Mathew
Gledhill has been ordered to pay $122,400 after milking assets out of his
Christchurch company Willburn Furniture and Restorations Ltd leaving creditors
unpaid.
The Gledhill family’s antique furniture
and restoration business received insurance payments totalling $322,000 after
its central Christchurch premises were destroyed in the February 2011
earthquake. Four years later, the
company was in liquidation with no assets and creditors unpaid. Inland Revenue was owed the most: $96,765.
The High Court was told company cash had
been used by Mr Gledhill to pay personal expenses for clothing, groceries,
dining out, alcohol and entertainment with additional drawings in cash. Some of the money was traced to the purchase
of a vessel called the “Calanthe” and to berth rental fees in Port Marlborough. A Nissan Caravan van owned by the company was
transferred to a new owner just three days before liquidation. The company received no payment. A public auction of company stock and
equipment realised $33,680. This was
paid into the bank account of Mr Gledhill’s son, Cameron. He subsequently repaid $11,000 to the
company, but claimed the balance retained was from the sale of private assets
and family heirlooms. The two did not
defend legal action taken by Willburn liquidators to recover creditor losses.
Justice Dunningham ruled Mathew Gledhill
was in breach of Companies Act directors’ duties. He did not act in good faith, he used his
powers as a director for improper purposes and he acted recklessly by taking
company assets leaving creditors unpaid.
He was ordered to pay the $122,400 creditors' shortfall plus liquidation costs of $26,100. Liquidation was a direct
consequence of his breach of directors’ duties and was made more difficult by his
lack of co-operation with the liquidator and his provision of conflicting and
unsupported explanations for use of company cash, Her Honour said.
Cameron Gledhill was held liable to repay
$22,680, breaching the Property Law Act by taking money received from the auction
of company assets.
Willburn
Furniture v. Gledhill – High Court (2.03.16)
16.038