Walker v Ariyathas - [2012] NZHC 1648

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-1894 [2012] NZHC 1648

UNDER the Companies Act 1993

IN THE MATTER OF ARIYA NEW ZEALAND LIMITED (IN LIQUIDATION)

BETWEEN ROBERT BRUCE WALKER Plaintiff

ANDSELVATHAS ARIYATHAS Defendant

Hearing: 9 July 2012

Counsel: N H Malarao and K L Wendt for the Plaintiff
No appearance by or on behalf of the Defendant

Judgment: 9 July 2012

ORAL JUDGMENT OF VENNING J

Solicitors: Meredith Connell, PO Box 2213, Auckland 1140
Copy To: Mr S Ariyathas, 29 Marion Avenue, Mt Roskill, Auckland 1041

WALKER V ARIYATHAS HC AK CIV-2011-404-1894 [9 July 2012]

Introduction

[1] In this proceeding the plaintiff, Mr Walker, the liquidator of Ariya New Zealand Limited (the company) seeks orders against the defendant, Mr Ariyathas, a director of the company. The liquidator seeks orders under s 300 of the Companies Act 1993 and in particular a declaration that the defendant is personally liable for the debts of the company.

[2] The company was incorporated on 17 September 2001. It had two directors and two shareholders. Since 10 February 2005 the defendant has been the sole director and since 24 March 2008 the sole shareholder of the company.

[3] The company was placed into liquidation for failure to pay a debt owing to

New Zealand Customs. The liquidation took effect on 9 September 2009.

Procedural matters

[4] The proceedings were commenced in March 2011. The defendant was initially represented and filed a statement of defence. However, the defendant’s solicitor formally sought leave to withdraw, which was granted on 25 May 2012 by Judge Bell.

[5] In a minute on that date the Judge confirmed the liquidator’s application was set down for a hearing for five days to commence on 9 July. The matter was before the Associate Judge again on 11 June. The Judge noted counsel for the liquidator’s advice that the defendant had failed to serve any evidence in response. The Judge directed that the case would proceed on 9 and 10 July estimating no more than two days would be required to deal with the matter.

[6] The defendant did not take part in that conference or in the previous conference on 25 May but he is clearly aware of the proceedings. On 25 May he had faxed a communication to the Court seeking a one month extension from 25 May to find the money for a lawyer.

[7] When the matter was called this morning there was no appearance of or for the defendant at 10 am. As matters eventuated, there was a previous matter the Court had to deal with at 10 am. This matter could not start until approximately
10.40 am. The defendant was again called and there was no appearance of or for the defendant. The hearing proceeded in the absence of the defendant.

[8] I accept that, on the basis of the statement of defence before the Court, the obligation remains on the plaintiff liquidator to satisfy the Court that the orders sought are appropriate both…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Walker v Ariyathas

Details

AGLC: Walker v Ariyathas [2012] NZHC 1648
Case: [2012] NZHC 1648
Decision Date: 9 July 2012

CaseChat Overview and Summary

In the High Court of New Zealand, Auckland Registry, the plaintiff, Mr. Robert Bruce Walker, the liquidator of Ariya New Zealand Limited, sought orders against the defendant, Selvathas Ariyathas, a director of the company. The liquidator pursued a declaration of personal liability under s 300 of the Companies Act 1993. The company had been liquidated for its inability to pay debts, and the liquidator sought to establish the defendant’s personal liability for the debts of the company. The defendant did not participate in the proceedings, and the Court proceeded in his absence. The evidence presented by the liquidator, Mr. Walker, established that the company had failed to maintain proper accounting records as required by the statute, and that the defendant had deliberately destroyed relevant records. The Court found that the defendant's failure to comply with statutory obligations contributed to the company's insolvency and resulted in substantial uncertainty over the company's assets and liabilities. The Court rejected the defendant's defenses and held him personally liable for the debts of the company in the amount of $998,505, together with interest from the date of liquidation. The liquidator was awarded costs on a 2B basis, together with disbursements as fixed by the Registrar.

Orders