Millenium Securities Limited v Parekura Bay Vineyard Estates Limited (in liquidation) [2016] NZHC 1302 (16 June 2016)

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UNDER	Section 328 of the Companies Act 1993 Rules 19.2 to 19.4 of the High Court Rules
IN THE MATTER OF	an application for restoration of company to the Register of Companies
BETWEEN	MILLENNIUM SECURITIES LIMITED Applicant
AND	PAREKURA BAY VINEYARD ESTATES LIMITED (IN LIQUIDATION) (STRUCK OFF) Defendant

Hearing:	(On the papers)
Counsel:	David Rooke for the Applicant Bruce Pamatatau for the Former Liquidator
_Judgment:	_{16 June 2016}

This judgment was delivered by me on 16 June 2016 at 4:00 pm pursuant to Rule 11.5 of the High Court Rules.

MILLENNIUM SECURITIES LIMITED v PAREKURA BAY VINEYARD ESTATES LIMITED (IN LIQUIDATION) (STRUCK OFF) [2016] NZHC 1302 [16 June 2016]

[1] The applicant, Millennium Securities Limited (“Millennium”) was at all material times a shareholder of Parekura Bay Vineyard Estates Limited (in liquidation) (“Parekura”).

[3] Millennium seeks restoration of the company to the Register to enable real property, of which Parekura is the registered proprietor, to be sold for the purpose of meeting its debt to the mortgagee.

[4] Parekura was incorporated on 9 October 2000. It was, and remains, the registered proprietor of the land and improvements situated at Lot 1, Parekura Bay, Northland, contained in Identifier NZ111A/754 (“the Property”). The Property comprises a residential house on 5.7800 hectares of land. The evidence reveals it has a market value estimated at between $700,000 to $800,000 although I note the liquidator in his final report stated the property was purchased in October 2000 for

$975,000. The property is currently unoccupied. It is subject to a mortgage in favour of Downsview Finance Limited (“Downsview”) which secured advances to the company which remain unpaid. These advances are repayable in priority to the unsecured creditors represented by the liquidator.

[5] The liquidation arose from a debt owed by Parekura in relation to Court proceedings brought against it by one William Hawken. Mr Hawken registered a caveat against the title as part of his substantive claim in debt against Parekura. Parekura made an application to this Court for removal of the caveat. On 18 August

2015, Faire AJ (as he then was) directed the caveat could not be removed but directed Mr Hawken to file and pursue his claim against the company.¹Costs were

3 December 2007 for non-compliance with Faire AJ’s directions. Costs were awarded in favour of the company. The caveat subsequently lapsed in March 2008 and the costs order against Mr Hawken was enforced and recovered in about April

[7] However, it appears that before the substantive proceedings were struck out, Mr Hawken pursued the company for the debt arising from the costs order made in his favour. He obtained judgment, brought proceedings to enforce the debt and, ultimately, Parekura was placed in liquidation and later struck off the Register.

2006. It is common ground between Downsview and the liquidator that the former’s mortgage over the Property exceeded its value and, accordingly, the Property was disclaimed by the liquidator and was never an asset in the liquidation.

[10] On 31 March 2016, Millennium applied for leave to commence these proceedings by way of an originating application. An application for directions as to service was also made. Faire J granted permission to commence the proceedings by way of originating application. He also made orders the proceedings be served on the former liquidator and the mortgagee, Downsview.

[11] When the matter was first called in the Duty Judge List, Hinton J directed it be adjourned for 14 days to allow the former liquidator an opportunity to obtain legal representation.

[12] When the matter was called before me on 12 May 2016, I directed that proof of service be filed. I also directed counsel for Millennium, Mr Rooke, to file submissions on the Court’s jurisdiction to make the orders sought.

[13] Section 329 of the Companies Act 1993 (“the Act”) provides the jurisdiction

(1) The Court may, on the application of a person referred to in subsection (2) of this section, order that a company that has been removed from the New Zealand register be restored to the register if it is satisfied that,—

(i) the company was ... carrying on business or [a proper] reason existed for the company to continue in existence; or

(iv) the applicant was a creditor, or a shareholder, or a person who had an undischarged claim against the company; or

(v) the applicant believed that a right of action existed, or intended to pursue a right of action, on behalf of the company under Part 9 of this Act; or

(b) for any other reason it is just and equitable to restore the company to the New Zealand register.

(1A) In considering whether to restore a company to the register on the ground referred to in subsection (1)(a)(i) or (b), the court must have regard to the reasons for the company’s removal and whether those grounds existed at the time of removal or exist at the time of the hearing of the application.

(a) any person who, at the time the company was removed from the New Zealand register,—

(3) Before the Court makes an order restoring a company to the New Zealand register under this section, it may require any provisions of this Act or any regulations made under this Act, being provisions with which the company had failed to comply before it was removed from the register, to be complied with.

(4) The Court may give such directions or make such orders as may be necessary or desirable for the purpose of placing the company and any other persons as nearly as possible in the same position as if the company had not been removed from the New Zealand register.”

[14] Subsection 2 sets out those who may make an application under s 329(1). Included amongst those is any person, who at the time the company was removed from the Register, was a shareholder or director of the company.

[15] Of relevance to the present application, is s 329(1)(a)(iii) which provides that a company may be restored if the Court is satisfied that at the time the company was removed from the Register it was in receivership or in liquidation or both.

[17] Section 330 provides that a company is restored to the Register when a notice signed by the Registrar stating that the company is restored, is registered under the Act. A company so restored shall be deemed to have continued in existence as if it had not been removed from the Register.²

[18] I am satisfied that this application is properly brought and that Millennium is empowered to apply. At the time Parekura was removed from the Register,

Millennium was a shareholder and thus by virtue of s 329(2)(a)(i) is qualified to make an application under s 329(1).

[19] Furthermore, in terms of s 329(1)(a)(iii), I am satisfied that at the time Parekura was removed from the Register it was in liquidation. Those prerequisites permit me to make the order sought.

[20] However, I would have been prepared, in any event, to have restored Parekura because I am satisfied that it is just and equitable to do so in terms of s 329(1)(b). My reasons follow. However, before examining those reasons it is necessary to consider a number of other matters raised by counsel.

[21] Although Mr Pamatatau, for the former liquidator, takes a neutral position in relation to the application, he raises two issues which he submits are matters which the Court should be made aware of. I shall deal with each of these in turn. In doing so I would however observe that to the extent it is necessary to comment, I am completely satisfied the liquidator diligently and lawfully undertook his duties and, more particularly, did not prematurely complete the liquidation. Indeed, as I understood the submissions of counsel, this is not disputed.

[22] The two matters raised by counsel relate, first, to what I shall describe as the

[23] In the liquidator’s final report the substantive proceedings were described as being alive and still before the Court. However, the litigation with Mr Hawken had been concluded some years earlier.

[24] This comment was made in error. However, it is not an error which, in my view, is material. Neither does it affect the matters on which I must decide.

[25] The second issue relates to the Property, the registered proprietor of which remains as Parekura.

[26] I agree with Mr Rooke that any concerns raised by the former liquidator that should Parekura be restored to the Register it could still continue to operate as it did

before it was placed in liquidation, is not a matter of concern. Because the Property was never an asset in the liquidation, having been disclaimed by the liquidator, it cannot be of interest to the former liquidator.

[27] According to s 249 of the Act, a liquidator ceases to hold office on completion of a liquidation and the liquidation is complete when the liquidator files a final report, final accounts and the liquidator’s final statement.

[28] The liquidation was for the purpose of recovering funds under the costs order made in favour of Mr Hawken. That sum was recovered by the liquidator together with his costs.

[29] There is thus is no reason why the liquidator’s final report should be reversed or for there to be an order made for termination of the liquidation under s 250 of the Act, given the operation of law under s 249. As previously noted, there is no suggestion that the former liquidator did not diligently undertake his duties or that he prematurely completed the liquidation.

[30] This Court dealt with a similar situation in In the matter of Dewes Holdings Ltd, Greenlees.³There the final report of the liquidator had been filed in anticipation that a final distribution of the assets of the company was underway. However, the conveyancing of the land by discharge of mortgage and transfer of title had not been completed. The title to the land remained in the name of the company when it was struck off the Register. This Court considered it appropriate to deal with the

application by way of originating application, dispense with service and considered the application on the papers. The Associate Judge considered that in all the circumstances it was appropriate to restore the company to the Register to permit the transfer of land as originally intended.

[31] In the present case it was intended that the Property would be dealt with by Parekura and the mortgagee but the liquidator’s final report frustrated those intentions when it triggered the removal of the company from the Register. Mr Rooke properly accepted that Parekura’s director and/or shareholders should

have objected to the proposed removal at the time but did not do so. He also accepted that the mortgagee could have taken steps at the time but failed to do so.

[32] However, for the mortgagee to execute its security, its only remedy is if Parekura was restored to the Registrar. I agree with Mr Rooke that the present situation is unsatisfactory. It can only be resolved by restoration of the company to the Register.

[33] I am satisfied that that is an appropriate course and that to do so is just and equitable. There is no prejudice to any party by making the orders sought. This is particularly so given that the Property was disclaimed by the former liquidator and was never an asset in the liquidation.

[34] I am also fortified in that view having regard to the purpose of the liquidation. It was only ever for the purpose of recovering the funds under the costs order made in favour of Mr Hawken. Those funds were recovered together with costs.

[35] Neither can I see any reason why the liquidator’s final report should be reversed or for there to be an application for termination of the liquidation under s 250.

[36] Accordingly, I make an order under s 329(1) of the Act that Parekura be restored to the Register.

High Court of New Zealand Decisions

Millenium Securities Limited v Parekura Bay Vineyard Estates Limited (in liquidation) [2016] NZHC 1302 (16 June 2016)