Henderson v Riach [2013] NZHC 2744 (21 October 2013)

Last Updated: 12 November 2013

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-409-001210 [2013] NZHC 2744

BETWEEN DAVID IAN HENDERSON First Appellant

AND GP96 LIMITED Second Appellant

AND WENDY SUSAN RIACH First Respondent

AND LICHFIELD VENTURES LIMITED (IN RECEIVERSHIP AND LIQUIDATION) Second Respondent

AND PROPERTY VENTURES LIMITED (IN RECEIVERSHIP AND LIQUIDATION) Third Respondent

Hearing: 7 October 2013

Counsel: Mr Henderson in person for Appellants

S E McKenzie for First Respondent

K P Sullivan for Second Respondent

Judgment: 21 October 2013

_{JUDGMENT OF PANCKHURST J}

The issue

[1] The appellants challenge one aspect of a decision given by Judge Somerville in relation to an application under s 199 of the Summary Proceedings Act 1957. That application required the Judge to decide who was entitled to receive items of property seized under search warrant, but not required by the police as evidence in a pending prosecution. He decided that the items in issue, eight computers, a back-up

_{tape drive and 24 back-up tapes, were the property of Property Ventures Limited}

HENDERSON AND GP96 LIMITED v RIACH AND ORS [2013] NZHC 2744 [21 October 2013]

(Property Ventures) and should be delivered to the liquidator of that Company.¹ The appellants only challenge this conclusion, not other directions pertaining to other items of property.

[2] They maintain that prior to the District Court hearing a deed of settlement was executed between the then receivers of Property Ventures and other parties, whereby the receivers and Property Ventures surrendered any claim they had to certain assets, including the eight computers, the back-up hard drive and the 24 back- up tapes (“the disputed items”). These items, it is said, should be delivered to one of two other companies within the group in terms of the agreement evidenced by the deed.

The factual background

[3] Mr Henderson controlled numerous companies, conducting different business activities largely in the hospitality sphere, which traded under the umbrella of Property Ventures, a parent company. Commencing in 2009 many of the companies in the group went into receivership and/or liquidation. Relevant for present purposes is the history of the parent company, Property Ventures.

[4] It is convenient to summarise some relevant events by way of a chronology:

March 2010 Allied Farmers Investment Limited placed Property Ventures in receivership pursuant to a general security agreement it held. Messrs Simon Thorn and Timothy Downes were appointed joint receivers. They commenced to gather and realise assets secured under the general security agreement.

July 2010 Property Ventures was placed in liquidation and Robert Walker was appointed as liquidator. However, an appeal was filed against the liquidation order and a stay was granted upon condition that the appeal was promptly

_{prosecuted. In fact it was not.}

¹ Riach v Property Ventures Ltd and Ors DC Christchurch CIV-2012-009-002031, 13 May 2013.

22 February 2011 The major Canterbury earthquakes occurred, causing widespread damage to the central business district. A no-go zone was established which included premises in Lichfield and Tuam Streets occupied by companies within the group.

Late February 2011 Mr Henderson obtained access to the premises and removed the computer server on which the business records of the group were stored.

March 2011 Mr Walker made a complaint to the police alleging non- compliance with notices to produce business records issued pursuant to s 261 of the Companies Act 1993. (It is an offence not to provide records sought by a liquidator.)

6 April 2011 A District Court Judge issued search warrants authorising the police to enter 96 and 110 Lichfield Street, Christchurch and search for the business records of Property Ventures and associated companies.

8 April 2011 The search warrants were executed and many items seized, including computers, computer software and thousands of documents. Mr Walker was permitted access to certain of the seized items by the police, which facilitated his recovery of electronically stored business data.

February 2012 Property Ventures’ appeal against the liquidation order was scheduled to be heard in the Court of Appeal, but the appeal was abandoned at the last moment.

August 2012 Following a breach of privacy complaint made by Mr Henderson to the police, particularly concerning personal and the trading information of companies not in liquidation, Mr Walker was required to return seized items and to delete certain of the information he had recovered.

September 2012 The police, having decided that a prosecution would not be instituted, applied to the District Court for directions pursuant to s 199 concerning to whom items of property should be returned. At much the same time, Mr Walker applied to this Court pursuant to s 266,² seeking access to the electronic data stored on a personal laptop belonging to Mr Henderson and on the back-up hard drive which is the subject of this appeal. The application concerned the electronic data itself, not the

physical items the fate of which was to be determined in the s 199 District Court proceeding.

8 March 2013 The receivers of Property Ventures, Mr Henderson, his wife and an extant company within the group, RFD Finance Limited (RFD), executed a deed of settlement to resolve proceedings concerning various property issues. Relevantly, the receivers and Property Ventures surrendered any claim to items “currently in the possession or control of Mr Henderson, his wife or RFD, being items defined as the “Tuam Street assets”. The deed defined the Tuam Street assets by reference to an inventory forming part of a High Court order made on

8 July 2010. It is Mr Henderson’s contention that the disputed items, the subject of this appeal, are Tuam Street assets and should not have been released to Mr Walker as the liquidator of Property Ventures by Judge Somerville.

13 May 2013 Judge Somerville, following a hearing the previous month, delivered a judgment in relation to the s 199 application.

June 2013 Associate Judge Osborne delivered a judgment in the High Court which authorised Mr Walker to retain electronic data relating to Property Ventures and associated companies liquidations, but not personal or electronic data pertaining to

_{non-liquidation companies.}

² Companies Act 1993.

14 August 2013 Mr Downes, a former receiver of Property Ventures, RFD, Mr Henderson and his wife executed a “deed of rectification” whereby the definition of Tuam Street assets was varied by adding to the inventory the words “and all office and administration equipment and other chattels claimed to be owned by PVL”.

14 September 2013 The appellants applied to adduce further evidence on appeal, being the deed of rectification and of a letter written by Mr Downes on 22 August 2013 explaining his viewpoint.

[5] The above narrative does not mention or explain the situation of

GP96 Limited. When Property Ventures was placed in receivership in July 2010

GP96 became the lessee of 96 and 110 Lichfield Street on assignment from another company within the group. GP96 remained the lessee as at April 2011 when the search warrants were executed. Hence, GP96 was a party to the District Court proceeding in its capacity as lessee, and is now the second appellant in this Court.

[6] For completeness I also note that the premises at 96 and 110 Lichfield Street back onto the rear of the premises at 179 Tuam Street. During the course of the Canterbury earthquakes the premises occupied by the group were damaged, and equipment was relocated from the Tuam Street to the Lichfield Street premises.

The District Court decision

[7] The police initiated the s 199 application and also provided affidavit evidence concerning their involvement in the matter. However, counsel for the police did not play an active role at the hearing. As in this Court, the police abided the decision, since their main concern was to have the protection of directions concerning disposal of the property in their possession and control.

[8] The police affidavit evidence showed that the disputed items were located in a file-server room in the basement area of 96 Lichfield Street. However, the file- server itself had been removed from the room (see [4] – late February 2011). The police evidence, together with the fixed asset register adduced in evidence by

Mr Walker, established the number and description of the computer items recovered from the file-server room.

[9] This enabled Judge Somerville to make these findings:

[25] I am satisfied that all eight computers currently in the possession of the police are the property of [Property Ventures] because:

(a) The four cyclone computers are included in the assets register for [Property Ventures].

(b) It is a reasonable assumption from the extent of that assets register, that all of the group’s computers were owned by [Property Ventures].

(c) It is also a reasonable inference that all of the computers located in the same place were owned by the same entity.

[26] As [Property Ventures] has established the best claim to being entitled to this computer equipment, the police are directed to deliver this equipment to [Property Ventures].

[10] In this Court Mr Henderson, representing himself and GP96, did not challenge the reasoning of Judge Somerville. Indeed, he said it was common ground that the disputed items “were acquired, held and owned by Property Ventures at least up and until July 2010”, when the company was placed in liquidation. Instead, the appeal was advanced solely on the basis of the deed of settlement executed on

8 March 2013, and the deed of rectification executed on 14 August 2013. Mr Henderson submitted that the deeds, read and understood in context, established that property in the disputed items was vested in RFD or, alternatively, GP96. The initial notice of appeal dated 12 June 2013 asserted property lay with RFD, whereas an amended notice of appeal dated 13 August 2013 nominated GP96 in the alternative.

[11] Although the appellant’s argument is in part based upon new evidence the admissibility of which is challenged, I do not propose to dwell on the admissibility question. Mr Sullivan submitted the new evidence was not cogent and that, although fresh, it should not be admitted to contradict a decision which preceded its emergence. In effect, he argued it was not competent to contradict the District Court judgment on the basis of a deed created after the event.

Did the deeds displace Property Ventures interest in the disputed items?

[12] The nub of Mr Henderson’s argument is that Property Ventures abandoned any claim to the disputed items when the receivers of Property Ventures signed the deed of settlement on 8 March 2013. Judge Somerville overlooked this in his decision delivered two months later. And, if it was unclear whether the disputed items fell within the definition of the Tuam Street assets abandoned by the receivers, this was put beyond doubt when the deed of “rectification” was executed.

[13] Firstly, the so-called deed of rectification is a contradiction in terms. Rectification is an equitable jurisdiction by which this Court may rectify a deed so that it gives effect to the true intentions of the parties. The elements of rectification are conveniently set out in Westland Savings Bank v Hancock.³ The August 2013 deed relied upon here is, if anything, a variation of the original agreement between the receivers of Property Ventures and others.

[14] But, for a number of reasons I am satisfied that neither deed, nor the two in combination, achieve the end result for which Mr Henderson contended. These reasons can be briefly explained:

(a) The deed dated 14 August 2013, by which Property Ventures is said to have abandoned any claim to all equipment and chattels of Property Ventures, was signed by Mr Downes as a former receiver of the Company. In my view he had no authority to and could not bind the Company at that time. On 27 June 2013 the joint receivers gave notice pursuant to s 29 of the Receivership Act 1993 that they ceased to act as receivers of Property Ventures. Thereby, their powers ceased, save for any wash-up payments and the like already

authorised in the course of the receivership.⁴

(b) It is elementary that a variation of contract must be between the same entities as were parties to the original contract. Here, in August 2013

³ _{Westland Savings Bank v Hancock [1987] 2 NZLR 21 (HC) at [30].}

4. Re Liquidation of Lakeview Farm Fresh Limited (In Receivership and Liquidation) HC Wellington CIV-2003-485-2555, 5 December 2003 at [20].

the liquidator of Property Ventures would need to consent to the contractual variation for the Company to be bound.

(c) The August 2013 deed purports to vary the definition of “Tuam Street assets” by adding all “equipment and chattels claimed to be owned by [Property Ventures]” to the inventory of chattels which previously comprised the definition of the class. Importantly, however, the March 2013 deed provided that Property Ventures (through its receivers) surrendered any claim to the Tuam Street assets “currently in the possession or control of Henderson, Buxton or RFD”. Hence, only some items within the class were surrendered – being those defined by possession. Demonstrably, the disputed items which are the subject matter of this appeal were and remained in the possession of the police at all material times. In my view the August deed, even if it were somehow effective, does not materially alter matters.

Conclusion

[15] For these reasons the appeal is dismissed.

[16] Costs are reserved. Memoranda in support of an award may be filed within

10 working days, and the appellants shall have seven working days within which to reply.

Solicitors:

S E McKenzie, Wellington

K P Sullivan, Wellington