To What Extent Does A Liquidator Have A Duty Of Care Over The Information They Control

The recent judgment against Robert Walker for a breach in the confidence and privacy rights of David Henderson a prior director of Property Ventures Limited is a timely reminder that even liquidators can be held liable for breach of privacy.  In this case Mr Walker is required to pay $5,000 in damages. What rights do you have when you are dealing with a liquidator who has control of the company books and records?

When a liquidator is appointed over a company, either by the shareholders or by order of the High Court, one of the first steps taken will be to locate and uplift the books and records of the company and to seek information about the business, accounts or affairs of the company to ensure that any potential avenue of recovery for creditors is identified. The liquidator has the ability under section 261 of the Companies Act 1993 to require a party with information on the company to provide it to the liquidator. Unfortunately, there may also be some personal information of the company directors, shareholders, staff and customers that may be included in the information they collect.

As an individual it is important to understand what your personal information is and what an interference with privacy looks like. Your personal information is any information that can identify you as an individual. This can include, but is not limited to your name, address, a picture of your face, a record of your opinion and views, employment information, health records and personal financial information.

If a liquidator doesn’t handle your personal information properly, they could interfere with your privacy. There are several different ways in which this can occur including giving your information to someone you didn’t authorise, using incorrect information about you or refusing to give you access to your information. In most cases, an interference with privacy occurs when a liquidator has breached a privacy principle and or caused significant harm through doing so.

The privacy principles are set out on the Privacy Commissioners website and are important to be mindful of: https://www.privacy.org.nz/your-rights/your-privacy-rights/the-privacy-principles/

It is a timely reminder that as liquidators if we realise there is confidential personal information on say a laptop or in company records then even if the information is commingled with company information the confidence in the personal information needs to be preserved.

The confidential information must not be disseminated or the contents of it discussed with outsiders, except to proper authorities, potentially the OA and maybe the Police.

Court imposed stays also need to be obeyed in their entirety.  For example, if a stay on liquidation is imposed don’t do anything, don’t continue to investigate etc until the stay is lifted.

When in doubt Court direction needs to be sought.

An example of a simple and easy step that a liquidator can take to protect your privacy as an employee is to withhold personal address details from the 1st report.  This does not apply to a director/shareholder who has address details on the Companies Office as a public record.

If you think a liquidator may have interfered with your privacy, contact them first. However, if they are not able to resolve the issue for you contact the office of the Privacy Commissioner.

If you would like more information about liquidations and their powers under the Companies Act and how they can affect your privacy, please contact one of the team at McDonald Vague.

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