Receivers of George Kerr’s Pyne Holdings Ltd were entitled to see all the paper work relating to his negotiations with BNZ over a disputed debt, even though they were in fact appointed by BNZ as receivers of Pyne Holdings. In a classic example of legal schizophrenia; receivers act independently of their appointing creditor while at the same time getting in cash for the benefit of that same creditor.
In April 2021, Bank of New Zealand put Mr Kerr’s Pyne Holdings Ltd into receivership claiming some $67.7 million. Mr Kerr disputes how much is owed. Receivers from Calibre Partners were rebuffed when they demanded access to all Pyne Holdings’ records. It was wrong that BNZ-appointed receivers should see company documents and legal advice setting out negotiating strategies in Pyne’s dispute with BNZ, Mr Kerr said.
The courts recognise legal professional privilege over lawyer/client discussions arising in the course of a dispute. Holding that advice confidential means a client is more likely to make frank admissions, putting legal advisers in the best position to give proper advice.
Where loan documents create a security over all assets, company receivers have a statutory right of access to all company records under the Receiverships Act, Justice Walker ruled. As outsiders, receivers need information to sort out a company’s financial position. BNZ has security over all Pyne Holdings ‘personal property.’ That includes all written records and files, including legal advice received.
While the receivers could have access to all company documents, BNZ had no absolute right to see this information, Justice Walker cautioned. The receivers act independently. It is their decision, while acting in the best interests of Pyne Holdings, to determine how otherwise legally privileged information is used: to settle, to sue or to abandon any claim against BNZ.
Calibre Partners told the High Court it would not disclose to BNZ any legally privileged documents it accessed. The High Court was told Mr Kerr currently lives in the United Kingdom.
Jackson v. Kerr – High Court (15.06.21)
21.100