivery of these books and records, I attach as Schedule 4 a summary of the books and records provided to your office, and the dates that these were provided. In addition, I note that an amount of physical records of the Companies are held in a storage facility (Recall New Zealand) and that these may not have been transferred to an account in the Liquidator’s name. On
10 October 2011 an email was sent to you by Ian Jordan requesting that you set up a Recall account to enable the books and records to be transferred, we have not received a response to this email. Please confirm whether you have
24 See para [14] above.
25 Eagle and Gothard v Petterson HC Auckland CIV 2011-404-7387, 21 December 2011 at para
[4].
set up an account or been in correspondence with Recall in relation to this matter.
[18] In order to resolve the liquidator’s concerns “efficiently” Mr Kelly expressed the receivers’ preparedness “to provide certain information on conditions set out in their response”. They included, among their conditions, that:
...
a) [the receivers’] reasonable remuneration is met by the Liquidator.
We estimate our remuneration to be $5,000 (plus GST). Please confirm that you agree to pay this sum and will apply for an order
for these to be paid;
b)[the receivers’] reasonable legal expenses are met. The expenses have and will be incurred in collating time records, reviewing them for any privileged material and advising on the request. We estimate those expenses to not exceed $5,000 (plus GST). Please confirm that you agree to pay this sum.
...
[19] The liquidator responded the following day. He sent his reply by email to Mr Kelly, the receivers personally and another person (Mr Jordan) whom Mr Kelly had indicated might be in a position to respond to any queries. In his letter, of 2 February
2012, Mr Petterson emphasised the need for a liquidator to determine the information he or she might require. He stated:
...
Section 261 of the Companies Act 1993 (“the Act”) was provided by the legislature to assist the Liquidator in the expeditious discharge of his responsibilities in a liquidation.
One of its purposes was to provide a mechanism whereby the Liquidator could seek and obtain information relevant to the company in liquidation without the necessity to recourse through the courts. The section presents a cost efficient mechanism for obtaining information, recognising that a company in liquidation is usually in an insolvent position with available funds being at a minimum.
While I note your opinion as to what the Liquidator may or may not need, the position is that that the legislation does not contemplate a recipient of a section 261 notice making that determination. That is the prerogative of the Liquidator. Further your interpretation of what was stated in Heath J’s decision, in terms of the notice issued by the Liquidator, is irrelevant.
The Liquidator is entitled to seek any information he chooses in regard to the company in liquidation from the persons listed in section 261(2), whether or
not (for the assistance of the recipient as we did in this case) it is referenced back to a decision of the Court.
Further the Liquidator can require any person who has possession of the company’s books and records to deliver those to the Liquidator. Until my appointment, the Receivers and your solicitors were agents of the Company. This means that any document created between appointment on 13 July 2011 and 9 September 2011 (in the Case of Hurlstone Earthmoving Ltd) or 26
September 2011 (in the case of the other Hurlstone Group companies to which Receivers were appointed) in discharge of that agency is the property of the Company and as such a book or record of the Company.
The books and records of the Company and the other information sought in the Notice is required to be provided pursuant to the Notice served by 3
February 2012. Failure to provide it is an offence under section 261(6A) and will be material to the Liquidation. I am obligated to report any such offence
to the Registrar under section 258A of the Companies Act.
Should the information sought not be provided by 3 February 2012 I will view this as a “failure to comply” under section 36 of the Receiverships Act and seek an order pursuant to section 37 of that Act at the hearing on 21
February 2012.
I hope this can be avoided as the materially sought is neither commercially sensitive nor costly to provide as it is already referred to in your affidavits.
...
[20] The liquidator sent his letter of 2 February 2012 to an email address to which he had previously sent correspondence. I accept Mr Kelly’s evidence that the letter was not received as a result of technical problems afflicting a company responsible for filtering incoming email for the receivers’ firm. For the same reasons, neither the receivers personally nor Mr Jordan (the other intended recipients of the letter) received the letter by email. I accept Mr Kelly’s evidence that the letter did not come to the attention of any of the intended recipients until the s 37 application was served.
[21] Explaining the position in his affidavit of 20 February 2012, Mr Kelly deposed:
5.Ferrier Hodgson utilise an external provider, Symantec Messagelabs, to filter incoming email. I have made enquiries with the Receivers’ staff. On the basis of their responses, I believe that the email was received by the Symantec Messagelabs email server on 2 February
2012. However, the email was never sent onto the Ferrier Hodgson email server and consequently the intended recipients of the email
did not receive the email into any of their inboxes.
[22] In the same affidavit, Mr Kelly expressed the view that there had been
“substantial compliance with the Liquidator’s request”, referring to his letter of 1
February 2012. He pointed out that “detailed time records and invoices of” the receivers’ solicitors had been sent to the liquidator by letter dated 17 February 2012. A letter dated 16 February 2012 from the receivers’ solicitors to the receivers was annexed as an exhibit.
[23] It is apparent from the solicitors’ letter that there may be discrepancies in relation to fees and disbursements charged. Whether any differences materially affect the outcome of my judgments on the s 30 application or favour the liquidator is unclear. On the face of it, they may not. The solicitors wrote:
...
Please find enclosed our detailed time records and invoices that relate to the legal costs and disbursements listed in schedules 1A to 6 of your affidavit dated 25 November 2011. However, in light of the judgment of Heath J on
16 December 2011 (“Judgment”), we have not included time records and invoices relating to our costs of the proceedings.
In the process of compiling the time records and invoices it has become apparent that certain time entries have not been filled or have been billed at a discounted rate.
It has further become apparent that, in light of the Judgment, some time entries have not been allocated to the correct matter. Particularly, there is time advising on GST liabilities that is currently in the “General” matter which properly should be allocated to the “Accounts Receivable” matter.
We reserve the right to invoice the receivers for any time that has not been billed or billed at a discounted rate. We further reserve the right to reissue invoices to allow us to reallocate time entries between matters as appropriate.
...
The application under s 37 of the Receiverships Act
[24] On 15 February 2012, the liquidator sought an order under s 37 of the Receiverships Act to compel production of the documents previously requested. The application was opposed.
[25] Sections 37(1)(h), (3), (4) and (8) provide:
37 Orders to enforce receiver's duties
(1) An application for an order under this section may be made by—
...
(h) If the grantor is a company, a liquidator of the grantor:
...
(3) No application may be made to the Court in relation to a failure to comply unless notice of the failure to comply has been served on the receiver not less than 7 days before the date of the application and, as at the date of the application, there is a continuing failure to comply.
(4) If the Court is satisfied that there is, or has been, a failure to comply, the Court may—
(a) Relieve the receiver of the duty to comply, wholly or in part;
or
(b) Without prejudice to any other remedy that may be available in relation to a breach of duty by the receiver, order the receiver to comply to the extent specified in the order.
...
(8) In making an order under this section the Court may, if it thinks fit,—
(a) Make an order extending the time for compliance: (b) Impose a term or condition:
(c) Make an ancillary order.
....
[26] In his letter of 5 January 2012, the liquidator made it clear that the terms “documents” and “correspondence” should be interpreted in broad terms, “to include all letters, emails, reports, correspondence, filenotes, memoranda, expense claims, credit card statements, commission statements, including “both handwritten and computer generated advices, reports and summaries”. While the information was initially required by 5.00pm on 3 February 2011 (New Zealand Daylight Saving Time), the response from the receivers of 1 February 2012 made it clear that they did not intend to comply with the liquidator’s requirements.
[27] The liquidator’s letter of 2 February 2012 purported to be a “notice of ... failure to comply”, for the purposes of s 37(3).26 An application cannot be made under s 37 until seven days have elapsed from the date of service of the notice. A jurisdictional question has arisen. Given that the letter of 2 February 2012 did not come to the attention of Mr Kelly until the s 37 application was served, the question is whether service of the emailed “notice to failure to comply” has been effected
properly. If it has not, the application fails on that ground.
The issues
[28] While put in different ways in the pre-application correspondence and counsel’s submissions, I consider that the issues requiring determination can be distilled to five:
(a) Was the notice of failure to comply validly served on the receivers?
(b)If so, did the liquidator use the correct process to require production of the documents?
(c) If so, did the receivers comply with the s 261 notice? (d) If not, was the request for documents “oppressive”?
(e) If the notice of failure were properly served and the receivers did not comply with it, what order should the Court make?
Service of the “notice of ... failure to comply”
[29] Read together, s 261(1) of the Companies Act and s 37(3) of the Receiverships Act contemplate a two-stage approach. First, the liquidator requires a receiver to supply documents falling within s 261(1). The letter of 5 January 2012 is
the s 261 notice. Second, if the documents were not provided, the liquidator must
26 The term “failure to comply” is defined in s 36 of the Receiverships Act; set out at para [30]
below.
issue a notice of failure to comply, under s 37(3). The letter of 2 February 2012 is the notice of failure to comply.
[30] For the purposes of s 37, the term “failure to comply” is defined in s 36:
36 Meaning of “failure to comply”
In section 37 of this Act, failure to comply in relation to a receiver means a failure by a receiver to comply with a relevant duty arising—
(a) Under the deed or agreement or the order of the Court by or under which the receiver was appointed; or
(b) Under this or any other Act or rule of law or Rules of Court; or
(c) Under any order or direction of the Court other than an order to comply made under that section; and comply, compliance, and failed to comply have corresponding meanings.
[31] Neither s 36 nor s 37(3) specifies a mode of service. Plainly, the notice must be in a written form; otherwise, it cannot be served. The question is whether service by electronic means meets the requirements of the section.
[32] The Electronic Transactions Act 2002 is an adapted version of the UNCITRAL27 Model Law on Electronic Commerce (the Model Law), and was designed to meet the contemporary needs of the New Zealand business community. The purposes of the 2002 Act are to facilitate the use of electronic technology by (among other things) reducing uncertainty regarding the time and place of dispatch and receipt of electronic communications.28 The term “writing” is used in a manner that brings an email within its scope.29
[33] The Act enables “certain paper-based legal requirements [to] be met by using
electronic technology that is functionally equivalent to those legal requirements”.30
Email is the functional equivalent of a letter that is sent by post. Default rules about the time and place of dispatch and receipt of such communications are set out in
ss 9-13 of the Act.
27 United Nations Commission on International Trade Law.
28 Electronic Transactions Act 2002, s 3(a)(ii). The term “electronic communications” is defined in
s 5 in wide terms that plainly embrace emails.
29 Ibid, ss 18 and 19.
30 Ibid, s 3(b).
[34] For present purposes, s 11 is relevant. It is a default rule for the time at which an electronic communication is received:
11 Time of receipt
An electronic communication is taken to be received,—
(a) in the case of an addressee who has designated an information system for the purpose of receiving electronic communications, at the time the electronic communication enters that information system; or
(b) in any other case, at the time the electronic communication comes to the attention of the addressee.
(emphasis added)
[35] While expressed more succinctly, s 11 is based on article 15 of the Model Law. The UNCITRAL Guide to Enactment of the Model Law31 explains the notion of a “designated ... information system” of the type to which s 11 refers. Article 15(2) of the Model Law and paras 102–103 of the Guide to Enactment respectively state:
(a) Article 15 Time and place of dispatch and receipt of data messages
...
(2) Unless otherwise agreed between the originator and the addressee, the time of receipt of a data message is determined as follows:
(a) if the addressee has designated an information system for the purpose of receiving data messages, receipt occurs:
(i) at the time when the data message enters the designated information system; or
(ii) if the data message is sent to an information system of the addressee that is not the designated information system, at the time when the data message is retrieved by the addressee;
(b) if the addressee has not designated an information system, receipt occurs when the data message enters an information system of the addressee.
31 The terms of the Model Law are set out at Appendix B to the Law Commission’s Report, Electronic Commerce Part Two: A Basic Legal Framework (November 1999). Appendix B also incorporates the Guide to Enactment prepared by the UNCITRAL Secretariat. Section 6 of the Electronic Transactions Act permits recourse to the Model Law and the Guide to Enactment for the purpose of interpreting the statute.
(b) Guide to Enactment
102. [Article 15(2)], the purpose of which is to define the time of receipt of a data message, addresses the situation where the addressee unilaterally designates a specific information system for the receipt of a message (in which case the designated system may or may not be an information system of the addressee), and the data message reaches an information system of the addressee that is not the designated system. In such a situation, receipt is deemed to occur when the data message is retrieved by the addressee. By “designated information system”, the Model Law is intended to cover a system that has been specifically designated by a party, for instance in the case where an offer expressly specifies the address to which acceptance should be sent. The mere indication of an electronic mail or telecopy address on a letterhead or other document should not be regarded as express designation of one or more information systems.
103. Attention is drawn to the notion of “entry” into an information system, which is used for both the definition of dispatch and that of receipt of a data message. A data message enters an information system at the time when it becomes available for processing within that information system. Whether a data message which enters an information system is intelligible or useable by the addressee is outside the purview of the Model Law. The Model Law does not intend to overrule provisions of national law under which receipt of a message may occur at the time when the message enters the sphere of the addressee, irrespective of whether the message is intelligible or useable by the addressee. Nor is the Model Law intended to run counter to trade usages, under which certain encoded messages are deemed to be received even before they are usable by, or intelligible for, the addressee. It was felt that the Model Law should not create a more stringent requirement than currently exists in a paper-based environment, where a message can be considered to be received even if it is not intelligible for the addressee or not intended to be intelligible to the addressee (eg, where encrypted data is transmitted to a depository for the sole purpose of retention in the context of intellectual property rights protection).
(emphasis added)
[36] In arguing that no “information system” had been designated, Mr Kersey, for the receivers, referred me to s 14A(1)(a) of the Electronic Transactions Act 1999 (Cth), an Australian statute that also had its genesis in the Model Law. With reference to two versions of s 14A(1)(a), before and after amendments made in 2011, he submitted:
2.10The Australian Electronic Transactions Act 1999 (“AETA”) supports this interpretation of the [New Zealand Electronic Transactions Act]. Section 14A(1)(a) of the AETA reads:
For the purposes of a law of the Commonwealth, unless otherwise agreed between the originator and the addressee of an electronic communication:
(a) the time of receipt of the electronic communication is the time when the electronic communication becomes capable of being retrieved by the addressee at an electronic address designated by the addressee
2.11 Before amendments in 2011, the predecessor to section 14A(1)(a), section 14(3) read:
For the purposes of a law of the Commonwealth, if the addressee of an electronic communication has designated an information system for the purpose of receiving electronic communications, then, unless otherwise agreed between the originator and the addressee of the electronic communication, the time of receipt of the electronic communication is the time when the electronic communication enters that information system.
[37] To support his submission, Mr Kersey cited Aristocrat Technologies Inc v IGT.32 In that case, a Delegate of the (Australian) Commissioner of Patents observed, in relation to (the pre-2011) s 14(3):
... [T]he applicant did not specifically request that documents be sent via a particular information system. There was therefore no expressed designation of any particular information system as an electronic addressee for service. The opponent argued that all correspondence from applicant’s address for service contains their general email address. However this is not “specific directions” to use a particular information system as contemplated by the [Explanatory Memorandum to the [(Australian) Electronic Transactions Act]] and in my view, it is insufficient to invoke section 14(3).
[38] If the Delegate intended to hold that it was necessary for a recipient to designate an information system in specific words, I decline to follow the decision. It proceeds, in my view erroneously, on the premise that “designation” must be effected in an express manner. If she were right, a designation could never be inferred from conduct. Those propositions do not sit easily with the commentary in para 102 of the Guide to Enactment. That refers to express designation as an
example of the way in which existence of a relevant designation could be proved.33
[39] Determination of whether an information system has been “designated”, for
the purposes of s 11(a), is a question of fact to be determined on the basis of available evidence. Section 11(a) contemplates the possibility of designation being
32 Aristocrat Technologies Inc v IGT [2008] APO 33 at para [34].
33 See para [35] above: “By “designated information system”, the Model Law is intended to cover a system that has been specifically designated by a party, for instance in the case where an offer expressly specifies the address to which acceptance should be sent”.
effected either through express words or by conduct. Not only is that consistent with para 102 of the Guide to Enactment but it is also in line with the view taken by the our Law Commission, in its precursor work to the Electronic Transactions Act. In the context of considering service of documents by email, the Commission said:34
87... If documents are sent by email they may be sent through the use of an application which cannot be read by the intended recipient. Obviously, if the intended recipient communicates first by electronic means, it can readily be inferred that communication through the same means is acceptable. But receipt of an email from a person does not necessarily mean that a reply, which includes an attachment which is generated through a different application, can be read.
88To accommodate this peculiarity, it should be necessary, consistent with the choice principle, for a person who wishes to give notice or to serve documents by email, in lieu of ordinary post, to be able to establish to the satisfaction of the court both
Thatthe intended recipient actually agreed to receipt of the notice by email; and
Thatthe particular form of email used can be read by the intended recipient.
In our view there should be no prescriptive legislation detailing how such agreement should be proved; that should be a matter left to the parties to determine. If documents are sent in lieu of statutory notice and these factors cannot be proved by the person who sent the documents then the service will be invalid. That is a risk which the person seeking to use email runs. The onus will be on the person who wishes to serve or give notice by email to prove agreement on the points raised.
(emphasis added)
[40] I am satisfied that email correspondence had been historically used between the parties and the evidence is sufficient to infer a “designation” that the “Ferrier Hodgson” address could be used for correspondence and official notices. I add that the far greater use of email communications in 2012 (compared to 1999 when the Commission released its report) suggests that the threshold for a sender to prove a
“designation” will not be high.
34 Electronic Commerce Part Two: A Basic Legal Framework (NZLC R 58, 1999) at paras 87 and
88.
[41] Notwithstanding the difficulties in the delivery of the email message from Ferrier Hodgson’s contracted provider, Symantec Messagelabs,35 s 11(a) was triggered. The situation with which the receivers were faced was not unlike one in which a paper-based letter is delivered to an office but it lays unopened on the intended recipient’s desk during a period of absence.
[42] In my view, the notice of failure to comply was validly served. Once the seven days to which s 37(3) refers had expired, it was open to the liquidator to apply for an order to compel compliance with the s 261 notice.
Did the liquidator use the correct mechanism to obtain the documents?
[43] Mr Gustafson, for the liquidator, submitted that s 261 was the correct mechanism by which to request the documents. Mr Kersey contended that it was not. He submitted that the appropriate provision was s 262 of the Companies Act and that, as a term of enabling a liquidator to obtain access to documents under either s 262(2)(a) or (b), the liquidator was required to meet reasonable expenses of
the receivers.36
[44] Sections 261(1) and 262 are opposite sides of the same coin. Section 261(1)
states what a liquidator may require a receiver to deliver to him or her. Section
262(1) allows the receiver, in specified circumstances, to withhold some or all of the documents sought. Section 261(1) is a statutory acknowledgement that liquidators need to have access to books and records of the company to perform their duties.37
Section 262(1) recognises that there will be occasions (when the documents are required for the purpose of the receivership) when a receiver must have a prior right to possession of them. In that situation, the liquidator’s position is protected through the availability of other means of obtaining access to the documents; namely, by
inspection or copying.38
35 See para [21] above.
36 Companies Act 1993, s 262(4). Section 262 is set out at para [12] below. See my analysis of the scheme of ss 261 and 262 at paras [10]–[13] above.
37 In the case of a private liquidator, see ss 253 and 255 Companies Act 1993.
38 Companies Act 1993, s 262(2).
[45] In determining whether s 261 was the appropriate authority for the liquidator to obtain the documents, the respective roles, functions and duties of receivers and liquidators must be considered. Without an understanding of their inter-relationship, it is difficult to determine, in the abstract, what documents a liquidator may require from a receiver under s 261.
[46] Performance of at least three of a liquidator’s functions may require access to
books and records held by a receiver:
(a) Access might be required to some books and records for the purpose of compiling reports that must be lodged with the Registrar of Companies, under s 255 of the Companies Act.
(b)There is a need for a liquidator to oversee any actions of the receivers that might prejudice the interests of preferential or unsecured creditors. This role has been described as that of “an official and independent watchdog” on the receiver.39 Section 30 of the Receiverships Act (in requiring proceeds of circulating assets to be used for the benefit of preferential creditors) is a good example of a
situation in which a liquidator may need to perform that role.
(c) Access to some books and records will be required in order to determine whether any actions should be commenced in relation to voidable transactions. A receiver does not have power to bring such proceedings. In assessing the importance of that right, regard must be had to the strict time limits within which a liquidator can act; for example, in the case of a voidable transactions and charges, a period
of two years before the date of commencement of the liquidation.40
[47] The liquidator’s “oversight” function is confirmed by his or her ability to seek orders reviewing or fixing the reasonable remuneration of a receiver41 and to
39 Blanchard and Gedye, The Law of Private Receivers of Companies in New Zealand (LexisNexis
2008) at para 12.01.
40 Companies Act 1993, ss 292(5)(a) and 293(6)(a).
41 Receiverships Act 1993, s 34(2), standing coming from s 34(3)(f).
seek an order terminating or limiting the receivership.42 It is also supported by a receiver’s duty to unsecured creditors, when exercising a power of sale of property, to obtain the best price reasonably obtainable as at the time of sale.43
[48] The existence of the “oversight” function supports the view that a liquidator is entitled to seek documents in order to determine whether there has been any material error in the calculation of moneys to be paid to preferential creditors under s 30 of the Receiverships Act. The possibility of allocation of too much of the receivers’ costs to circulating assets or the allocation of too little to non-circulating assets and general administration may each be relevant to whether any material error has been made.
[49] The class of information that a liquidator is entitled to require a receiver to provide is defined expansively in s 261(1). The phrase used is “such books, records, or other documents of the company in that person’s possession or under that person’s control”. While the terms “books”, “records” and “other documents” are not specifically defined, the term “company records” (which must be regarded as a
subset of those to which s 261(1) refers) is defined:44
189 Company records
(1) Subject to subsection (3) of this section and to section 88 and section
195 of this Act, a company must keep the following documents at its registered office:
(a) The constitution of the company:
(b) Minutes of all meetings and resolutions of shareholders within the last 7 years:
(c) An interests register:
(d) Minutes of all meetings and resolutions of directors and directors' committees within the last 7 years:
42 Ibid, s 35(1), standing coming from s 35(2)(b) and the grounds of such an applicatio n being set out in s 35(3).
43 Ibid, s 19(c).
44 Companies Act 1993, s 189(1). See also s 190(1). The records of a company must be kept in written form or in a form or manner that allows the documents and information comprising the records “to be easily accessible and convertible into written form”. See also ss 215 and 216 of the Companies Act 1993 and Watts, Campbell and Hare, Company Law in New Zealand (LexisNexis Wellington 2011) at para 22.1.
(e) Certificates given by directors under this Act within the last
7 years:
(f) The full names and addresses of the current directors:
(g) Copies of all written communications to all shareholders or all holders of the same class of shares during the last 7 years, including annual reports made under section 208 of this Act:
(h) Copies of all financial statements and group financial statements required to be completed by this Act or the Financial Reporting Act 1993 for the last 7 completed accounting periods of the company:
(i) The accounting records required by section 194 of this Act for the current accounting period and for the last 7 completed accounting periods of the company:
(j) The share register.
[50] In addition, the company has an obligation to keep accounting records that comply with s 194 of the Companies Act. Section 194(1) states:
194 Accounting records to be kept
(1) The board of a company must cause accounting records to be kept that—
(a) Correctly record and explain the transactions of the company; and
(b) Will at any time enable the financial position of the company to be determined with reasonable accuracy; and
(c) Will enable the directors to ensure that the financial statements of the company comply with section 10 of the Financial Reporting Act 1993 and any group financial statements comply with section 13 of that Act; and
(d) Will enable the financial statements of the company to be readily and properly audited.
....
[51] The purpose of s 194(1) is to identify classes of records that must be kept in order to meet its objectives. Thus, “records” of the company (for the purpose of s 261(1)) must, in my view, include all documents kept by the company to meet that
obligation.45 Necessarily, records that enable financial statements to be prepared,
45 Generally, see Maloc Construction Ltd v Chadwick (1986) 3 NZCLC 99,795 (HC) at 99,802 and
Watts, Campbell and Hare at para 22.2.
and identify both the proceeds of sale of assets under the control of a receiver and the associated costs of realisation fall within the ambit of s 194(1).
[52] The receivers have an obligation to keep proper accounting records during their stewardship of the company.46 Enactment of s 31 of the Receiverships Act has reversed the long-standing rule that appointment of a liquidator terminated a receiver’s right to act as agent of the company.47 Therefore, from the commencement until the termination of a receivership, the financial statements continue to be those of the company – not the receivers’ personally.48
[53] A major plank of the receivers’ argument is the proposition that the records requested were records of the receivers, rather than the company. That proposition is advanced on the basis that the records that the liquidator seeks to obtain came into existence after receivership and, in significant respects, refer to the calculation of fees and disbursements that they incurred. The distinction is supported by some
authority.49
[54] In Gomba Holdings UK Ltd v Minories Finance Ltd, the Court of Appeal of England and Wales, in a judgment delivered by Fox LJ (with whom Stocker and Butler-Sloss LJJ agreed), held that ownership of documents in a receivership of a company depended on whether the documents were brought into being in discharge of the receivers’ duties to the mortgagor, the debenture holder, or neither. Gomba was a case in which companies that had been released from receivership sought an order that the receivers return documents to them. They were met, in part, by a submission that the documents were those of the receivers, not the company. The Court held that the fact that the documents were created for or on behalf of the receiver who was, “technically” the “agent” of the company was not sufficient to
confer ownership of the documents on the company itself.50
46 Receiverships Act 1993, s 22.
47 Blanchard and Gedye, The Law of Private Receivers of Companies in New Zealand (LexisNexis
2008) at para 12.04 and the authorities collected in Andrew R Keay, McPherson’s Law of
Company Liquidation (Thomson Reuters (Legal) Ltd 2nd ed, 2009) at 402–404.
48 See also the reporting requirements of ss 23 and 24 of the Receiverships Act 1993.
49 Chantrey Martin & Co v Martin [1953] 2 All ER 691 (CA) and Gomba Holdings UK Ltd v
Minories Finance Ltd [1989] 1 All ER 261 (CA).
50 Gomba Holdings UK Ltd v Minories Finance Ltd [1989] 1 All ER 261 (CA) at 263–264.
[55] In New Zealand, a contrary view has been expressed. In Re Tricorp Investments Ltd; Watson v Russell,51 Thorp J considered the point in the context of a company that had been made subject to the Companies Special Investigations Act
1958, a forerunner of the statutory management regime in New Zealand.52 Section
9(1) of that Act created a duty on all persons having possession and control of “any books or records or documents or other property, ..., belonging to any company incorporated in New Zealand to which [the] Act applies” to deliver them up to the statutory receiver.53 The statutory receiver had written to a receiver appointed by Tricorp’s debenture holder seeking documents such as vouchers, receipts and tax invoices for the receiver’s costs and bank statements, check butts and deposit books of the bank account operated by the receiver.54 The words “belonging to” are synonymous with “of the””, in s 261(1) of the Companies Act 1993.
[56] After discussing Gomba and authorities on which it was based, Thorp J
concluded:55
Turning from that point to consider the list of documents produced by Mr Russell, it appears to me that such documents as cheque books, receipt books, bank statements, PAYE and wage records, invoices, contracts and correspondence affecting contracts made for and on behalf of the company, proceedings received by the respondent in relation to claims either upon himself as receiver or upon the company, and correspondence or copies of correspondence sent or received in relation to such matters, are correctly classified as documents or records created or received by the respondent as agent for the company and in the course of his agency, and accordingly are documents “belonging to” the company in terms of sec 9(1), whereas the receiver’s own working papers would not be within that classification.
I agree with Mr Manning that the portion of the decision in Chantrey Martin v Martin which considered the accountants’ working accounts and working papers must be read in the light of the primary significance that case gave to the professional/client relationship between the parties. Taking that factor into account it is my view that cash books and ledgers held by the respondent, even though prepared in his hand from documents of primary record, should be classified as records “belonging to the company”, being documents prepared by him for the purpose of the receivership which the company and its present agents the statutory receivers reasonably require in order to comprehend with reasonable speed the state of the receivership and therefore of the company of which they are custodians. (emphasis added)
51 Re Tricorp Investments Ltd; Watson v Russell (1988) 4 NZCLC 64,620 (HC) at 64,625–64,628.
52 Now the Corporations (Investigation and Management) Act 1989.
53 Companies Special Investigations Act 1958, s 9(1)(a). The whole of s 9(1) is set out in Tricorp, at 64,622.
54 Re Tricorp Investments Ltd; Watson v Russell (1988) 4 NZCLC 64,620 (HC) at 64,623.
55 Ibid, at 64,627–64,628.
With respect, Thorp J’s reasoning is unimpeachable. I apply it and hold that the
records sought are those “of the company”.
Did the receivers comply with the s 261(1) request?
[57] When they responded to the liquidator’s s 261 request, the receivers did no more than to deny the liquidator’s right to obtain the documents and make a conditional offer to supply them on terms requiring remuneration to be paid.56 There is no provision, in s 261, for a receiver to be paid remuneration or expenses in relation to the provision of the documents provided.57
[58] In the pre-application correspondence, the receivers placed no reliance on s 262 of the Companies Act. That was an issue that I raised during the course of a telephone conference on 21 February 2012. If it applied, it would entitle the receivers to receive reasonable expenses in relation to compliance with the requirements of either s 262(2) or (3). But, they would not be entitled to receive remuneration.
[59] In those circumstances, there has been no compliance by the receivers. The calculations that they forwarded were not documents required by the liquidator. The evidence does not go far enough to demonstrate that the liquidator already has all the documents he has required. I hold that the receivers did not comply with the s 261(1) request.
Was the s 261 request “oppressive”?
[60] Mr Kersey submitted that the liquidators’ request was oppressive because it was not intended to be used for a proper purpose. Mr Kersey’s submission is that s 261(1) is not an appropriate mechanism by which information relating to the costs
and expenses of the receiver can be obtained.
56 See para [18] above.
57 See para [12] above.
[61] I reject that submission. Initially, the documents were requested to assist the liquidator to determine whether there had been any material error in the calculation of amounts payable to the liquidator in respect of the proceeds of circulating assets. As the receivers indicated in their letter of 1 February 2012, the request did go further than that. Nevertheless, given the liquidator’s general function of oversight of a receivers’ actions and the particular obligation he has towards preferential creditors in relation to s 30 issues, I have no difficulty in holding that the request was
proper.58 Any request under s 261(2) did not need to be linked to the s 30 application
or the judgments given on it.
[62] There is no other basis on which I could hold the request was oppressive. It is well established that a liquidator is entitled to documents of this type. The position was best explained by the House of Lords in British and Commonwealth Holdings Plc (joint administrators) v Spicer and Oppenheim (a firm),59 in which Lord Slynn of Hadley, giving the principal opinion with which the other Law Lords agreed, said, in the context of the “oppression point”:60
The protection for the person called upon to produce documents lies, thus, not in a limitation by category of documents ('reconstituting the company's state of knowledge') but in the fact that the applicant must satisfy the court that, after balancing all the relevant factors, there is a proper case for such an order to be made. The proper case is one where the administrator reasonably requires to see the documents to carry out his functions and the production does not impose an unnecessary and unreasonable burden on the person required to produce them in the light of the administrator's requirements. An application is not necessarily unreasonable because it is inconvenient for the addressee of the application or causes him a lot of work or may make him vulnerable to future claims, or is addressed to a person who is not an officer or employee of or a contractor with the company in administration, ...
....
[63] In my view, there was no oppression or unfairness in the liquidator’s requirements. However, if it were to emerge that the liquidator is using funds that would otherwise be distributed to preferential creditors as part of an extensive
fishing expedition, that would, no doubt, be taken into account by the Associate
58 See also para [47]–[48] above.
59 British and Commonwealth Holdings Plc (joint administrators) v Spicer and Oppenheim (a firm)
[1992] 3 All ER 876 (HL).
60 Ibid, at 885. For “administrator” read “liquidator”. See also, Re Northrop Instruments & Systems Ltd [1992] 2 NZLR 361 (HC) at 364–365..
Judge who is required to approve the liquidator’s remuneration in respect of the holding company, Hurlstone. The protections that exist for creditors in relation to the review of remuneration apply equally to the actions of both receivers and liquidators.
Orders
[64] While, on the application of s 11(a) of the Electronic Transactions Act, the notice of failure to comply was validly served, it is clear that the letter did not come to the attention of the receivers until after the time for compliance had passed. I have wide powers, in respect of the relief that can be given when failure to comply is demonstrated. I am entitled to relieve the receivers of their duty to comply or to order compliance to a specified extent. I take the view that it is preferable to extend the time for compliance, as opposed to requiring the parties to begin their exchanges
afresh.61 The orders that I make shall be regarded as being made in respect of each
of the four companies in question. [65] I make the following orders:
(a) Subject to (b) below, I extend the time for compliance with the s 261(1) request. I direct that the receivers deliver to the liquidator, on or before 11 May 2012, the documents required in his letter of 5
January 2012.
(b)If the receivers require any of the documents for the purpose of the receivership (in terms of s 262(1)), they must advise the liquidator in writing62 on or before 18 April 2012 of the documents they say fall under s 262(1). They must provide to the liquidator, on or before 11
May 2012, copies of those documents in respect of which they invoke s 262(1).63 The receivers shall provide an invoice for expenses incurred in providing copies, at the same time. Documents may be
provided in electronic form or by inclusion in a compact disk.
61 See Receiverships Act 1993, s 37(4) and (8); set out at para [25] above.
62 For the avoidance of doubt, this may include an email communication.
63 Companies Act 1993, s 262(2)(b).
(c) The liquidator shall pay any invoiced expenses, on or before 17 May
2012. Any disputes as to the reasonableness of the expenses may be referred to me if payment were made on a without prejudice basis. Leave to apply is reserved, in that regard.
[66] If any questions of privilege or confidentiality arise that would affect the ability of the liquidator to see the documents, the receivers shall provide a list of those documents (explaining why privilege or confidentiality considerations apply) to the liquidator and file in this Court a sealed envelope containing copies of that list and the documents referred to in it. If asked to do so, I can review them and rule on any claims for confidentiality or privilege. That process will protect the receivers in the event that any privilege of those types exist.
[67] I reserve all questions of costs. If they cannot be agreed, memoranda may be filed. Any memorandum by a party seeking costs shall be filed and served on or before 26 April 2012. Any memorandum in opposition shall be filed and served on or before 10 May 2012. I will give any judgment on costs on the papers.
[68] I thank counsel for their assistance.
P R Heath J
Delivered on 4 April 2012 at 4.00pm
8