WALKER V ARIYATHAS HC AK CIV-2011-404-1894

WALKER V ARIYATHAS HC AK CIV-2011-404-1894

Defendant, as sole director, failed to create and keep required accounting records and to ensure adequate financial statements; he destroyed or withheld key records, produced inconsistent unsupported accounts and thereby contributed to insolvency and substantially impeded the liquidation; statutory defences under s300(2) do not apply; therefore a declaration under s300 is proper making defendant personally liable for the company's debts of $998,505 plus interest and costs.

Citation
openlaw-c6fd396f_2727_4e20_a5c9_3e7dbbc59647.pdf
Parties
Plaintiff (liquidator): Robert Bruce Walker; Defendant (director): Selvathas Ariyathas
Court
High Court
Jurisdiction
New Zealand
Judgment Date
9 July 2012
Procedural Posture
Application Under S300 Companies Act 1993 (liquidator Seeking Declaration of Personal Liability) / Hearing and Judgment (oral Judgment)
Outcome
Declaration under s300 Companies Act 1993 that defendant Selvathas Ariyathas is personally liable for the company's debts of $998,505; interest at judicature rate from 9 September 2009; costs to liquidator on a 2B basis and disbursements fixed by Registrar; no relief granted to defendant.
Legal Topics
Director Liability, S300 Companies Act 1993, S194 Accounting Records, S10 Financial Reporting Act 1993, Liquidator Remedies, Personal Liability for Corporate Debts
Company Law Insolvency Law Financial Reporting Law Civil Procedure Director Liability S300 Companies Act 1993 S194 Accounting Records S10 Financial Reporting Act 1993 +2 more

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Parties

Robert Bruce Walker

Plaintiff (liquidator)

Selvathas Ariyathas

Defendant (director)

Procedural Posture

Application Under S300 Companies Act 1993 (liquidator Seeking Declaration of Personal Liability) / Hearing and Judgment (oral Judgment)

Legal Issues

  1. 1 Whether the company failed to keep accounting records required by s194 Companies Act 1993 or prepare financial statements under s10 Financial Reporting Act 1993
  2. 2 Whether the failure contributed to insolvency or impeded orderly liquidation
  3. 3 Whether the defendant director is personally liable under s300 Companies Act 1993

Ratio Decidendi

Defendant, as sole director, failed to create and keep required accounting records and to ensure adequate financial statements; he destroyed or withheld key records, produced inconsistent unsupported accounts and thereby contributed to insolvency and substantially impeded the liquidation; statutory defences under s300(2) do not apply; therefore a declaration under s300 is proper making defendant personally liable for the company's debts of $998,505 plus interest and costs.

Court Disposition

Declaration under s300 Companies Act 1993 that defendant Selvathas Ariyathas is personally liable for the company's debts of $998,505; interest at judicature rate from 9 September 2009; costs to liquidator on a 2B basis and disbursements fixed by Registrar; no relief granted to defendant.

Orders

  • Declaration that defendant Selvathas Ariyathas is personally liable under s300 Companies Act 1993 for $998,505
  • Defendant to pay $998,505 to the liquidator