Shareholder
liability for current account debts owed on liquidation follow from signed company
annual tax accounts in the absence of contrary evidence that financial
statements are incorrect. The High Court
took exception to van Duyn family interests seeking to reduce their liabilities
by reworking shareholder current accounts within their west Auckland building
removal company after the company went into liquidation.
Ordered to pay liquidators
of EBR Holdings Ltd a total of $184,760 were Mr Johannes van Duyn Snr ($55,502
jointly with his spouse), Mr Rene van Duyn ($129,258) and Mr Johannes van Duyn
Jnr ($125,209). Their company was put
into liquidation by Inland Revenue in 2009.
Creditors are owed some $250,000 with liquidators from Deloitte
incurring costs of over $730,000 in an eight year pursuit of debts owed by van
Duyn interests.
The High Court was told
Mr van Duyn Snr was the dominant force behind the company. Company funds were used to pay life insurance
premiums on policies taken out on family members’ lives and also to pay
interest on personal loans from Fidelity Life.
These payments were recorded in company accounts as overdrawn personal current
accounts – a debt owed to the company.
EBR directors signed off on the accounts.
Van Duyn family
interests resisted the liquidators’ demands for payment. Initial court action foundered when what
proved to be incorrect accounting advice on behalf of the van Duyns suggested
the financial statements did not correctly record the amounts owed. Later accepting money was owed, the van Duyns
attempted to reallocate indebtedness between family members. Justice Heath said this was an attempt to
reduce the net amount payable by family members as a whole. EBR’s primary accounting records set out what
was owed by whom. Attempts by
accountants to redraw EBR financial statements after liquidation were invalid,
not supported by any evidence and based on no more than unsubstantiated
opinion, he said.
Justice Heath ordered
the van Duyns make an increased contribution to EBR liquidators’ costs because
of their unreasonable delays in dealing with demands for payment.
EBR
Holdings Ltd v. Madsen-Ries – High Court (21.07.17)
17.086