DDL Homes Limited

[2023] NZHC 1916

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-1072

[2023] NZHC 1916

UNDER

Section 329 of the Companies Act 1993

IN THE MATTER

of an application to restore DDL HOMES LIMITED to the New Zealand Register of Companies

Plaintiff

AND

AUCKLAND COUNCIL

Applicant

Hearing:

On the papers

Appearances:

D J Collins for the Applicant

A Kashyap for DDL Homes Limited and Baljit Kaur Dheil

Judgment:

21 July 2023

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 21 July 2023 at 4 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

Meredith Connell, Auckland Kashyap Law, Auckland

RE DDL HOMES LIMITED [2023] NZHC 1916 [21 July 2023]

Introduction

[1]    Auckland Council has filed an originating application for orders to restore DDL Homes Limited to the New Zealand Register of Companies.

[2]    The grounds for the application are that at the time DDL Homes Limited was removed from the register, the company was a party to legal proceedings. I set out the relevant provisions below before considering the application.

Relevant legal principles

[3]    The Companies Act 1993 provides for the removal and the restoration of companies to the register. As the Court of Appeal states in Commissioner of Inland Revenue v Commercial Management Ltd:1

… the provisions concerning removal of a company from the register are designed to ensure that a company is only removed if there is no good reason for it to continue in existence. The controllers of the company and other interested persons are given the opportunity to object to removal for a range of reasons. But there can be cases where a company is removed from the register as a result of an error or oversight, or where circumstances change and it becomes apparent with the benefit of hindsight that there were good reasons for the company to continue in existence. In such cases, a company can be restored to the register.

[4]    Section 328 provides for the circumstances in which the Registrar may restore a company to the register and s 329 where an application must be made to the Court. Section 329 provides:

329 Court may restore company to New Zealand register

(1)The court may, on the application of a person referred to in subsection (2), order that a company that has been removed from the New Zealand register be restored to the register if it is satisfied that,—

(a)at the time the company was removed from the register,—

(i)the company  was  carrying  on  business  or a  proper reason existed for the company to continue in existence; or

(ii)the company was a party to legal proceedings; or

(iii)the company was in receivership, or liquidation, or both; or

1      Commissioner of Inland Revenue v Commercial Management Ltd [2019] NZCA 479 at [29].

(iv)the applicant was a creditor, or a shareholder, or a person who had an undischarged claim against the company; or

(v)the applicant believed that a right of action existed, or intended to pursue a right of action, on behalf of the company under Part 9; or

(b)for any other reason it is just and equitable to restore the company to the New Zealand register.

(1A) In considering whether to restore a company to the register on the ground referred to in subsection (1)(a)(i) or (b), the court must have regard to the reasons for the company’s removal and whether those grounds existed at the time of removal or exist at the time of the hearing of the application.

(2)The following persons may make an application under subsection (1):

(a)any person who, at the time the company was removed from the New Zealand register,—

(i)was a shareholder or director of the company; or

(ii)was a creditor of the company; or

(iii)was a party to any legal proceedings against the company; or

(iv)had an undischarged claim against the company; or

(v)was the liquidator, or a receiver of the property of, the company:

(b)the Registrar:

(c)with the leave of the court, any other person.

(3)Before the court makes an order restoring a company to the New Zealand register under this section, it may require any provisions of this Act or any regulations made under this Act, being provisions with which the company had failed to comply before it was removed from the register, to be complied with.

(4)The court may give such directions or make such orders as may be necessary or desirable for the purpose of placing the company and any other persons as nearly as possible in the same position as if the company had not been removed from the New Zealand register.

Can Auckland Council apply to restore DDL Homes Limited to the register?

[5]    Auckland Council has filed an affidavit of Christopher Brooks in support of its application confirming that the Council was a party to legal proceedings against DDL Homes Limited and its sole director, Baljit Kaur Dheil (Ms Dheil), under the Resource Management Act 1991 (RMA) at the time it was removed.

[6]    Section 329(2)(a)(iii) provides that a party to any legal proceedings against the company may bring an application to restore and so Auckland Council has satisfied this aspect of the application.

Should an order restoring the company to the register be made?

[7]    The Court may order that a company be restored if satisfied that the company was a party to legal proceedings at the time it was removed, pursuant to s 329(1)(a)(ii) as set out above. Auckland Council’s evidence confirms DDL Homes Limited was a party to proceedings.

[8]    Auckland Council has arranged service of the application and the supporting affidavit of Mr Brooks on the following persons:

(a)Ms Dheil;

(b)Secretary to the Treasury;

(c)Registrar of Companies; and

(d)Five registered secured creditors of DDL Homes Limited recorded on the Personal Properties Securities Register.

[9]    Counsel for Ms Dheil has confirmed her consent to the restoration of DDL Homes Limited.

[10]   The Secretary of Treasury and Registrar of Companies have both confirmed receipt of the proceedings and that they will abide the decision of the Court. No documents have been filed on behalf of any of the creditors served with the application.

[11]   In the absence of opposition and with the consent of Ms Dheil I consider it is appropriate for an order for restoration to be made.

Should any ancillary orders be made?

[12]   Section 329(3) provides that before making a restoration order, the Court may require any provisions of the Companies Act with which the company had failed to comply before it was removed to be complied with.

[13]   The joint memorandum filed on behalf of Auckland Council and Ms Dheil does not confirm the reason for removal from the register. It appears likely that it is for failure to file annual returns as the list of documents filed for DDL Homes Limited with the companies register, attached to Mr Brook’s affidavit, shows that the last annual return filed on behalf of DDL Homes Limited was on 24 November 2021.

[14]   I consider that it is necessary to make an order for any outstanding annual returns to be filed in this case to avoid subsequent removal and so include that order below.

Orders

[15]I order:

(a)DDL Homes Limited is restored to the New Zealand Companies Register pursuant to s 329(1)(a)(ii) of the Companies Act 1993; and

(b)any outstanding annual returns for the years 2021, 2022 and 2023 (if due) are to be filed by 18 August 2023.

Associate Judge Sussock