The High Court has recently granted a receiver's application for an order that the grantor company and its sole director deliver up documentation relating to the company's affairs.
Ribble Limited was placed into receivership. The receiver, Mr Whitley, wrote to Ribble's sole director, Mr Kooiman, seeking information necessary to identify collateral secured by a general security agreement (GSA) between Ribble and the secured creditor, under which Mr Whitley was appointed. Mr Kooiman opposed Mr Whitley's application, arguing that:
- Mr Whitley's appointment was invalid as the terms permitting appointment of a receiver were not incorporated into the GSA
- Ribble's personal property was not subject to the GSA
- Mr Whitley failed to give notice of his appointment as required by the Receiverships Act 1993 (Act).
Justice Moore granted Mr Whitley's application and rejected Mr Kooiman's three grounds of opposition. His Honour's reasons for doing so were, respectively, that:
- Although Mr Whitley had not signed the terms permitting the appointment of a receiver, the GSA expressly stated that those terms were to be incorporated into the GSA, which Mr Whitley had signed
- Notwithstanding an ambiguity in the GSA, it would be commercially absurd to hold that there was no personal property secured by it
- Mr Whitley's alleged failure to advertise his appointment, although potentially an offence under the Act, had no bearing on the validity of his appointment.
Mr Kooiman's argument that Mr Whitley only had a right to inspect (rather than take possession of) Ribble's documentation was also rejected both because Ribble's documents and records were personal property subject to the GSA, and because there was express provision in the GSA for that information to be provided to the receiver.
A copy of the decision can be found here.