Ballantyne Trustees Limited v Registrar of Companies

[2013] NZHC 3271

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV 2011-409-2499 [2013] NZHC 3271

UNDER  The Companies Act 1993

IN THE MATTER             of GOOSE BAY RANCH HOLDINGS LIMITED (IN LIQUIDATION)

BETWEEN  BALLANTYNE TRUSTEES LIMITED First Plaintiff

KEUNG INVESTMENTS LIMITED Second Plaintiff

SENG BOU KEUNG AS TRUSTEE OF THE KEUNG FAMILY TRUST

Third Plaintiff

ANDTHE REGISTRAR OF COMPANIES Defendant

Hearing:                   9 December 2013

Counsel:                  M J Wallace for Plaintiffs

No appearance for Defendant (abiding outcome) Judgment:     9 December 2013

ORAL JUDGMENT OF THE HON JUSTICE KÓS

[1]      This is an uncontested application by the plaintiffs for orders:

(a)       that Goose Bay Ranch Holdings Limited in liquidation (the Company)

not be removed from the Register of Companies; and

(b)      recalling of the liquidators’ final report dated 30 September 2011.

[2]      The Company, as it name suggests, owns land at Goose Bay near Kaikoura. The  first  plaintiff  Ballantyne  Trustees  Limited  is  a  minority  shareholder  in  the

BALLANTYNE TRUSTEES LIMITED v THE REGISTRAR OF COMPANIES [2013] NZHC 3271 [9 December 2013]

Company.  The third plaintiff, Mr Keung, is trustee of the Keung Family Trust.  It is said to be a creditor of the Company.  The second plaintiff is a company associated with the third plaintiff.  It is not clear to me why the second plaintiff is a participant in this proceeding.

[3]      The application is uncontested because the Registrar of Companies (the only party served with the application) abides the decision of the Court.

[4]      The  reason  for  the  bringing  of  the  application  is  that  the  first  plaintiff (supported by the other plaintiffs) intends to bring proceedings against the mortgagee of the principal asset of the Company, 314 hectares of land at Goose Bay, Kaikoura. There is an affidavit from Mr Keung which sets out a number of complaints about the way in which the mortgagee conducted a mortgagee sale of that asset.   The essence of the complaints is that the property was badly marketed and sold at a significant  discount  on  its  true  value.    It  is  not  necessary for  me  to  detail  the complaints further here.  The claim is not one the liquidators are willing to undertake on the Company’s behalf.  But I am satisfied that a reasonable basis exists for at least the bringing of a claim against the mortgagee.   That is not to express any view whatever as to the merits of the claim.

[5]      Any claim in this case against the mortgagee would have to be brought by the Company (which is in liquidation), unless the Court grants leave to a shareholder (such as the first plaintiff) to bring derivative action under s 165 of the Companies Act 1993.  There is a live question here as to whether such leave would be granted given the decisions of this Court in Hedley v Albany Power Centre Limited (In Liquidation)1  and Buxton v Mainline Contracting Limited (In Liquidation).2     The essence of those decisions is that where a company is  in liquidation, the more appropriate course is to give directions to the liquidators under s 284.  Thus the first

plaintiff faces a choice of either proceeding under s 165 or s 284.  Which course may be taken is not for me to determine today.  I am simply satisfied that there is for the purposes of s 321(1)(e) a sufficient basis for pursuit of a right of action under s 165.

That does not in my view necessitate my considering whether a Court separately

1      Hedley v Albany Power Centre Limited (In Liquidation) [2005] 2 NZLR 196.

2      Buxton v Mainline Contracting Limited (In Liquidation) HC Auckland CIV 2010-404-1224,

22 October 2010.

would grant such leave formally or instead prefer the s 284 route.  Only a limited merits assessment is required under s 321(1).

[6]      Accordingly I am prepared to grant the first order sought.  But I do so on a strictly time-limited basis.  The order will expire four months from today unless prior to then one of the following three steps has occurred:

(a)       an order has been made under s 165;

(b)      an order has been made under s 284; or

(c)       a further order has been made under s 321 extending the present order. [7]     I  am  not  prepared  to  grant  the  second  order  sought,  for  recall  of  the

liquidator’s  report,  for  two  reasons.     First,  it  is  unnecessary.     Secondly,  the

liquidators were not served with the application. [8]    Costs are not sought.

Stephen Kós J

Solicitors:

Kearney & Co, Christchurch for Plaintiffs