ACTION MEDIA LIMITED (IN LIQUIDATION) v HENRY DAVID LEVIN AND VIVIEN JUDITH MADSEN-RIES AS LIQUIDATORS OF ACTION MEDIA LIMITED (IN LIQUIDATION) [2015] NZHC 3121

ACTION MEDIA LIMITED (IN LIQUIDATION) v HENRY DAVID LEVIN AND VIVIEN JUDITH MADSEN-RIES AS LIQUIDATORS OF ACTION MEDIA LIMITED (IN LIQUIDATION) [2015] NZHC 3121

The court held that the Liquidators are required to pursue and enforce compliance with their s 261 notice to the IRD and therefore must produce correspondence relating to the IRD's compromise with the Company because that correspondence is company material and within the Liquidators' right to possess (enforceable via s 266). However, s 261 does not extend to obtaining third-party internal IRD case notes or documents relating to the director's personal compromise, and the Liquidators were not ordered to produce all s 261 notices where relevance was not established. On proportionality grounds, the court ordered on-site inspection of marginal supplier invoices rather than full electronic...

Citation
[2015] NZHC 3121
Parties
First Plaintiff: Action Media Limited (in liquidation); Second Plaintiffs: Henry David Levin and Vivien Judith Madsen-Ries as Liquidators of Action Media Limited (in liquidation); First Defendant: Sean Wesley Mitchell; Second Defendant: Farry & Co Trustees Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
9 December 2015
Procedural Posture
Company Liquidation and Insolvency Proceedings Under the Companies Act 1993 / Interlocutory Hearing on Discovery and Related Applications
Outcome
Interlocutory applications partly granted and partly declined as set out in orders
Legal Topics
Directors' Duties, Voidable Transactions, Section 261 Notices and Non Party Documents, Particular Discovery R 8.19, Enforcement of Statutory Notices S 266, Proportionality of Discovery
Company Law Insolvency and Liquidation Civil Procedure Statutory Enforcement Directors' Duties Voidable Transactions Section 261 Notices and Non Party Documents Particular Discovery R 8.19 +2 more

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Parties

Action Media Limited (in liquidation)

First Plaintiff

Henry David Levin and Vivien Judith Madsen-Ries as Liquidators of Action Media Limited (in liquidation)

Second Plaintiffs

Sean Wesley Mitchell

First Defendant

Farry & Co Trustees Limited

Second Defendant

Procedural Posture

Company Liquidation and Insolvency Proceedings Under the Companies Act 1993 / Interlocutory Hearing on Discovery and Related Applications

Legal Issues

  1. 1 Whether liquidators are in 'control' of third-party IRD documents such that they must be discovered pursuant to r 8.19
  2. 2 Whether section 261 empowers liquidators to obtain unredacted IRD case notes and correspondence
  3. 3 Whether all s 261 notices issued by the liquidators must be discovered

Ratio Decidendi

The court held that the Liquidators are required to pursue and enforce compliance with their s 261 notice to the IRD and therefore must produce correspondence relating to the IRD's compromise with the Company because that correspondence is company material and within the Liquidators' right to possess (enforceable via s 266). However, s 261 does not extend to obtaining third-party internal IRD case notes or documents relating to the director's personal compromise, and the Liquidators were not ordered to produce all s 261 notices where relevance was not established. On proportionality grounds, the court ordered on-site inspection of marginal supplier invoices rather than full electronic...

Court Disposition

Interlocutory applications partly granted and partly declined as set out in orders

Orders

  • Defendants' request for discovery of all s 261 notices declined
  • Defendants' request for correspondence relating to the IRD's compromise with the Company granted; Liquidators must pursue enforcement with the IRD and provide responsive correspondence