Eversons International Limited (in liquidation) v Stewart [2022] NZHC 1651 (13 July 2022)

Last Updated: 21 July 2022

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2020-409-000192 [2022] NZHC 1651

BETWEEN	EVERSONS INTERNATIONAL LIMITED (In Liquidation) First Plaintiff
AND	E H KEENE and L NORMAN Second Plaintiffs
AND	E K STEWART Defendant

Hearing:	16 June 2022
Appearances:	M J Tingey for Plaintiffs K W Clay for Defendant R J Wallace for Commissioner of Inland Revenue
Judgment:	13 July 2022

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 13 July 2022 at 11.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

EVERSONS INTERNATIONAL LTD (in liq) v STEWART [2022] NZHC 1651 [13 July 2022]

• [1] This judgment concerns an application by Mr Stewart under r 8.21 of the High Court Rules 2016 for non-party discovery from the Commissioner of Inland Revenue of four categories of documents. Those documents are as follows:

(a) A letter from the Inland Revenue Department (IRD) to Mr R Whiteley dated 16 January 2014.

(b) Any emails, prior or subsequent to an email from the plaintiff, Ms Elizabeth Keene, to Paul Sparrow, from the IRD, dated 3 December 2019 at 11.29 am.

(c) Email(s) between the IRD/Paul Sparrow and the second plaintiffs (the liquidators) with regard to Eversons International Ltd (Eversons) and/or Mr Stewart.

(d) Email(s) between the liquidators and Lee Hukui between 9 April 2018 and 4 February 2020 relating to Mr Stewart.

• [2] This application needs to be understood in the context of an earlier application made by Mr Stewart for particular discovery from the plaintiffs in respect of the same four categories of documents. His application was dismissed on 17 May 2022.¹

• [3] The present application is a response to matters raised by the plaintiffs in opposition to the earlier application, in particular, that the documents sought either do not exist or have been disclosed or are not relevant to any matter put in issue. Mr Stewart also filed a further amended statement of defence dated 13 May 2022, raising several new matters.² Mr Stewart alleges that, given the circumstances under which Eversons was forced to cease trading, it is unfair this claim has been made against him, that the liquidators are failing to act independently of the IRD, and the proceeding should be struck out as an abuse of process.

¹ Eversons International Ltd (in liq) v Stewart [2022] NZHC 906.

² At paras [80]-[89].

• [4] Memoranda have recently been filed suggesting Mr Stewart will not now be pursuing at trial the new matters he raised in his latest statement of defence. Be that as it may, he has not formally withdrawn those pleadings and I have considered this application on the basis of his amended statement of defence of 13 May 2022.

• [5] Finally, I should also record that Mr Stewart’s counsel, Mr Clay, filed written submissions stating that orders were no longer sought in respect of the first two categories of documents. At the hearing, Mr Clay revived the application in respect to category (b). Discovery is therefore sought from the Commissioner in respect of categories (b), (c) and (d).

• [6] The application is opposed by the plaintiffs and by the Commissioner.

Background

• [7] There have been several prior judgments of the Court in this proceeding which recount the facts, but it is necessary to do so again to the extent that follows.

• [8] Mr Stewart was the sole shareholder and director of Eversons. Eversons was in the business of selling synthetic legal high products. It was effectively put out of business from 8 May 2014 when the sale of its products was made illegal.³

• [9] Eversons was placed into liquidation by Mr Stewart on 9 April 2018. At the date of liquidation, the company owed the IRD $3,766,118 in unpaid taxes and penalties.

• [10] The liquidators say Eversons has no available assets to meet the IRD’s claim. This is despite its financial statements showing overseas investments of more than

$6,500,000 and net assets of more than $3,000,000.

• [11] This proceeding was commenced on 13 May 2020 and was accompanied by an application for summary judgment. The summary judgment application was limited to a cause of action seeking to recover the amount said to be overdrawn in

³ Psychoactive Substances Amendment Act 2014.

Mr Stewart’s current account. The summary judgment application was dismissed on 3 December 2020.⁴

• [12] Since then, the liquidators have filed an amended statement of claim.⁵ There are now eight causes of action relied upon. By the first cause of action, the liquidators seek to recover what they say is Mr Stewart’s overdrawn shareholder’s current account. There are alternative causes of action alleging several breaches of directors’ duties owed by Mr Stewart to Eversons under the Companies Act 1993. There is also a claim that substantial payments made from Eversons’ bank accounts were distributions to Mr Stewart, in breach of s 52 Companies Act, which he is obliged to repay.

• [13] The amended statement of claim and Mr Stewart’s amended statement of defence of 13 May 2022 indicate the fundamental issues at trial will concern when Eversons became insolvent, whether the company had any overseas investments as shown in its financial statements, the extent to which large amounts paid from its bank account between April 2012 and February 2015 were payments to Mr Stewart as a shareholder, and whether the claims should be dismissed as an abuse of the Court’s processes because it is unfair to Mr Stewart (given the circumstances leading to the collapse of the business) or because the liquidators are not acting independently of the Commissioner.

Legal principles

• [14] Rule 8.21 of the High Court Rules provides:

Order for particular discovery against non-party after proceeding commenced

(1) This rule applies if it appears to a Judge that a person who is not a party to a proceeding may be or may have been in the control of 1 or more documents or a group of documents that the person would have had to discover if the person were a party to the proceeding.

(2) The Judge may, on application, order the person

(a) to file an affidavit stating

⁴ Eversons International Ltd (in liq) v Stewart [2020] NZHC 3188.

⁵ The plaintiffs' latest pleading is an amended statement of claim dated 1 October 2021.

(i) whether the documents are or have been in the person’s control; and

(ii) if the documents have been but are no longer in the person’s control, the person’s best knowledge and belief as to when the documents ceased to be in the person’s control and who now has control of them; and

(b) to serve the affidavit on a party or parties specified in the order; and

(c) if the documents are in the control of the person, to make those documents available for inspection, in accordance with rule 8.27, to the party or parties specified in the order.

(3) An application for an order under subclause (2) must be made on notice to the person and to every other party who has filed an address for service.

• [15] The Court’s power to make an order for non-party discovery is discretionary. It is not enough that an applicant for non-party discovery demonstrates documents sought are relevant to matters in issue, they must show the orders are necessary in the sense that other sources of evidence are unlikely to be sufficient because they are materially incomplete or unreliable. These points were made by Kós J in Vector Gas Contracts Ltd v Contact Energy Ltd as follows: ⁶
  • [28] First, it will be seen that the power to make an order under r 8.21 is discretionary. In this it contrasts with r 8.5(1) – the ordinary party discovery provision – where a Judge must make an order unless formal discovery is unnecessary.
  • [29] Secondly, in determining an application for non-party discovery order, the Court should have regard to the test under r 8.7 for standard discovery –

i.e. the adverse documents regime. But, as Judge Osborne observed in Westpac New Zealand Ltd v Adams, the former Peruvian Guano approach may still inform a non-party discovery order in some instances. To that extent the “train of inquiry” approach, broader than the adverse documents regime, remains relevant. However excursions on the train of inquiry are not to be encouraged in the case of non-party discovery. The Australian cases I am about to discuss make that clear.

• [30] Thirdly, a non-party discovery order must still be necessary. This point flows to an extent from the first two, but particularly the first. Previous decisions of this Court have observed that the former requirement in r 8.26, that an order for particular discovery be “necessary”, no longer exists under r 8.21. Technically, that is correct. But it is I think a distinction without a difference, in practice. It is simply a consequence of the 2011 changes to the discovery provisions in the High Court Rules, which made party discovery presumptive. That is not the case with non-party discovery, as the opening words of r 8.21(2) make clear. Such discovery remains discretionary. As

⁶ Vector Gas Contracts Ltd v Contact Energy Ltd [2014] NZHC 3171, [2015] 2 NZLR 670.

Mr Cooper (who carried the burden of the argument for the applicants) candidly accepted, no Court will make a non-party discovery order that is unnecessary. In my view it remains implicit in r 8.21 that the non-party discovery order be necessary, so that the discretion should be exercised. That is to say, without limitation, other sources of evidence are unlikely to be sufficient because they are materially incomplete or unreliable. And that the documents sought may make a real difference, and are not merely marginal.

...

[footnotes omitted]

• [16] The relevant principles were also discussed in C & P Holdings Ltd (in liq) v Boyd where Associate Judge Smith applied the approach in Vector Gas and noted that the relevance of the documents sought, assessed against the pleadings, remains the hallmark of discovery.⁷

Submissions

Mr Stewart

• [17] Mr Clay argues that the grounds for making a non-party discovery order are made out because the Commissioner would be required to disclose the documents sought if he was a party to the proceeding, the documents are relevant to matters raised by the pleadings, and it is necessary that they are disclosed to Mr Stewart because they will enable him to advance his own defence or damage the plaintiffs’ case against him.

• [18] Specifically, the documents are said to be relevant to the issue of the unfairness of the proceeding, to when the liquidators received Eversons’ bank statements from the IRD, whether the liquidators are acting independently of the IRD, and the “circumstances surrounding the overseas investments”. Mr Clay submits an inference may be drawn that the Commissioner will have documents concerning those investments.

• [19] In response to the ground of opposition relied upon by the Commissioner, that disclosure of the documents is prohibited under s 18 of the Tax Administration Act

7. C & P Holdings Ltd (in liq) v Boyd [2018] NZHC 1392 at [61] citing Chatfield & Co Ltd v Commissioner of Inland Revenue [2016] NZCA 614 at [21].

1994 (TAA), Mr Stewart advances several arguments that s 18 does not apply. I deal with this below.

• [20] Mr Stewart does not consider findings made in my judgment of 17 May 2022 to be an impediment to the making of the orders he now seeks because the focus of that application was on the obligations of the plaintiffs, not whether the Commissioner had such documents in his possession or control.

The Liquidators

• [21] The liquidators oppose the application on the bases of:

(a) the delay in making the application;

(b) the documents are irrelevant to any matter in issue; and

(c) all relevant documents have been disclosed.

The Commissioner

• [22] The Commissioner argues s 18 of the TAA requires him and his revenue officers to keep confidential sensitive revenue information unless disclosure is permitted under ss 18(D)-(J) of the TAA. He submits the documents sought are sensitive revenue information for the purposes of the section and disclosure is not permitted under any of the exceptions in ss 18(D)-(J) of the TAA.

• [23] As will be seen, my concluded view is that the Commissioner is correct, and disclosure of the documents sought is prohibited by s 18 of the TAA and that this is a complete answer to the application.⁸

8. It is not to be inferred that it has been established any such documents exist beyond what the liquidators have already disclosed. I am not of that view.

The Tax Administration Act

• [24] Mr Wallace provided thorough and helpful submissions, for which I am grateful.

The statutory provisions

• [25] The starting point is s 18 of the TAA, which provides that the Commissioner and his staff are subject to a statutory obligation to keep confidential all “sensitive revenue information”.⁹

• [26] Section 18(1) of the TAA provides:

Confidentiality requirements for revenue officers

(1) A revenue officer must keep confidential all sensitive revenue information and must not disclose the information unless the disclosure is a permitted disclosure that meets the requirements of sections 18D to 18J.

• [27] The central concept is “sensitive revenue information”.

• [28] Section 16C defines the terms “revenue information” and “sensitive revenue information”, both of which must be considered here.

• [29] The term “revenue information” is defined at s 16C(2) as:

For the purposes of this subpart and schedule 7, revenue information means information that is acquired, obtained, accessed, received by, disclosed to, or held by the Commissioner

(a) in connection with a revenue law and for a purpose set out in section 16B(1):

(b) under an information-sharing agreement.

• [30] The term “sensitive revenue information” is relevantly defined at s 16C(3) as:

For the purposes of this subpart and schedule 7, sensitive revenue information

9. It is an offence for a revenue officer to breach the confidentiality requirements in s 18, which is punishable under s 143C by a term of imprisonment of up to six months, a fine of $15,000, or both.

(a) means revenue information

(i) that identifies, or is reasonably capable of being used to identify, a person or entity, whether directly or indirectly; or

(ii) that might reasonably be regarded as private, commercially sensitive, or otherwise confidential; or

(iii) the release of which could result in loss, harm, or prejudice to a person to whom, or an entity to which, it relates:

(b) does not include aggregate or statistical data that may contain information about the person or entity to the extent to which the information does not meet the requirements of paragraph (a).

(c) does not include information if the only person or entity that identifies is the Commissioner or chief executive of the Inland Revenue Department, unless it relates to the application of the Inland Revenue Acts to the Inland Revenue Department as a taxpayer.

• [31] The confidentiality obligation in s 18 of the TAA is subject to statutory exceptions in ss 18D to 18J of the TAA.¹⁰ The Commissioner submits, and I accept, these exceptions are intended to be exhaustive.

• [32] The provisions that may be relevant to this case are ss 18D and 18G.

• [33] Section 18D concerns disclosures made in carrying into effect revenue laws and relevantly provides, in s 18D(4), for disclosures in court proceedings in these terms:¹¹

(4) Section 18 does not apply to

(a) prevent the disclosure of sensitive revenue information to a court or tribunal if the disclosure is necessary for the purpose of carrying into effect a revenue law:

(b) require a revenue officer to produce a document in a court or tribunal, or to disclose to a court or tribunal a matter or thing that comes to their notice in the performance of their duties.

• [34] “Revenue law” is a defined term at s 16C(1) of the TAA. It includes the Acts set out in sch 1 of the TAA and other Acts listed in s 16C(1)(b) to (d). It does not include the Companies Act 1993.

¹⁰ In addition, sch 7 of the TAA sets out further disclosure rules.

11. See the Tax Administration Act 1994, sch 7, part A, cl 2 which also states s 18 does not prevent disclosure for the purpose of carrying into effect a revenue law.

• [35] Section 18G allows for disclosure to a person (or their representative) in respect to whom the sensitive revenue information is held. It provides:

Section 18 does not apply to a disclosure of sensitive revenue information made to a person in relation to whom the information is held. The disclosure may be made to the person and also to the person’s representative as set out in schedule 7, part B.

The issues

• [36] There is no dispute s 18 imposes a confidentiality obligation upon the Commissioner. However, Mr Stewart says that s 18 does not apply to prohibit the making of the orders he seeks because:

(a) the documents sought are not “sensitive revenue information”; or

(b) the exception in s 18D applies; and/or

(c) the exception in section 18G applies.

• [37] I will deal with each submission in turn.

Are the documents sensitive revenue information?

• [38] Mr Clay submits the documents do not fit within the definition of revenue information because they are not information “acquired, obtained, accessed, received by, disclosed to, or held by the Commissioner”.¹² He submits the purpose of the confidentiality regime is to facilitate confidence in the tax system by preventing disclosure of sensitive information that taxpayers are compelled to provide to the Commissioner. On this basis confidentiality applies only to information “received” by the Commissioner. He says emails issued by the IRD to the liquidators are not received by the Commissioner, nor do they require statutory protection. I do not accept this submission.

¹² Section 16C(2).

• [39] There is nothing to suggest that the definition of revenue information includes only information received by the Commissioner. The submission overlooks that the definition includes information “held by the Commissioner”.

• [40] I accept Mr Wallace’s submission that this would include the Commissioner’s communications with taxpayers and their representatives as such communications will likely fall within one or more of the purposes set out at s 16B(1) of the TAA.

• [41] Further, one of the core duties of the Commissioner is the collection of taxes and, consistent with that responsibility, revenue officers are likely to maintain much information concerning the assessment of a taxpayer’s liability, consideration of options in the event that tax is unpaid and, in the case of a company, conveying relevant information concerning a taxpayer’s affairs to a liquidator.

• [42] Mr Stewart’s approach would defeat the purpose of s 18. It would mean that a great deal of sensitive revenue information would necessarily lose statutory protection. Examples include any documents prepared by revenue officers in relation to taxpayers’ affairs, and even documents such as Tax Assessment Notices setting out income tax details to a taxpayer.

• [43] The communications that Mr Stewart seeks concern Eversons’ tax affairs and, specifically, communications between revenue officers and the liquidators concerning the liquidation. In my view, such material is revenue information and also sensitive revenue information because the communications can reasonably be regarded as “private, commercially sensitive, or otherwise confidential”.¹³

Is disclosure necessary for the purpose of carrying into effect a revenue law?

• [44] Mr Stewart relies upon s 18D of the TAA. In this regard, Mr Clay referred to several decisions where discovery was ordered against the Commissioner.¹⁴ On the

¹³ Tax Administration Act 1994, s 16C(3)(a)(ii).

¹⁴ Knight v Commissioner of Inland Revenue [1991] 2 NZLR 30 (CA); ANZ National Bank v Commissioner of Inland Revenue [2009] NZCA 150, [2009] 3 NZLR 123; and BNZ Investments Ltd v Commissioner of Inland Revenue [2008] NZSC 24; [2008] 2 NZLR 709.

basis of these decisions, he submitted s 18 cannot be relied upon to prevent disclosure because production is necessary for the purpose of carrying the Tax Acts into effect.

• [45] All of the cases relied upon predate the sections of the TAA with which I am presently concerned.¹⁵ More importantly, they all concerned proceedings to which the Commissioner was a party (which is not the case here). So, in Knight v Commissioner of Inland Revenue, Cooke P held:¹⁶

The carrying into effect of the Inland Revenue Acts must include their proper implementation or administration. When the Commissioner is properly a party to litigation, whether as a claimant or as a defendant, it seems to me that in the natural and ordinary use of language the conduct of the litigation by him is activity in the carrying into effect or implementation or administration of the Acts. In such a case it can reasonably be said to be necessary that, subject to any justified claim of public interest immunity, he should comply with the ordinary obligations of a litigant to make discovery of relevant documents.

...

• [46] BNZ Investment Ltd v CIR concerned s 81 of the Tax Administration Act 1994 which was the immediate predecessor of what is now s 18D. It involved a challenge to amended tax assessments issued by the Commissioner for a number of banks, asserting they had engaged in tax avoidance arrangements. In discovery, the Commissioner provided a list of documents which included material relating to banks other than the BNZ to show that they had engaged in substantially similar transactions. The documents had been obtained in the course of investigations into the tax affairs of those banks. The BNZ applied for an order those documents not be discovered.

• [47] The Supreme Court discussed the legislative history of what was then s 81(3) of the TAA [now s 18D(4)]. In delivering the judgment of the Court, McGrath J said:¹⁷

• [28] The provision conferring privilege from production now contained in s 81(3), was introduced in 1952, again in a form that is substantially the same as at present.

• [29] It seems that prior to the introduction of the privilege provision, departmental officers would claim a common law privilege if they were required to attend court to produce taxpayer-related information, or to answer questions on such matters. The decision to give legislative force to the

¹⁵ Sections 18 and 18D were both inserted into the Tax Administration Act 1994 on 18 March 2019, by s 10 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

¹⁶ Knight v Commissioner of Inland Revenue, above n 14, at 35.

¹⁷ BNZ Investments Ltd v Commissioner of Inland Revenue, above n 14.

exemption from compulsory disclosure under court rules was taken, according to the Minister introducing the legislation, simply because it was “thought well to write the provisions into the law”. The introduction of what is now s 81(3) accordingly addressed apparent uncertainty as to the extent of protection given to departmental information in court proceedings. It makes plain that matters coming to the notice of the department are the subject of an evidential privilege as a class of documents.

• [30] Since 1952 further specific exceptions to the duty of secrecy in s 81(1) have been added to the legislation, usually in tightly framed terms. ...

(footnotes omitted)

• [48] At paragraphs [55], [56] and [57] the Supreme Court discussed the role of s 81(3) and stated:

• [55] Section 81(3) creates a privilege from being required to produce, which attaches to any material relating to the affairs of taxpayers coming to the notice of officers of the Inland Revenue Department in the performance of their duties. The privilege protects that material from requirements of compulsory disclosure in court proceedings. As indicated, the legislative history confirms that the statutory privilege was introduced in 1952 to clarify the basis and extent of that protection of the position of the Commissioner. Its purpose is to reinforce tax secrecy obligations under s 81.

• [56] The statutory privilege does not apply when production is “necessary” for the purposes of the Act. Section 81(3) in this way addresses the competing considerations of protecting tax secrecy and permitting use of secret material in court for the purposes of, in this case, carrying the Inland Revenue Acts into effect. The two public interests are reconciled by inquiring into whether production or disclosure in court, with or without editing, is necessary for the purpose of the relevant statutes. Where that is the case the privilege does not apply and the ordinary rules of court do. ...

• [57] It follows that the exception in s 81(1) governs the position where the Commissioner chooses to use secret tax material to support his case in litigation. He may do so provided he is acting within the exception. Section 81(3) applies when, in acting in accordance with the Department’s secrecy obligations, he claims the statutory privilege to resist production. Section 81(3) is not itself a restraint on voluntary use of secret material by the Commissioner. That restraint is provided for by s 81(1) when the exception in that provision does not apply.

• [49] Then at [69] the Supreme Court concluded:

[69] We are satisfied that these considerations of context and purpose indicate that the permitted use exception in s 81 (1) is a qualified one. Disclosure is not permitted unless, and to the extent that, it is reasonably necessary for the performance of the Commissioner’s statutory functions. This approach to interpretation reflects the underlying policy considerations referred to by Richardson J in Squibb. In particular it recognises that information concerning third party taxpayers’ affairs is a valuable resource in verifying correctness of returns and that it would be inimical to the integrity

of the tax system if the Commissioner were restricted from using it where that use is reasonably necessary in order for him to exercise his functions effectively. Tax secrecy is also an important value which should be accommodated unless the Commissioner’s case would be prejudiced.

(footnotes omitted)

• [50] Mr Wallace referred me to several earlier cases where the same approach has been consistently applied.¹⁸ In the cases he referred to, the Commissioner was not a party to the proceedings, and it was held the statutory privilege prevented disclosure of sensitive revenue information.

• [51] The Commissioner is not a party to this proceeding and has not brought any proceeding against Mr Stewart to carry into effect a revenue law. This proceeding is brought by the liquidators not to carry into effect a revenue law, but in the exercise of the liquidators’ rights and duties under the Companies Act for the potential benefit of creditors. The liquidators seek to recover a debt claimed to be owed to Eversons or damages for breach of duties Mr Stewart owed Eversons as a director. It follows that s 18D of the TAA has no application.

• [52] Mr Clay raised two further matters. First, he argued that in reality this proceeding is pursued to recover unpaid tax and in that sense its purpose is to carry into effect a revenue law. Certainly it is the case the Commissioner may benefit from this proceeding, but that potential benefit is not the relevant statutory test. The relevant statutory test is that disclosure must be necessary to carry into effect a revenue law and, here, it is not.

• [53] Second, Mr Clay relies on the wording of r 8.21(1) which, he says, requires the Court to order the discovery as if the non-party “were a party to the proceeding”. The effect of r 8.21 (1) is not to join a non-party to the proceeding. It also cannot trump the statutory prohibition on disclosure in s 18.

18. R v Saint-Merat [1958] 1147, Daemar v Gillard [1979] 2 NZLR 7, Burt v Darwin (1986) 8 NZTC 5,026.

Is Mr Stewart entitled to obtain company information from the Commissioner in his capacity as a director?

• [54] Mr Stewart also relies on s 18G of the TAA and argues that as a director of Eversons, he would be entitled to obtain information from the IRD prior to the company being placed into liquidation and he should continue to have that right. He argues that limits on directors’ powers, consequent upon the making of a liquidation order, are not intended to abrogate a director’s common law right to access company documents. Alternatively, he argues that s 18G should be interpreted to permit disclosure to directors of a company in liquidation.

• [55] When Eversons was put into liquidation Mr Stewart ceased to have any powers, functions or duties as a director other than those required or permitted to be exercised in pt 16 of the Companies Act.¹⁹ There is nothing in pt 16 of the Companies Act which permits a director of a company in liquidation to obtain tax information relating to the company.

• [56] I do not see anything in s 18G or the Companies Act that supports a view that directors retain an ability that exists at common law to access sensitive revenue information held by the Commissioner in respect of a company in liquidation. Mr Clay did not expand on the argument, and provided no authority that suggests to me such a right ever existed.

• [57] Further, while Mr Clay suggests there could be no reason why a director should not have access to such information, that submission assumes that the interests of a director and the company are aligned. As this case shows, that will not necessarily be the case. At the present time, Mr Stewart’s interests are inimical to Eversons’ interests.

Conclusion on s 18 of TAA

• [58] For the reasons given, I am satisfied that section 18 of the TAA applies. I am satisfied that the exceptions in s18D and 18G do not apply. It follows the application for non-party discovery must be dismissed.

¹⁹ Companies Act 1993, s 248(1)(b).

Other reasons for refusing the application

• [59] In my judgment of 17 May 2022, in respect of the documents in categories (b),

(c) and (d), I found that Mr Stewart had failed to show grounds for a belief that documents beyond those already disclosed by the liquidators exist. I also found the documents sought were not relevant to any matter arising in the proceeding.²⁰ Nothing presented to me in support of this application changes my views, notwithstanding the amendment to Mr Stewart’s pleadings.

• [60] At its highest, and even if there was reason to believe additional documents exist which have not been disclosed already, their relevance could be no more than marginal. For example, Mr Clay submitted that I might infer the Commissioner will have documents concerning the overseas investments, but there is nothing before me upon which such an inference could be drawn. If anyone has knowledge of the overseas investments it could be expected that would be Mr Stewart. Mr Clay submitted the documents are relevant to the issue of the unfairness of the proceeding but did not explain how this would be the case. I cannot see any logical or legal basis for the submission that because Eversons business activities were prohibited by law that could somehow release Mr Stewart from obligations he owes Eversons. I also do not see how it can possibly matter when the liquidators received Eversons’ bank statements but, in any event, this has already been adequately explained in the affidavits before me.

• [61] In those circumstances, and in the exercise of my discretion, I do not consider the making of an order for non-party discovery would be necessary and I would refuse to make it.

Result

• [62] Mr Stewart’s application for non-party discovery is dismissed.

²⁰ Eversons International Ltd (In Liq) v Stewart above n 1 at [48]-[49], [51]-[52] and [55].

• [63] I can see no reason why the plaintiffs and the Commissioner would not be entitled to costs on a 2B basis along with reasonable disbursements, but if there is any dispute about that, counsel may submit memoranda within 14 days.

O G Paulsen Associate Judge

Solicitors:

Martelli McKegg (J E M Lethbridge / C W Gambrill), Auckland Layburn Hodgins Limited (D K Quirk), Christchurch

Inland Revenue Department (R Wallace), Christchurch