Court told of Warehouse tax records destruction

By Jock Anderson

Friday 20th February 2004

In a startling twist in the curious case of 20,000 unwanted gas cylinders and two Stephen Tindalls, listed company The Warehouse admitted destroying all its tax records.

Disclosure of the destruction of all The Warehouse's tax records, including GST records, for several years up to 1996 followed intense courtroom grilling of company founder and chairman Stephen Robert Tindall by Auckland barrister Brian Henry.

After courtroom clashes over an invoice trail and who paid how much to whom and when, Warehouse lawyer Robert Ferguson disclosed in Tauranga Court that when the company moved office its tax records "went off to storage and they were all destroyed."

Mr Ferguson told Judge Ian Thomas it was a "sorry state" and he did not know what the explanation was.

The Warehouse was unsuccessfully sued in a long-running wrangle after a contract to supply the "red sheds" with 20,000 gas cylinders was axed. The claim was filed in 1996.

Institute of Chartered Accountants' tax director Annabel Young said the destruction of tax records, which are required to be held for seven years, would cause "some concern" to a company.

"They would have to hold their breath hoping no one [Inland Revenue Department] asked for the records," Ms Young said.

Unfolding in Tauranga court after nearly 12 years of wrangling, the case against The Warehouse was a weird one.

On the one hand was hopeful Warehouse supplier Nelson Bell, whose wife, Judith, changed her name by deed poll in 2002 to Stephen Robert Tindall.

Batting for one of the country's most high-profile companies were Mr Stephen Robert Tindall and fellow director Neil Plummer.

As "Stephen Tindall," Mrs Bell, who maintained the family business folded and 21 jobs were lost when The Warehouse suspended a gas cylinder supply contract, mounted a "buy New Zealand made" campaign against Mr Tindall and other big businesses.

An engineer and former partner with his primary school teacher wife in Bell Gas Cylinders, Mr Bell sued The Warehouse for alleged breach of contract, after "red shed" people cancelled a deal for Bell to supply some 20,000 gas cylinders.

The case involved the extent of Mr Tindall's financial support for the Bells, allegations of unsafe gas cylinders, the alleged inability of the Bells to run their business efficiently enough to produce the number of gas cylinders required, disagreements over profit margins, problems with Occupational Safety and Health (OSH), claims of a Warehouse-linked beach house dinner-party plan to take over the Bells 'company and, because of the longevity of the affair, a lot of memory loss by witnesses, including Mr Tindall.

Mr Bell, having started with a $36,000 claim, thought again and increased it to more than $400,000, before dropping it back to $296,681.

Judge Thomas said the claim, which began in 1996, had a chequered history. Mr Bell was bankrupted in 1997 and Mrs Bell in 2002.

Judge Thomas said the Bells had been cavalier in the manner in which they classified debts either as personal or company and appeared to have used the company and the partnership as and when it suited them.

The case was hindered by problems over discovery and Judge Thomas complained that briefs of evidence on both sides were late.

Case management was also hampered by The Warehouse entirely misplacing its file just before the start of the proceedings.

Judge Thomas said the weakest part of Mr Bell's case was proper proof of his damages claim.

There were also doubts as to whether Mr Bell's company or partnership ever became profitable because money The Warehouse put in was used to meet existing and past liabilities.

In rejecting Mr Bell's claim Judge Thomas said the reality was that the Bells' business may not have been profitable at any time and without The Warehouse's support would not have survived.

Costs were reserved.

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