89 Courtenay Place Limited v Portland Wines Limited

[2016] NZHC 158

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2016-485-26 [2016] NZHC 158

UNDER	the Companies Act 1993
IN THE MATTER OF	the liquidation of Portland Wines Ltd
BETWEEN	89 COURTENAY PLACE LIMITED Plaintiff
AND	PORTLAND WINES LIMITED Defendant

On the Papers
Judgment:	12 February 2016

JUDGMENT OF ASSOCIATE JUDGE SMITH

[1]      An application has been filed on behalf of the plaintiff for a review of a decision by the registrar to decline to accept for filing a liquidation proceeding which was presented for filing on 16 December 2015.

[2]      The application for liquidation was submitted for filing by a director of the plaintiff, on or about 16 December 2015.   The documents were rejected by the registrar,  on  the  basis  that  an  individual  is  not  entitled  to  represent  and  file documents on behalf of a company.

[3]      The decision to reject the documents submitted for filing was immediately challenged by Mr Gilchrist, who appears to be a director of the plaintiff.  In an email dated 16 December 2015 Mr Gilchrist asserted that “HC Rule 31.3 and Form C1 do not appear to restrict filing to a solicitor.  We will use a solicitor to appear at any

hearing but we are just trying to save costs by filing the claim directly.”

89 COURTENAY PLACE LIMITED v PORTLAND WINES LIMITED [2016] NZHC 158 [12 February 2016]

[4]      Mr Gilchrist’s 16 December 2015 email did not persuade the registrar to take any  contrary  view.    On  18  January  2016  the  proceeding  was  re-filed.    The statement of claim is unsigned, and states that it is filed “by the plaintiff”.   No solicitor for the plaintiff is nominated in the body of the document, although Mr Chiu of Macalister Mazengarb is named on the backing sheet of the document as the solicitor acting.   The notice of proceeding filed with the statement of claim on 18

January 2016 is signed by a director of the plaintiff. Again, Mr Chiu’s name appears

on the backing sheet as the solicitor acting.

[5]      On  28  January  2016  a  senior  deputy-registrar,  acting  as  registrar  in accordance with s 28(2) of the Judicature Act 1908, sent an email to Mr Chiu noting that the statement of claim in the liquidation proceeding filed on 18 January 2016 did not comply with s 288(1) of the Companies Act 1993.   That section provides that where a plaintiff in a liquidation proceeding wishes to rely on failure to comply with a statutory demand, the liquidation proceeding must be filed within 30 working days after the last date for compliance with the demand.   In this case, the proceeding would have had to be filed by 12 January 2016.  As such, the plaintiff could not rely on  failure  to  comply  with  the  statutory  demand  as  a  ground  supporting  the liquidation application.

[6]      The deputy-registrar’s email dated 28 January 2016 enquired whether the liquidation proceeding had been served, and advised that if the proceeding had not been served the matter would be removed from the 1 March 2016 Court list and the plaintiff would need to begin the process again.

[7]      There  was  further  email  correspondence  between  Mr  Gilchrist  and  the deputy-registrar between 1 February 2016 and 4 February 2016.  In an email dated 2

February 2016 the deputy-registrar confirmed her view that the decision to reject the documents  in  December  2015  was  correct,  as  a  solicitor  is  required  to  file High Court documents on behalf of a company.  She referred to High Court r 5.36, relating generally to authority to file documents, and to the statement on that rule in

the McGechan on Procedure commentary that:1

1      McGechan on Procedure (looseleaf ed, Brookers) at [HR5.36.02].

Where proceedings are commenced by a corporation they may only be filed by a solicitor on behalf of the corporation.

[8]      As the proceeding had not been served by the date of her 2 February 2016 email, the deputy-registrar advised that the matter would be removed from the list on

1 March 2016.

[9]      Mr Gilchrist was not satisfied with that response, and on 4 February 2016 he filed an application without notice for review of the registrar’s decision.   The application was purportedly filed by Mr Gilchrist on behalf of the plaintiff company. It is not signed by a solicitor, and there is no reference to a solicitor on the backing sheet or in the body of the application.

[10]     The relief sought by Mr Gilchrist is:

Pursuant to High Court Rules 2.11(1)(b) the plaintiff seeks:

(a) review by a Judge of the decision by the registrar that applications for liquidation of a company must be filed by a solicitor;

(b) any resulting order from the Judge that he or she thinks just in relation to this application and the related proceedings

[11]     Rule 2.11 of the High Court Rules materially provides:

2.11     Review of Registrar's decision

(1)       An affected party to a proceeding or an intended proceeding may apply to a Judge by interlocutory application for a review of any of the following:

(a)      a Registrar's exercise of jurisdiction:

(b)      a Registrar's refusal to file a document tendered for filing:

(c)      a Registrar's refusal to perform a duty placed on him or her under these rules.

(2)      The Judge may, on review, make any orders he or she thinks just.

…

Decision

[12]     I am satisfied that the registrar was correct in rejecting the documents.

[13]     The general rule, as stated recently by the Court of Appeal in Commissioner of Inland Revenue & Ors v Chesterfields,2   is that a company must be represented by a solicitor at all stages of the proceeding. This includes the initial procedure of filing documents.   The requirement for a solicitor to represent a company during legal proceedings is implicit (rather than explicit) in the High Court Rules,3 and dates back to 1984, when it was expressed by the Court of Appeal in Re G J Mannix.4

[14]     The Courts have held that there are sound policy reasons why a solicitor, rather than an officer of a company, should act for the company in commencing and continuing civil litigation. Those reasons include:

(a)      A company is not a natural body and may have a number of officers, each with their own individual concerns and interests.5   A solicitor is ethically constrained to represent the company’s interests, unlike an individual officer who seeks to represent it.

(b)Solicitors recognise the duties and responsibilities that are owed to the Court and to the defendant in the conduct of litigation, and are less likely to require indulgences in the rules of procedure, or to use Court processes for vexatious purposes.

(c)      The Court must have a solicitor on the record, as it cannot exercise its disciplinary powers over a company.6

[15]     The courts do have a discretion to depart from the general rule when there are

“exceptional circumstances”,7 but there is nothing exceptional about this case.

2      Commissioner of Inland Revenue & Ors v Chesterfields [2013] NZCA 53 at [33].

3      I refer particularly to the rules (rr 5.36-5.43) in sub-part 7 of Part 5 of the High Court Rules, as discussed in McGechan on Procedure (looseleaf ed, Brookers) at [HR5.36].

4      Re G J Mannix [1984] 1 NZLR 309 (CA): “a company has no right to be represented in the

conduct of a case in court except by a barrister” at 310 per Cooke J.  Cooke J also noted at 311 that “[t]here is a cognate rule that, apart from statutory exceptions, a corporation has no right to bring or carry on proceedings in a Court except by a solicitor.   This refers to the filing of documents – writs, statements of defence, notices of appeal, etc…[t]here is no express New Zealand equivalent [of the English rule of procedure which expressly precludes corporations from filing court documents except by a  solicitor] in [the forerunner of the New Zealand High Court Rules], but the general understanding is that the English rule embodies the former practice and that the New Zealand practice is the same.”

5      Re G J Mannix above n 4, at 315 per McMullin J.

6      Commissioner of Inland Revenue & Ors v Chesterfields, above n 2 at [34].

[16] Mr Gilchrist may not have fully appreciated that a company is deemed in law to be a separate legal “person” from its directors and shareholders. That separate legal statutes provide advantages for the individual shareholders, as they will generally not be personally liable for the company’s debts (beyond the amount of share capital they have agreed to subscribe). But creating a company as a separate legal person also has consequences, and one of them is that filing Court documents and representing the company in Court is generally the preserve of solicitors and barristers qualified under the Lawyers and Conveyancers Act 2006.

[17]     For the avoidance of any doubt, I add that the decision by the registrar to reject the documents was not a decision that “applications for liquidation of a company must be filed by a solicitor”, as suggested in the purported review application.  There is nothing to prevent an individual from filing an application for liquidation of a company.  The defect in the present case lies in the purported filing of High Court documents on behalf of a company by someone who had no right to act on the company’s behalf in so doing.

[18]     The proceeding as re-filed on 18 January 2016 appears to contain the same deficiency, namely that it has purportedly been filed on behalf of a corporation by someone who is not a solicitor.  If the plaintiff wishes to proceed with a liquidation claim, a fresh proceeding will need to be filed by a solicitor on its behalf.

[19]     For the foregoing reasons, Mr Gilchrist’s purported application for review is

dismissed.

Associate Judge Smith

7      A departure occurred in Lynskey v Dorley Holdings, (1988) 2 PRNZ (HC), where the lay director of a defendant company was granted leave to represent the defendant personally. However, the situation was quite different from the present, in that it was an application in Chambers of a relatively narrow compass.