Elias v Martin Aircraft Company Limited

[2021] NZHC 101

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2020-409-635

[2021] NZHC 101

UNDER

Companies Act 1993

IN THE MATTER

of the liquidation of MARTIN AIRCRAFT COMPANY LIMITED

BETWEEN

RAN ELIAS

Plaintiff

AND

MARTIN AIRCRAFT COMPANY LIMITED

Defendant

Hearing:	Determined on the papers
Counsel:	J H Stevens and S J Leslie for the Plaintiff
Judgment:	9 February 2021

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 9 February 2021 at 12.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 9 February 2021

ELIAS v MARTIN AIRCRAFT COMPANY LIMITED [2021] NZHC 101 [9 February 2021]

Introduction

[1]    Martin Aircraft Company Limited (the defendant company) ceased carrying on business in or about February 2019. The plaintiff, Ran Elias, is the sole remaining director of the defendant company. The plaintiff has sought an order that the defendant company be liquidated. To this end, the plaintiff, who is based in Australia but who has Wellington based solicitors, has applied to the court for orders transferring the proceeding from the Christchurch High Court to the Wellington High Court.

[2]The plaintiff applies for the proceeding to be transferred on the grounds that:

(a)he is the sole director of the defendant company;

(b)his solicitors are located in Wellington (and the cost to the plaintiff will be increased if they are required to travel to Christchurch);

(c)three quarters of the defendant company’s shareholders are largely based outside New Zealand;

(d)owing to restrictions in the defendant company’s constitution, it has no board with the ability to change its registered office;

(e)it is not anticipated that the liquidation application will be opposed or defended; and

(f)in all the circumstances, transfer of the proceeding to the High Court at Wellington would be more convenient to the parties.

[3]    The plaintiff has sought orders under rr 5.1(5) and 31.4(5) that the proceeding be transferred to the High Court at Wellington, and under r 31.6(2) that the place for the hearing of the proceeding is the High Court at Wellington.

Principles applicable to transfer of proceedings

[4]Rule 5.1(5) provides:

(5)If it appears to a Judge, on application made, that a different registry  of the court would be more convenient to the parties, he or she may direct that the statement of claim or all documents be transferred to that registry and that registry becomes the proper registry.

[5]    The onus is on the applicant to establish that another registry is more convenient, but it is not especially difficult to discharge.1 In Houghton, the counsel and solicitors for the majority of the parties were based in Auckland. The Judge accepted the fact counsel were Auckland-based was a measure of convenience translating into aggregate cost, but considered the geographical base of instructing solicitors to be much less relevant. The application to transfer the proceeding to Auckland was declined as the cost savings achieved by transfer were deemed to be outweighed by the convenience and efficacy of continuing the close management and control of the proceeding (which already had an extensive procedural history) in the Christchurch registry and thereby expeditiously achieving a fair and just outcome.2

[6]    Considerations of convenience do not simply mean the convenience of one party or the court but rather the convenience having regard to the case in all its bearings.3 The rule requires not only an assessment of physical, financial and any other matters affecting convenience, but also the overall justice of the case.4

[7]    Rule 5.1(5) assumes that a proceeding has been filed in its proper registry. It is to be noted that transfer on the basis of convenience is not available before the proceeding is commenced.5

[8]Counsel for the plaintiff also refers to r 31.4(2). Rule 31.4 provides:

(1)Despite rules 5.1(1) to (3) and 5.25, the proper registry of the court for the purposes of the filing of a statement of claim under rule 31.3 is—

(a)the registry of the court in the town where, or the registry of the court in the town nearest to which, the defendant company's registered office is situated; or

1      Houghton v Saunders HC Christchurch CIV-2008-409-348, 7 October 2011.

2 At [53]. See also [14]-[36] for recital of the matter’s considerable procedural history.

3      Consumer Council v Pest Free Service [1978] 2 NZLR 15 (CA) at 19.

4      Morgan v Sovereign Assurance Co Ltd [2013] NZHC 1195, (2013) 21 PRNZ 593 at [31].

5      Andrew Beck and others (eds) McGechan on Procedure (looseleaf ed, Brookers) at [HR5.1.18(2)];

Vine-Tech Contracting Ltd v South River Ltd [2016] NZHC 420 at [16].

(b)if the defendant company does not have a registered office, the registry of the court in the town where, or the registry of the court in the town nearest to which, the defendant company's principal or last known place of business is or was situated.

(2)This rule does not limit rule 5.1(4) and (5).

[9]    Accordingly, transfer under r 5.1(5) of an application to liquidate a company is confirmed by r 31.4(2).

Application of principles to grounds advanced by the plaintiff

[10]   Consideration of what would be more convenient to the parties requires “having regard to the case in all its bearings”. The primary ground advanced by the plaintiff regarding the convenience test in r 5.1(5) is the increased cost associated with requiring his Wellington-based solicitors to travel to Christchurch for the liquidation proceeding.

[11]   Without more, the cost above to the plaintiff of his solicitors travelling to Christchurch would likely be insufficient to discharge the onus under r 5.1(5). However, the plaintiff is the sole remaining director of the defendant company and without the practical ability to appoint additional directors. As a result, under the company’s constitution, the plaintiff  has  limited  authority  to  act  on  behalf  of  the company.

[12]   Shareholders have standing to defend a liquidation application.6 The fact three quarters of the defendant company’s shareholders are based outside New Zealand means a transfer of proceedings from Christchurch to Wellington will be of limited relevance to the majority of shareholders. As the proceeding has only just been commenced, it does not have an extensive procedural history or significant legal complexity as in Houghton that necessitates continued close management and control of the proceeding in the Christchurch registry.

[13]   The cost savings to be achieved by transfer and the lack of other directly affected parties means no apparent detriment arises from a transfer of proceedings.

6      High Court Rules 2016, r 31.5(2).

[14]   Therefore, having regard to  the  case  in  all  its  bearings,  I  am  satisfied  the plaintiff has established that it would be more convenient to the parties for the proceeding to be transferred to the Wellington registry. I so order.

Associate Judge Lester

Solicitors:
Bell Gully, Wellington