ANSON DEVELOPMENT LIMITED AND REGISTRAR OF COMPANIES

[2024] NZHC 2840

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-1457

[2024] NZHC 2840

UNDER

AND

the Companies Act 1993 and part 18 of the High Court Rules 2016

IN THE MATTER

of an application for orders pursuant to s 323 of the Companies Act 1993

BETWEEN

ANSON DEVELOPMENT LIMITED

Plaintiff

AND

REGISTRAR OF COMPANIES

Defendant

Hearing:

On the papers

Appearances:

D Tan for the Plaintiff

G Caro for the Defendant

Judgment:

1 October 2024

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 1 October 2024 at 3 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

Chen Sandhu Lawyers, Auckland

ANSON DEVELOPMENT LTD v REGISTRAR OF COMPANIES [2024] NZHC 2840 [1 October 2024]

Introduction

[1]                 The plaintiff has applied for an order pursuant to s 323 of the Companies Act 1993 that 59 Karaka Ltd (the Company) not be removed from the Companies Register on the basis that the plaintiff is a creditor of the Company.

[2]                 A joint memorandum has been filed on behalf of the plaintiff and the defendant, the Registrar of Companies, confirming that the orders are sought by consent.

[3]I briefly set out the background before making the orders sought.

Background

[4]                 The Company formed a limited partnership with investors on 15 December 2017 for the purposes of acquiring and developing 13 units on Karaka Street in Takapuna (the Development). In or about July 2018, the plaintiff joined as a limited partner by entering into a “Deed of Adherence” with the Company and Yang Zhang, one of the initial limited partners, for the purposes of admitting the plaintiff as a new limited partner and transferring Mr Zhang’s partnership interest in unit 10 to the plaintiff.

[5]                 Schedule B of the Deed of Adherence provides that the plaintiff is entitled to receive either a share of 43 per cent of the gross profit of the Company following completion of the Development, or $695,000, whichever is higher.

[6]                 The Development was completed towards the end of 2020. The Development’s cost summary prepared by the Company’s chartered accountant in 2021 discloses a gross profit of $1,398,000 on the sale of unit 10.

[7]                 The plaintiff submits that according to schedule B of the Deed of Adherence, the plaintiff is entitled to receive $695,000 because:

(a)the Deed of Adherence provides that the plaintiff is entitled to either a share of 43 per cent of the gross profit or $695,000, whichever is higher;

(b)43 per cent of the gross profit on unit 10 (see above at [6]) equals

$601,140; and

(c)       $695,000 is higher than $601,140.

[8]                 The plaintiff’s evidence is that so far it has received $190,000. On this basis the plaintiff submits $505,000 remains outstanding from the Company.

[9]The limited partnership was deregistered on 8 June 2023.

[10]              On 18 April 2024, the defendant issued a notice of intention to remove the Company from the Companies Register under s 318(1)(b) of the Companies Act. This section provides that the Registrar must remove a company from the register if the Registrar has reasonable grounds to believe that the company is not carrying on business and there is no proper reason for the company to continue in existence.

[11]              The plaintiff objected to the Company’s removal and delivered its objection to the defendant by letter on 21 May 2024. That same day, the defendant gave notice to the plaintiff pursuant to s 322(2) of the Companies Act accepting the objection but recording that the objection to removal was only temporary. The letter advised that if the plaintiff wished to stop the Company from being removed then they must make an application to the High Court for orders, either that the Company be put into liquidation or that the company not be removed from the register pursuant to s 323 of the Companies Act.

[12]              The plaintiff chose to file these proceedings, seeking an order that the Company not be removed from the register pursuant to s 323.

[13]              The defendant has not filed any notice of opposition and instead has signed the joint memorandum of counsel supporting orders being made.

Should an order be made that the Company not be removed?

[14]              Once an objection has been made, s 323 provides that the Court may make an order that the Company is not removed, if the objector can bring itself within one of

the categories in s 321(1)(d), (e) or (f).   The plaintiff submits that it comes within     s 321(1)(d) as it is a creditor of the Company.

[15]              Schedule B to the Deed of Adherence refers to the obligation to pay being owed to the “Contractor”, without defining who the Contractor is. In addition, the schedule refers to the alternative to payment of $695,000 being “43% of the gross profit of the Company in its capacity as General Partner” rather than 43% of the profit on Unit 10 as submitted by the applicant.

[16]              Furthermore, in correspondence with the Company, the plaintiff refers to being owed $300,000, rather than $505,000 as it now submits.

[17]                “Creditor” is defined for Parts 14, 15 and 16 of the Companies Act, but it is not defined for Part 17, relating to the removal of companies from the register.

[18]              In Part 16 “creditor” is defined to include a present or future contingent creditor.1

[19]              There appears no reason not to apply the same definition to creditors for the purposes of s 321(1)(d). Providing a prospective or contingent creditor with the right to object to the removal of a company will not determine any final rights in terms of the company. It will simply allow the contingent creditor to bring its claim.

[20]              Although the position of the plaintiff in terms of the Company in this case is not clear on the evidence filed, I am satisfied that the plaintiff has sufficiently established that it is a creditor of the company for the purposes of bringing the plaintiff within s 321(1)(d) of the Companies Act. An order that the company not be removed from the Register ought therefore to be made.

[21]              Finally I record that I do not consider the Company needs to be served with the application because before removing a company the Registrar is required to give notice to the company.2

1      Companies Act 1993, ss 240 and 303.

2      Sections 318(4) and 319.

Result

[22]              I order that 59 Karaka Ltd is not to be removed from the Companies Register pursuant to s 323 of the Companies Act 1993.

[23]By consent, costs are to lie where they fall.

Associate Judge Sussock