Beneficial Insurance Limited v Registrar of Companies

[2017] NZHC 2437

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-002277 [2017] NZHC 2437

UNDER

Sections 321(1)(d) and 323 of the

Companies Act 1993

IN THE MATTER OF

an objection to the removal of a company from the Companies Register

BETWEEN

BENEFICIAL INSURANCE LIMITED Applicant

AND

THE REGISTRAR OF COMPANIES Respondent

Hearing:	30 October 2017
Counsel:	M Singh for the Applicant No Appearance of, or for the Respondent
Judgment:	30 October 2017

(ORAL) JUDGMENT OF EDWARDS J

Solicit ors  : Glaister Ennor, Auckland

BENEFICIAL INSURANCE LTD v THE REGISTRAR OF COMPANIES [2017] NZHC 2437 [30 October 2017]

Introduction

[1]      The applicant seeks orders:

(a)      Granting leave pursuant to High Court Rule 19.5 for this proceeding to be brought by way of originating application; and

(b)That Mordarth Ltd (No 1202416), (formerly known as MRL Finance Ltd), not be removed from the Companies Register pursuant to s 323 of the Companies Act 1993.

[2]      The Registrar of Companies has been served and abides the decision of the

Court.

Background

[3]      On 17 August 2017, the Registrar of Companies gave notice of its intention to remove Mordarth from the Register.  It appears that Mordarth had failed to file its annual return.

[4]      The applicant (Beneficial) objected to the removal of Mordarth from the Companies Register on 7 September 2017.  That was accepted and acknowledged by the Registrar on 11 September 2017, provided that the present application was made within 20 working days of that date.

[5]      This is not the first time that an application to prevent the removal of Mordarth Ltd has been made.  There have been numerous occasions where the applicant, or its predecessors, have applied to have Mordarth restored to the Companies Register or objected to its removal. Those occasions date back to 20 November 2008.

Grounds for the application

[6]      The application is made pursuant to s 321(1)(d) of the Companies Act 1993. That subsection allows a person to object to the removal of the company from the Register on the grounds that the person is a creditor or a shareholder or a person who has an undischarged claim against the company.

[7]      In this case, the orders are sought because the applicant is a creditor of Mordarth Ltd pursuant to a financing facility agreement. That agreement is currently in default with approximately $1,680,000 of the book value outstanding.

[8]      The applicant continues to exercise its security rights in order to reduce the sum owing and it may wish to take formal action against Mordarth in relation to those rights.  That will not, of course, be possible if Mordarth is removed from the Companies Register.

Decision

[9]      I am satisfied that this is an appropriate proceeding for leave to be granted to commence the proceeding by way of originating application.    Leave  is  granted accordingly.

[10]     I  am  also  satisfied  that  little  would  be  gained  by  directing  service  on Mordarth’s shareholders and directors given the persistent failure to comply with provisions of the Companies Act.

[11]     The grounds for the substantive order sought are made out.  However, I note that there does not appear to be any immediate plans to pursue enforcement action against Mordarth. There must come a time where companies that should no longer be registered are either liquidated or struck off, and the applicant makes its election in that respect.

[12]     I am prepared to grant the application on this occasion but caution that the applicant must take all reasonable steps to exercise its enforcement rights.  It cannot rely on the success of future applications designed to maintain registration in the absence of evidence regarding the enforcement of those security rights.

Result

[13]     As a result, I order that:

(a)       Leave is granted to the applicant to bring the application by way of originating application;

(b)      Mordarth Ltd shall not be removed from the New Zealand Register of

Companies; and

(c)       A sealed copy of this order shall be lodged with the Registrar of

Companies and shall be served on the registered office of Mordarth Ltd.

Edwards J