Keshvara v Blanchett and Burns as Liquidators of APG Holdings Ltd ((in Liquidation))

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeStevens J
Judgment Date30 Nov 2012
Neutral Citation[2012] NZCA 553
Docket NumberCA665/2011

[2012] NZCA 553

IN THE COURT OF APPEAL OF NEW ZEALAND

Court:

Ellen France, Stevens and Asher JJ

CA665/2011

Between
Ranjit Keshvara
Appellant
and
David Murray Blanchett and Grant Edward Burns as Liquidators of APG Holdings Limited (In Liquidation)
Respondent
Counsel:

L Herzog for Appellant

M D Branch and S J Rawcliffe for Respondent

Appeal from a High Court (“HC”) decision which found the appellant had breached his duties as a director under s131 Companies Act 1993 (“CA”) (duty to act in good faith and in best interests of company), s133 CA (powers to be exercised for proper purpose) and s137 CA (director's duty of care) — respondents were the liquidators — claims related to advances made to the parent company, a related company and relatives — HC had admitted as business records, various documents relating to the transactions that contained hearsay statements — whether the HC had erred by admitting the documents into evidence pursuant to s19 Evidence Act 2006 (admissibility of hearsay statements contained in business records) as there had been no attempt by the respondents to identify who had supplied the information used for the composition of various of the documents relied on — whether there was any evidence that any of the transactions were improperly made or that the appellant had any involvement in the transactions.

The issues were: whether the HC had erred by admitting into evidence, the documents relating to the transactions in question pursuant to the provisions of s19 EA; and whether there was any evidence that any of the transactions were improperly made or that K had any involvement in the transactions.

Held: Section 16 EA defined business records as documents made to comply with a duty or in the course of a business and that was made from information supplied directly or indirectly by a person who had, or might reasonably be supposed by the court to have had, personal knowledge of the matters dealt with in the information they supplied. The focus under s19(1) EA (when hearsay statements contained in business record admissible) was on “the person who supplied the information used for the composition of the record”.

The HC had not failed to consider who had supplied the information used for the composition of the business records in question. The judge had specifically considered this question and concluded that the most likely candidate was A. The Judge had considered, and made findings on, the issue of whether the documents concerned were “business records” and the Judge was entitled to make these findings.

The documents themselves, and the evidence of the liquidators established that each element of the definition of business record was established. It was not necessary in the circumstances of this case for the liquidators to seek to call more detailed or specific evidence directed at proof of the statutory requirements of the definition. The fact that it was open to the court to draw inferences in this context was evident from the use of the statutory language in s19(1)(b) EA of the definition of “business record” that personal knowledge about the information concerned might be such that the person actually had “or may reasonably supposed by the court to have had”.

Even if it was considered that A was unlikely to be the person who supplied the information used in composing the documents, the HC's conclusions on admissibility were still valid. Nothing in s19 EA required the judge to make an explicit finding as to the identity of the person who had supplied the information relevant to the documents in question. A judge could rely on s19(1)(b) EA if satisfied that, given that sufficient time had passed, whoever the precise person or persons might be, no useful purpose would be served by requiring that individual to be a witness. The identity of the person who supplied information used for the compilation of the record did not need to be precisely demonstrated as a pre-requisite to admissibility.

The circumstances of the case meant it had been open to the judge to conclude that the person who supplied the information relevant to the documents in question could not reasonably be expected to recollect the matters dealt with in the information they had supplied. Given that seven years had passed since the time the records were produced, and given that the records were routine documents, it would not be reasonable to expect that the person who had supplied the relevant information would recollect the matters dealt with in the records. All of the challenged documents were business records. The hearsay statements contained in each were correctly held to be admissible in evidence under s9(1) EA. There had been admissible evidence available to the judge to support all the findings made and the inferences he drew in relation to K's liability.

Moreover, any claim by K regarding lack of proof of absence of valuable consideration could not help him. The issue was whether there was a breach of duty and a want of prudence. The key issue in the HC had been the lack of prudence on K's part in allowing the payments to be made and the absence of any inquiry. The liquidators had amply made out the case establishing breaches of duty by K in relation to the three categories of payments made during his tenure as a director.

Appeal dismissed.

  • A The appeal is dismissed.

  • B The appellant must pay the respondents costs for a standard appeal on a Band A basis and usual disbursements.

JUDGMENT OF THE COURT
REASONS OF THE COURT

(Given by Stevens J)

Para No

Introduction

[1]

Background

[5]

High Court judgment

[8]

Evidentiary issues

[8]

Breaches of duty

[12]

Liability under's 194 of the Companies Act

[18]

Relief

[19]

First question — admissibility of business records

[20]

Statutory provisions

[26]

Our evaluation — admissibility

[31]

The second question — liability

[38]

Liability issues — High Court judgment

[41]

Submissions on liability

[55]

Our evaluation — liability

[57]

Result

[62]

Introduction
1

This appeal concerns findings in the High Court that the appellant had breached his duties as a director under ss 131, 133 and 137 of the Companies Act 1993. 1 In relation to those breaches the appellant was ordered to pay the sum of $1,439,084.00 by way of remedy under's 301 of the Companies Act. 2 The High Court also found that at the relevant times the board of directors of which the appellant was a member was in breach of s 194 of the Companies Act. In relation to that breach the appellant was ordered to pay $39,876.00 pursuant to s 300.

2

The appellant is a former director of APG Holdings Ltd (APG). The respondents, Messrs Blanchett and Burns, are the liquidators of that company.

3

The central question is whether Venning J was correct to admit into evidence certain documents relating to the transactions in question pursuant to the provisions of s 19 of the Evidence Act 2006 dealing with admissibility of hearsay statements contained in business records. That was the first issue raised in the agreed list of issues. The second was whether, if all or some of the evidence is not admitted, the findings of the High Court on liability were affected.

4

At the hearing, Mr Herzog, counsel for the appellant, also sought to challenge the Judge's findings on liability even if all of the challenged documents were ruled to be admissible. We address this question later in the judgment.

Background
5

The appellant was a director of APG from 11 March 2004 until 23 July 2004. APG was placed into liquidation on 9 February 2007. APG was one of the companies in a group known as “Capital Events”. The Capital Events companies were primarily controlled by Terry Wilson and David Andrew Tauber. The companies mainly provided hospitality services for sporting and cultural events.

6

The claims for breaches of duty related to three types of payment made by APG during the period in which the appellant was a director. These are: 3

  • • An advance of $215,000 to Kap Nominees (2) Ltd (Kap Nominees) on 25 June 2004. The appellant was also a director of Kap Nominees, which was the parent company of APG.

  • • Three advances totalling $475,000.40 made to Rita Wilson between 17 March 2004 and 27 April 2004. Ms Wilson is the appellant's daughter and the wife of Mr Terry Wilson.

  • • Net payments of $749,084.00 advanced to a company called Jokers Wild Ltd between 13 April 2004 and 20 July 2004. Jokers Wild was one of the companies associated with the activities of Messrs Wilson and Tauber. It was later placed in liquidation.

7

Evidence in support of the claims for breaches of provisions of the Companies Act was adduced in the High Court by the liquidator Mr Blanchett. In support of the claims the liquidators produced and relied upon a bundle of documents relating to the affairs of APG and the three types of payment made while

the appellant was a director. These documents had been obtained by the liquidators during their investigation into the running of the company.
High Court judgment
Evidentiary issues
8

At the commencement of the hearing in the High Court counsel for the appellant had objected to a number of passages in Mr Blanchett's brief of evidence. The objection was twofold. First, that Mr Blanchett was seeking to introduce hearsay statements contained in documents he himself had not created. Second, there was a challenge to opinion evidence to be given by Mr Blanchett who was said not to be qualified as an expert. This aspect of the challenge was not pursued on appeal.

9

As to the documentary evidence, Venning J upheld the objection in relation to two paragraphs of Mr Blanchett's brief of evidence offering evidence referred to documents prepared by a Mr Barclay. Such documents were found to have no probative value. The Judge allowed the hearing to proceed on the basis that the...

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