The High Court refused to bring accountancy business Galveston Nominees back from the dead so former employee Vasintha Pillay could get access to its tax records as part of her claim for an alleged profit share.
Auckland-based Galveston Nominees (2009) Ltd, previously known as Ascent Business Directions Ltd, was wound up in 2014 by shareholders as a shell company having no assets and no creditors. Ms Pillay says she has been cut out. She had worked for the business since 2003 and alleges in 2009 she was promised a twenty per cent stake. For the five years prior to liquidation she is entitled to a $116,000 profit share, Ms Pillay claims. No formal adjustment to shareholdings was ever made. The High Court was told director Mark Salmon held off making any changes because he was embroiled in a property relationship dispute and did not want the value of his interest in the business quantified. Prosecution in Australia of fifty per cent shareholder, Australian accountant, Mark Letten was a further complication. Letten was sentenced to five years jail in 2014 for operating an unregistered managed investment scheme.
To advance her profit share claim, Ms Pillay needs access to Galveston Nominees’ accounting records. These had been destroyed twelve months after liquidation was complete, as company law allows. As an alternative, Ms Pillay asked IRD for access to the company’s tax file. It refused. Taxpayer secrecy precludes disclosure to third parties. Ms Pillay asked the High Court to restore Galveston Nominees to the companies register, to reinstate the company’s liquidators and then have them get a copy of Galveston’s IRD records. Galveston’s liquidators do have a right to access Galveston’s tax records. Associate judge Bell refused reinstatement. Costs were disproportionate when the purpose was to uncover evidence for a separate court case, he ruled. Liquidators are not expected to work for Ms Pillay on a charitable basis, he said. Ms Pillay has yet to prove in court she is entitled to a profit share. And if proved, the amount will be less than her claimed $116,000, Judge Bell said. Any proved profit share will be reduced by an amount representing the 2009 value of a twenty per cent equity share given her.
re Galveston Nominees (2009) Ltd – High Court (26.04.18)
18.088