Liquidator Confidentiality and Privacy

Liquidator’s duty of Confidentiality and Privacy: Company Records

Liquidator’s duty of Confidentiality and Privacy: Company Records

A Liquidator’s duty of confidentiality and privacy where company records is concerned sprouted in the case of Henderson v Walker [2019] NZHC 2184 (3 September 2019) (“Henderson”) which appears to have highlighted a practical issue when Directors cause or permit private and personal information to become intermingled and conflated with the affairs of their companies. Arguably this is a state of affairs which could arise in a great many cases for Liquidators to consider.

The Liquidator in Henderson was found to be in breach of confidence for distributions of personal information and ordered to pay damages. Mr Henderson’s cause of action against the Liquidator for misfeasance in a public office was dismissed. However, notably, the distributions of information included provision of information to the Official Assignee and the Court held that there had been an invasion of privacy:

I have also found Mr Walker liable for invasion of privacy in relation to the distributions to the Official Assignee on 14 June 2011 and 26 August 2011. I issue a declaration to that effect.

Who should bear the cost of unscrambling the merged information?

The Henderson case appears to raise a number of questions:

  1. At a practical level if Directors have permitted their personal and private information to become mixed up with the documents and data of a company, have they waived their right to privacy by causing such a state of affairs to prevail?
  2. Is it the failure and or fault of the company that led to this situation?
  3. Should the creditors in such situations later be then involved in indirectly bearing the conceivably huge costs arsing in liquidation due to a Director who has failed to keep private and company information separate?
  4. Is it not the duty of the Director to unpick and regularise the information before it is handed over to a Liquidator?
  5. Has the risk of liquidators disclosing information now reached an even greater threshold with the Court now destined to be called upon even more to deal with such disclosure issues?
  6. Is the conceivable consequence that financial conduct investigations by public officials seeking records from liquidators are now set for increasing delays?