Donnithorne v Registrar of Companies

[2021] NZHC 3172

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2021-409-000537

[2021] NZHC 3172

UNDER

the Companies Act 1993 and Part 19 of the High Court Rules 2016

IN THE MATTER

of an application that Times Seven Investments Limited be restored to the Register of Companies

BETWEEN

HELLEN MARGARET DONNITHORNE and PAUL DAMIAN BRADLEY

Applicants

AND

THE REGISTRAR OF COMPANIES

First Respondent

AND

THE SECRETARY TO THE TREASURY

Second Respondent

Hearing:	On the papers
Counsel:	J E Bayley for Applicants
Judgment:	24 November 2021

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 24 November 2021 at 4.30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

DONNITHORNE v THE REGISTRAR OF COMPANIES [2021] NZHC 3172 [24 November 2021]

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

(a)granting leave under r 19.5 of the High Court Rules 2016 for this proceeding to be brought under pt 19 by way of originating application; and

(b)that pursuant to s 329(1)(a)(i) and (b) of the Companies Act 1993 (the Act), Times Seven Investments Ltd (Times Seven) (company number 857079) be restored to the New Zealand Register of Companies.

The facts

[2]        The applicants were the only directors of Times Seven when it was removed from the Register of Companies. They were also shareholders of the company at that time. The other shareholders consent to this application.

[3]        The applicants have standing to make this application under s 329(2)(a)(i) of the Act.

[4]Times Seven was incorporated on 16 May 1997.

[5]        The decision to have Times Seven removed from the Register was a deliberate one and prior to this occurring the Inland Revenue Department was notified and had no objection to that course of action. The Registrar of Companies gave notice of the request to remove Times Seven from the Register of Companies on 17 June 2021 in the New Zealand Gazette and it was removed from the Register on 23 July 2021.

[6]Times Seven was not trading and had no assets, no creditors and no liabilities.

[7]        The applicants are also the only directors of a company called Bon Accord Ltd (Bon Accord). Bon Accord is the registered proprietor of a property at Akaroa and has entered into an agreement to sell the property to an arms-length purchaser with settlement due 30 November 2021.

[8]        In requesting that Times Seven be removed from the Register of Companies the applicants overlooked that it held a second mortgage over Bon Accord’s property that will need to be discharged to allow the sale to proceed. There are no monies secured by the mortgage.   If Bon Accord is not in a position to settle the sale on     30 November 2021 it has a potential liability for penalty interest and additional legal and other costs.

[9]        The applicants have made this application to the Court as upon initiating an application to the Registrar of Companies under s 328 of the Act, they were advised that process will take until 17 December 2021, well after the settlement date of the proposed sale by Bon Accord.

[10]      The Registrar of Companies and the Secretary to the Treasury consent or do not oppose the application.

Discussion

[11]      This is plainly an appropriate case to grant leave to proceed by way of originating application under r 19.5 of the High Court Rules.1

[12]      I also consider that the grounds for making an order restoring the company to the Register are made out. Under s 329(1)(a)(i) Times Seven had a proper reason to continue in existence when it was removed from the Register, namely, to comply with its obligation to provide a discharge of its mortgage. I also consider the application is justified on the just and equitable ground under s 329(1)(b). I have had regard to the principles in Commissioner of Inland Revenue v Commercial Management Ltd.2 The mortgage was simply overlooked and to refuse to restore Times Seven would delay the sale of Bon Accord’s property and lead the parties to incur losses for no reason. There are no creditors who are affected by the application, nor is there any objection to the application by the respondents. There is no suggestion that the application is contrary to the public interest or that the application is not pursued for genuine reasons.

1      Wallace v Assured Systems New Zealand Ltd [2018] NZHC 713.

2      Commissioner of Inland Revenue v Commercial Management Ltd [2019] NZCA 479 at [32] and [61] – [63].

Result

[13]      Under r 19.5 of the High Court Rules, I grant leave to commence this proceeding under pt 19.

[14]      I make an order restoring Times Seven Investments Ltd to the Register of Companies.

[15]I reserve leave to apply further for any ancillary orders that may be required.

O G Paulsen

Associate Judge

Solicitors:

Rhodes & Co, Christchurch