MELTZER LAMACRAFT v SANCTUARY DEVELOPMENTS NO.8 LIMITED [2021] NZHC 889

MELTZER LAMACRAFT v SANCTUARY DEVELOPMENTS NO.8 LIMITED [2021] NZHC 889 [23 April2021]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2020-404-2417[2021] NZHC 889UNDER the Companies Act 1993IN THE MATTER OF the liquidation of Sanctuary DevelopmentsNo.8 LimitedBETWEEN JEFFREY PHILIP MELTZER andMICHAEL LAMACRAFT as Liquidatorsof Sanctuary Developments No.8 LtdApplicantsAND SANCTUARY DEVELOPMENTS NO.8LIMITEDRespondentHearing: 23 April 2021Appearances: Lynne M Van and Richard Idoine for the ApplicantsJudgment: 23 April 2021JUDGMENT OF ASSOCIATE JUDGE R M BELLThis judgment was delivered by me on 23 April 2021 at 4:00pmpursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:Anthony Harper (Lynne Van/Richard Idoine), Auckland, for the ApplicantsCopy for:Victoria Young, Senor Journalist at BusinessDesk, Auckland[1] Sanctuary Developments (No.8) Ltd went into voluntary administration on9 December 2020. At the watershed meeting on 15 March 2021, it went intoliquidation. The administrators are now the liquidators. In his decision of11 December 2020, Associate Judge Andrew gave directions deferring advertising andnotification of the administration and made a confidentiality order under r 5 of theSenior Courts (Access to Court Documents) Rules 2017.[2] Ms Young, Senior Journalist at BusinessDesk, has requested access to thedocuments on the file. She made an earlier request, before the watershed meeting. Inmy minute of 11 March 2021, I provided her with a copy of Associate Judge Andrew'sredacted judgment. I said that if there were further developments, she could applyafresh later. Ms Young now seeks access to all the documents on the court file.[3] The liquidators oppose. They say that commercial sensitivity attaches to someof the information in the affidavits on file and that some of the documents on the courtfile are confidential to contracting parties. They also say that any relevant informationthat creditors require can be reported by the liquidators through the normal liquidationprocess.[4] Because of the order under r 5 of the Senior Courts (Access to CourtDocuments) Rules 2017, none of the documents on the court file may be accessedwithout permission of a Judge. That includes the formal court record which wouldotherwise be accessible as of right under r 8. Ms Young's request to access thedocuments is considered under rr 11—14 of the Rules. Rule 11(1) says that r 11applies to persons not entitled to access a document under rr 8 or 9. In this case, accessas of right is not available because of Associate Judge Andrew's decision under r 5.There is nothing in the Rules to suggest that other provisions apply once an order hasbeen made under r 5.[5] This is a media application. Ms Young has reported on the administration andliquidation of Sanctuary Developments (No.8) Ltd. The administration andliquidation of insolvent companies are matters of legitimate interest on which themedia may report.[6] Publicity is a normal consequence of a company being put into voluntaryadministration under Part 15A of the Companies Act 1993. That is consistent with thegeneral approach in insolvency law, that insolvency should not be kept a secret.Notwithstanding that general approach, Associate Judge Andrew held that thevoluntary administration of Sanctuary Developments (No.8) Ltd should be keptconfidential for a short time in the interest of obtaining the best possible prices forunsold units in the development.[7] In his affidavit of 9 December 2020, Mr Meltzer said:26. Confidentiality is key to protecting asset value which in turn willlikely result in creditors receiving a better return through theadministration process, than through one of the alternative optionssuch as liquidation.27. It is my belief, having regard to the above, that it is in the interests ofall creditors for the settlements and remaining sales to proceedwithout public notification/advertisement of the administration. Thiswill ensure that the realisable value of the business can be maximised.28. Having regard to the current status of the sales and the imminentsettlement of those expected to get CCC and PC, it is my belief that itis in the best interests of the company and the general body ofcreditors, for the administration to be kept confidential for a briefperiod of time to allow an orderly sell-down. This will ensure that thepurchase price can be maximised without the stigma of an insolvencyprocess.Mr Meltzer did not say in that affidavit or later affidavits that the information as toparticular creditors was confidential and should not be disclosed.[8] I gave interim rulings during the administration for certain information relatingto some of the secured creditors to be kept confidential, but I did not say that thoserulings should continue after the administration came to an end.[9] Now that the company is in liquidation, the earlier confidentiality rulings canbe reviewed. They were made while the company was in administration, in the hopethat keeping the administration confidential would assist in selling unsold units. Thereis, however, no confidentiality over the facts of administration and liquidation. Thecompany's insolvency is public knowledge. There is no longer any need for a blanketrestriction on access to the court file. The original reason for the order under r 5 nolonger applies.[10] Rule 13 provides that different considerations carry different weight, accordingto which stage the proceeding has reached: before the substantive hearing, during thesubstantive hearing and afterwards. There was not, however, any formal substantivehearing in this case. Instead, the administrators sought without notice directions as tothe conduct of the administration. Once the company went into liquidation at thewatershed meeting, the administration came to an end. There is little prospect offurther directions under Part 15A for the administration. Under r 13, I regardMs Young's request as coming "after the substantive hearing". At that stage, openjustice has greater weight in relation to documents that have been relied on in adetermination than other documents; and the protection of confidentiality and privacyinterests has greater weight than would be the case during the substantive hearing. Forthis decision I treat "matters that are commercially sensitive" under r 12(c) as an aspectof confidentiality.[11] Under r 12, these considerations are important for this request for access:12 Matters to be consideredIn determining a request for access under rule 11, the Judge mustconsider the nature of, and the reasons given for, the request and takeinto account each of the following matters that is relevant to therequest or any objection to the request:(a) the orderly and fair administration of justice:(c) the right to bring and defend civil proceedings without thedisclosure of any more information about the private lives ofindividuals, or matters that are commercially sensitive, thanis necessary to satisfy the principle of open justice:(e) the principle of open justice (including the encouragement offair and accurate reporting of, and comment on, court hearingsand decisions):(f) the freedom to seek, receive, and impart information:[12] These factors favour disclosure of all documents on the court file, except to theextent that there are any matters of commercial sensitivity under r 12(c). Ms Younglegitimately seeks access to report on the company and thereby keep the publicinformed. Fair trial rights are not in issue.[13] The question then is whether certain information on the court file ought to beredacted because of commercial sensitivity. The only area where such considerationscould arise is the secured creditors. Their identity is already known and has beenpublicly reported. So far however the amounts they claim are due to them has beenkept under wraps. That information was redacted in the version of Associate JudgeAndrew's judgment released to Ms Young in my minute of 11 March 2021.[14] I understand that the amounts claimed by the secured creditors may not yet beestablished nor the extent of their securities. Some of them may be partly or whollyunsecured. These matters will affect the conduct of the liquidation and thedistributions (if any) to unsecured creditors. Ordinarily secured creditors may notwish the public to know how much they have lent and the extent of any shortfall, butthere is not any special commercial sensitivity over these matters. That informationmay be included in the liquidators' six-monthly reports to creditors. Those reports arefiled with the Companies Office and the information will be publicly available. I seeno reason why the public cannot have that information before the liquidators maketheir reports. Overall, the considerations of commercial sensitivity are not strongenough to warrant keeping that information covered up. With that, no matters countagainst disclosure of the information on the court file.[15] Accordingly, Ms Young may have access to all the documents on the court file..Associate Judge R M Bell