A seven-year ban for director of failed property developer Valiant Homes Ltd, Hamish James Clarke, was upheld by the High Court.
Valiant Homes was put into receivership and liquidation in 2015. Valiant, together with four associated companies, owe Inland Revenue $1.1 million with some $904,000 of that being GST unpaid. Using its Companies Act administrative powers, the Companies Office banned Mr Clarke from acting as a company director for seven years starting August 2017. The maximum period for banning orders was doubled to ten years following a law change effective 2014.
Mr Clarke appealed. He said seven years was punitive. It should be reduced. The purpose of banning orders is protection of the public. A seven-year ban was not manifestly excessive, Justice van Bohemen ruled. The court was told Valiant Homes suffered a cash flow crisis. It used Inland Revenue as a bank; delaying payment of GST because penalties for late payment were less than the default interest payable to other creditors for late payment. The Companies Office said Mr Clarke either mismanaged his company or was fundamentally ignorant of what is required of a company director. It said Mr Clarke failed to keep proper accounting records for Valiant. There were doubts about Mr Clarke’s claim that company records were destroyed when its office was ransacked by unpaid creditors after Valiant’s liquidation became public knowledge. There was no complaint to the police about any alleged break-in. Companies Office also said Mr Clarke has failed to co-operate with his companies’ liquidators.
Mr Clarke was bankrupted in July 2016. His ban from acting as a company director runs on for five years beyond any automatic three-year discharge from bankruptcy.
Clarke v. Registrar of Companies – High Court (2.07.18)
18.135