THE COMMISSIONER OF INLAND REVENUE v PROPERTY VENTURES LIMITED (IN LIQ AND IN REC) [2013] NZHC 1847

THE COMMISSIONER OF INLAND REVENUE v PROPERTY VENTURES LIMITED (IN LIQ AND IN REC) [2013] NZHC 1847 [24 July 2013]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2010-409-000123[2013] NZHC 1847UNDER Section 266 of the Companies Act 1993BETWEEN THE COMMISSIONER OF INLANDREVENUEPlaintiffAND PROPERTY VENTURES LIMITED (INLIQUIDATION AND INRECEIVERSHIP)DefendantAND ROBERT BRUCE WALKERApplicantAND NEW ZEALAND POLICERespondentHearing: 22 July 2013(By way of telephone conference)Counsel/Parties: D Bleier for ApplicantD I Henderson in person as a person directed to be served andby leave on behalf of GP96 Ltd, a person directed to be servedNo appearance for Respondent (abiding)Judgment: 24 July 2013JUDGMENT OF ASSOCIATE JUDGE OSBORNEas to further directions in relation to production of company records[1] On 11 June 2013, the Court gave judgment on the application of the liquidator of Property Ventures Limited (in receivership and in liquidation) for orders as to the production of company records.11 The Commissioner of Inland Revenue v Property Ventures Limited (In Liq and in Rec) [2013] NZHC 1368.[2] By its judgment, the Court reserved leave to any party to apply for further directions.Application[3] The liquidator, Mr Walker, has applied for further directions.[4] The application is supported by an affidavit of John Marshall Scutter, who was appointed as an additional liquidator on 4 June 2013.[5] By the judgment of 11 June 2013, the liquidator was required within 15 working days to complete an analysis of electronic data the subject of the judgment, and to complete a list in three categories.[6] Mr Scutter deposes, and I am satisfied, that the timeframe ordered has proved to be unachievable in practice. I am satisfied that the extension sought ought to be granted.[7] The judgment of 11 June 2013 required that the liquidator provide to Mr Henderson either an electronic copy of documents in a third (specified) categoryof documents, or that he provide at Mr Henderson's request confirmation that thosedocuments had been deleted from the liquidator's electronic records.[8] Mr Scutter explains a request that the alternative (to providing copies of the category 3 documents to Mr Henderson) should be a quarantining of the electronic records rather than a deletion. The liquidators are engaged in litigation involving the companies in the Property Ventures Group. Mr Scutter deposes that he is reluctant to delete any files before there is a complete understanding of what transpired within those companies. He also notes that the liquidators may be required to disclose some of the information through their discovery obligations in the substantive proceedings (although that may be unlikely).[9] I am again satisfied that the course proposed by Mr Scutter is appropriatehaving regard to the liquidator's obligations.[10] The extension of time sought by the liquidators would be to 9 August 2013 (in relation to category 1 and category 2 documents) and 23 August 2013 (in relation to category 3 documents). In the event the Court was to grant an extension of time, Mr Henderson did not submit that the two suggested dates were inappropriate. I regard them as reasonable extensions in the circumstances.Concerns as to Mr Walker's conduct[11] In his submissions, Mr Henderson accepted that the Court's primary focus inrelation to the present application for further directions must be upon the interests of the company and its creditors. I am concerned to ensure that a Court file which has already grown exponentially in size since March 2013 not be allowed to simply grow further in an uncontrolled fashion. The steps which the liquidators take (even assuming some recovery of party/party costs along the way) will, through therecovery of liquidator's costs, erode or eliminate any net proceeds available to the creditors. The present application needs to be resolved expeditiously through a focus on the needs of the further directions.[12] That said, Mr Henderson has explained the concern of himself and of GP96 Ltd as stemming from what he considers a failure by Mr Walker to respect the privacy and interests of others when controlling documents and conduct of companies in liquidation. This is not a new concern for Mr Henderson. He has made submissions in relation to it on a number of occasions. Things which Mr Walker has said and done have arguably ignited, and then fuelled Mr Henderson'sconcerns. They have done so to the extent that Mr Henderson asserts that neither he nor the Court can be confident that Mr Walker will respect privacy rights.[13] I have recently, by a Minute in this proceeding, had occasion to commentupon the Court's powers under s 284(1)(b) Companies Act 1993 to supervise any act or decision of a liquidator. Mr Henderson has not filed an application for orders of a supervisory nature. Mr Walker remains, as liquidator, an officer of this Court. He has now been joined by Mr Scutter, who shares jointly that responsibility. Mr Walker is clearly on notice from the repeated submissions of Mr Henderson that were Mr Walker to put into practice conduct of the nature which at least oneunverified transcript of his conversation suggests he contemplated, the Court islikely to be called upon to scrutinise Mr Walker's conduct very carefully.[14] For now, I consider that the appropriate course is that amended directions be given as sought by the liquidator who will be conscious, as liquidator and as officer of the Court, of his obligations to faithfully carry out the amended directions according to their letter and intent.Order[15] I order:(1) The directions contained in [66] of the Court's judgment dated 11June 2013, The Commissioner of Inland Revenue v Property Ventures Limited (In Liq and in Rec),2 are varied as follows:(a) The order [66](b) is varied to require:(i) A listing of the emails and voice recordings that have been obtained from the flash drive with category 1 and 2 combined, and a separate listing for category 3, by 9 August 2013.(ii) A listing of the categories of documents held on the external hard drive with category 1 and 2 combined and category 3 separated, by 23 August 2013.(iii) An amendment to the direction numbered [66](c), requiring the liquidator to file and serve in this proceeding by 30 August 2013 a memorandum attaching the lists referred to in the direction [66](b), as now amended.2 The Commissioner of Inland Revenue v Property Ventures Limited (In Liq and in Rec) [2013] NZHC 1368.(iv) An amendment to the direction [66](d) substituting for Mr Henderson's entitlement to have the liquidatordelete category 3 documents from the liquidator'selectronic records a right to have the liquidators quarantine the category 3 documents and to undertake that they will not be disclosed in the absence of further order of the Court. The term "quarantine" in thisamended direction shall mean to hold safe and inaccessible by any person other than the liquidatorsthemselves, the liquidators' employees engaged in the conduct of the liquidation, and the liquidators' legaladvisors.Costs[16] The liquidator's request for further directions was an appropriate requestbrought about by a need for clarification for extension of the orders made, pursuant to leave reserved. It was appropriate that Mr Henderson be heard on the matter. The liquidator has not sought an order for costs in relation to the brief telephone hearing required in relation to the informal application and the brief telephone hearing required. It is appropriate that costs lie where they fall. There is accordingly no order as to costs.____________________Associate Judge OsborneNOTICE REQUIREMENTThe solicitors on the record for the parties are promptly to provide a copy of this Minute to their clients (r 5.43).Solicitors:DLA Phillips Fox – WellingtonCrown Law Office, WellingtonD I Henderson, Christchurch