Willeston Ventures Limited v Scutter - [2016] NZHC 3146

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2016-485-412 [2016] NZHC 3146

BETWEEN
WILLESTON VENTURES LIMITED

Applicant

AND

JOHN MARSHALL SCUTTER Defendant

Hearing: 31 October 2016

Counsel:

M Freeman for Applicant
K P Sullivan for Defendant

Judgment:

20 December 2016

RESERVED JUDGMENT OF ELLIS J

I direct that the delivery time of this judgment is
10 am on the 20th day of December 2016

WILLESTON VENTURES LIMITED v SCUTTER [2016] NZHC 3146 [20 December 2016]

[1] Willeston Ventures Ltd (WVL) is a third party creditor of Fresco Advertising Limited (in liquidation) (Fresco). The respondent (Mr Scutter) is the liquidator of Fresco, having been appointed by Fresco’s shareholders.

[2] The other major creditor of Fresco is a family trust (the Trust) associated with Fresco’s directors, Sheridan Bruce and Fraser Carson. The Trust (through its trustees Ms Bruce and Mr Carson) holds 98 per cent of Fresco’s shares.

[3] WVL has applied to inspect all of Fresco’s accounts and financial records and

all accounts and records of the liquidation, pursuant to s 256 of the Companies Act

1993. The specific grounds for the application are that:

(a) WVL (through its director, Mr Galt) “wishes to carry out his own

investigations into [the] voluntary liquidation” of Fresco; and

(b) there are “good reasons” to permit access to the files, as articulated in

Mr Galt’s affidavit.

[4] Mr Scutter has deposed that he does not oppose the flow of information to creditors where they have a specific and genuine interest in seeing particular and identified books and records. He says that he has, in fact, been open and transparent with WVL and has kept Mr Galt informed about the steps he has taken in the litigation. But he opposes the present application on the grounds that it is too general, insufficiently focussed and appears to be driven by Mr Galt’s desire to second guess professional decisions he has taken as a liquidator.

Background

[5] As its full name suggests, Fresco was an advertising company. Until 2009 the company’s turnover was generated by designing and publishing various prospectuses and investment statements for finance companies. Following the GFC that work dried up. Fresco then sought to reinvent itself in a digital space. It created a shared digital platform known as Flightdec, which businesses pay to host their own websites. As well as this hosting service itself there are other, ancillary, benefits for the businesses using the platform.

[6] Since Fresco encountered financial difficulties Ms Bruce and Mr Carson have funded the business by borrowing personally from the bank and investing money in the company through their Trust. It seems that the Trust invested some $230,000 to provide working capital for the business of Fresco up until August 2015. This support from the directors enabled Fresco to continue trading and to reduce its expenditure.

[7] WVL was Fresco’s landlord.1 The lease with Fresco was in place when WVL purchased the 12th floor of Guardian Trust House at 15 Willeston Street, Wellington. The lease had a nine…

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 Willeston Ventures Limited v Scutter

Details

AGLC: Willeston Ventures Limited v Scutter [2016] NZHC 3146
Case: [2016] NZHC 3146
Decision Date: 20 December 2016

CaseChat Overview and Summary

Willeston Ventures Limited (WVL), a creditor of Fresco Advertising Limited (Fresco), sought an order to inspect all of Fresco's accounts and financial records and all accounts and records of the liquidation, pursuant to s 256 of the Companies Act 1993. The application was made against John Marshall Scutter, the liquidator of Fresco. The specific grounds for the application were that WVL wished to carry out its own investigations into the voluntary liquidation of Fresco and there were "good reasons" to permit access to the files. Mr Scutter opposed the application, arguing that it was too general, insufficiently focused and appeared to be driven by WVL's desire to second guess professional decisions he had taken as a liquidator. The court had to decide whether there were good reasons to permit inspection of the accounts and records of the liquidation. The court found that there were no good reasons for WVL to inspect the accounts and records of the liquidation. The court found that the liquidator had acted properly and that the application was an attempt by WVL to second guess professional decisions made by the liquidator. The court also found that the application was too general and did not provide any specific reasons why inspection should be granted. The court dismissed the application and ordered that WVL pay costs on a 2B basis.

Orders