Liquidators
powers of examination do not extend to demands that directors of failed
companies hand over details of their personal financial position, the Court of
Appeal ruled in a test case.
Liquidators Peri
Finnigan and Boris van Delden failed in attempts to extract personal
information from lawyer Brian Ellis, previously director of failed Wenztro
Co-operation Ltd formerly known as Trojan Foods (NZ) Ltd. They are suing Wenztro directors for over
$773,000 alleging failure to comply with their statutory duties when in charge
of the company. Before continuing
expensive High Court litigation they wanted to see the extent of Mr Ellis’ assets. They asked to see personal tax returns for
the period 2102 to 2016, copies of his bank statements and a list of his assets
and liabilities.
Australian courts have been
sympathetic to liquidators demands.
English courts have not. The
question has never before been argued in New Zealand courts. The Court of Appeal ruled New Zealand’s
developing privacy rules counted against letting liquidators access private
financial information. The Privacy Act
discourages information obtained for one purpose being used for another. The New Zealand Bill of Rights Act gives
citizens rights against unreasonable search.
Wenztro liquidators
told the court they were concerned Mr Ellis might dissipate his assets, making
himself ‘judgement-proof’. If concerned,
they can apply for a freezing order over Mr Ellis’ assets, the court said.
Finnigan
v. Ellis – Court of Appeal (30.10.17)
17.145