Commissioner of Inland Revenue v Interior Drywall Systems Limited (in liquidation)

[2018] NZHC 924

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2011-409-002594 [2018] NZHC 924

UNDER

the Companies Act 1993

AND

IN THE MATTER

of an application for orders restoring Interior Drywall Systems Limited to the Register and reversing the Liquidators’ final report

BETWEEN

COMMISSIONER OF INLAND REVENUE

Plaintiff

AND

INTERIOR DRYWALL SYSTEMS

LIMITED (in liq.) Defendant

Appearances:	G K Riach for Applicants
Judgment:	3 May 2018
(Determined on the papers)

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

(restoring a company to the register)

Introduction

[1]        Interior Drywall Systems Limited (the Company) was put into liquidation by Court order on 21 February 2012.

[2]        Malcolm Grant Hollis and Maurice George Noone were appointed the liquidators. In the course of the liquidation they pursued repayment of an overdrawn

COMMISSIONER OF INLAND REVENUE v INTERIOR DRYWALL SYSTEMS LIMITED (in liq.) [2018] NZHC 924 [3 May 2018]

account of a shareholder of the company. The shareholder was adjudicated bankrupt. The liquidators lodged a claim in his bankruptcy but no distribution followed.

[3]        The liquidators after realising all known available assets filed a final liquidators’ statutory report dated 5 February 2013. They requested that the company be removed from the Register of Companies.1

[4]The company was removed from the Register on 21 July 2014.

This application

[5]Mr Hollis and Wendy Ann Somerville apply for:

(a)an order under s 329(1) of the Companies Act 1993 restoring the company to the Register of Companies; and

(b)an order under s 284(1)(b) of the Act reversing the liquidators’ final report; and

(c)an order that Ms Somerville be appointed in place of Mr Noone as joint and several liquidator of the Company along with Mr Hollis.

The grounds of the application

[6]        The grounds of the application (established through evidence from Mr Hollis) are:

(a)matters occurred as summarised above;

(b)there has since the removal of the company from the Register been a realisation in the shareholder’s bankruptcy amounting to $266,418. The Official Assignee anticipates that there would be a distribution to the Company of approximately $37,000;

1      The Statutory Report being required under s 257(1) Companies Act 1993.

(c)in that event, after costs associated with this application and liquidators’ fees have been paid, there would likely be a 5 percent distribution to the Company’s preferential creditor, the Inland Revenue Department;

(d)it is accordingly in the interests of the preferential creditors of the company that the company be restored to the register and the completion of the liquidation reversed; and

(e)since the Company’s removal from the register, Mr Noone no longer takes appointments as a liquidator whereas Ms Somerville is available to take his place.

[7]        The Secretary of the Treasury has provided written confirmation that no objection is taken to the restoration of the Company to the Register.

The statutory regime

[8]        The statutory provisions referred to in the application represent together the appropriate regime to be applied to this application.

[9]        For the applicants, Mr Riach has referred to the judgment of the Court of Appeal in Registrar of Companies v Body Corporate 307730.2 The applicants in that proceeding came within the provisions of s 329(1)(a)(iv) in that they were persons who had undischarged claims against the struck-off company.

[10]      The Court of Appeal held (reversing a decision of the Associate Judge) that the filing of the liquidators’ final report had been an act of the liquidators and fell within the scope of the s 284(1)(b) power of reversal.3 The combined effect of a restoration and a reversal order is that the company is then restored to the Register, still in liquidation. The former liquidator resumes office, with the liquidation reinstated.4

2      Registrar of Companies v Body Corporate 307730 [2013] NZCA 659.

3      Registrar of Companies v Body Corporate 307730 at [16].

4      Registrar of Companies v Body Corporate 307730 at [16].

Decision

[11]     I apply the conclusions in the Registrar of Companies v Body Corporate 307730.

[12]      The distinct feature of this case is that with the retirement of one of the initial liquidators from this form of work it is expedient that he be replaced by Ms Somerville. The jurisdiction to make such a replacement order arises in s 284(1)(a) of the Act. Mr Hollis and Ms Somerville have provided their consents to their appointment.

[13]      In addition, Mr Hollis and Ms Somerville have provided details of their current remuneration rates which are appropriate.

Orders

[14]I order:

(a)Interior Drywall Systems Limited, previously registered company number 1762829 (the Company), is restored to the Register of Companies.

(b)The final report of the liquidators of the Company dated 5 February 2017 is reversed.

(c)Malcolm Grant Hollis and Wendy Ann Somerville are appointed liquidators of the Company in place of Malcolm Grant Hollis and Maurice George Noone and are allowed to exercise their powers individually pursuant to s 242 of the Companies Act 1993.

(d)The liquidators’ remuneration is fixed in accordance with the liquidators’ consent to act subject to s 284 of the Companies Act 1993.

Associate Judge Osborne

Solicitors:
Harmans, Christchurch