Maitland Booth, former director of Heyward Holdings Ltd (now in liquidation) has been ordered to pay $566,940 to his former company. The High Court dismissed arguments that personal expenses charged to the company were not his but were expenses incurred by a family trust.
Heyward Holdings was used to hold land for development in Dunedin. A family trust associated with Mr Booth was the sole shareholder. In 2016, the trust sold out its interest in Heyward Holdings. The company slipped into liquidation months later. Tracking back through Heyward Holdings financial statements, the liquidator discovered a debt showing in the 2014 financial statements having Mr Booth owing his company $566,940. This debt magically disappeared in the 2015 financials with Mr Booth now owing nothing and his family trust owing more to Heyward Holdings. Mr Booth said there had been an accounting error. The debt was never his, it was a debt of the family trust. The error was corrected, he said, by ‘assigning’ the debt across to his family trust.
In the High Court, Associate judge Matthews said a debtor cannot ‘assign’ a debt. For a debtor, a debt is a liability, not an asset. Judge Mathews further ruled the financial statements did not need ‘correction’. The Heyward Holdings credit in favour of Mr Booth arose from personal expenses being charged to the company: payments for phone and power, food, dental expenses, parking fines, Ministry of Justice fines, car expenses plus cash advances. There was no evidence of Mr Booth being a beneficiary of his family trust such that the trust could be assuming responsibility for these personal debts.
Heyward Holdings Ltd v. Booth – High Court (3.07.18)
18.136