First NZ Properties Limited v Registrar of Companies

[2020] NZHC 359

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2019-442-66

[2020] NZHC 359

UNDER

Section 329 of the Companies Act 1993

IN THE MATTER OF

an application for an order that Inlandia Limited be restored to the Companies Register

BETWEEN

FIRST NZ PROPERTIES LIMITED

First Applicant

AND

SUPERSTORE PROPERTIES LIMITED

Second Applicant

AND

REGISTRAR OF COMPANIES

First Respondent

AND

NEIL ALLAN BARNES

Second Respondent

Hearing:

27 February 2020

Appearances:

C Lange for Applicants

No appearance for Respondents

Interim Judgment:

3 March 2020

INTERIM JUDGMENT OF ASSOCIATE JUDGE LESTER

This interim judgment was delivered by me on 3 March 2020 at 12.30pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 3 March 2020

FIRST NZ PROPERTIES LIMITED v Registrar of Companies and Barnes [2020] NZHC 359 [3 March 2020]

[1]                 The applicants apply to restore Inlandia Ltd (“the company”) to the Companies Office Register.

[2]                 Mr Neil Barnes was the sole director and shareholder of the company at the time of its removal from the Register.

[3]                 The company was incorporated on 16 May 2006 but removed from the Register in 2017 on the basis that the company had ceased business.

[4]                 Mr Barnes was engaged as the Chief Executive Officer (“CEO”) of a company called Investment Services Ltd (“ISL”). ISL managed property assets held by the first and second applicants.

[5]                 During 2012 and November 2016 when Mr Barnes was engaged as CEO of ISL, Mr Barnes misappropriated from the applicants just over $1,000,000 and paid those monies into the bank account of the company. A great sum was  taken by     Mr Barnes from the applicants but not all paid to the company.

[6]                 The applicants only became aware of the misappropriation of funds after  June 2018.

[7]The applicants have judgment against Mr Barnes for the sums taken.

[8]                 This application is aimed at restoring the company to the Register and ultimately placing the company into liquidation so that enquiries can be pursued as to what became of the funds that were paid into the company.

[9]                 As directed by the Court, Mr Barnes was served with the application. He has filed a document opposing the application. He says that full judgment for the amounts he  took  has  already been  entered  against  him.  That  may well  be  the  case,  but a judgment against Mr Barnes does not amount to a judgment against the company, although given his dual role, it may well be that the judgments against Mr Barnes personally will form the basis of an issue estoppel against the company,  but on that  I say no more.

[10]             Mr Barnes asserts that no claim has ever been made against the company. I do not see that as material. The fact is the applicants have had to work through the detail of Mr Barnes’ defalcations that took place over many years. To suggest that such should stand against restoration when the applicants’ evidence is that the company received $1,000,000 of stolen money is not convincing.

[11]             The last point Mr Barnes raises is that s 10(d)(1) of the Companies Act 1993 requires that the director, where there is only one, reside in New Zealand. Mr Barnes was the sole director and he no longer resides in  New Zealand.  I raised this with  Mr Lange when the matter was called. It is a matter of which he is aware. I do not see this as a barrier to restoration of the  company as  to  do  so  would  mean  that Mr Barnes could frustrate restoration by simply staying overseas. That is an unattractive proposition.

[12]             Given the company received over $1,000,000 of the applicants’ funds that it was not entitled to, the applicants are a creditor of the company. The applicants therefore have standing to apply for restoration under s 329(2)(a)(ii) of the Companies Act 1993.

[13]             Hammond J in Re Saxpac Foods Ltd said that where there is opposition to restoration on the grounds that restoration would not be “just”, the person opposing must have a legitimate interest in the opposition.1 It is hard to see how Mr Barnes can have a legitimate interest in preventing a thorough review of a company into which he paid funds that he misappropriated.

[14]In Skeates v Bruce, Allan J said that the approach of Hammond J in Saxpac

was grounded on the notion that:

It is in the public interest that legal disputes be resolved on their merits through the courts, rather than be stifled on technical grounds.2

[15]At best, the point raised by Mr Barnes is a technical one.

1      Re Saxpac Foods Ltd [1994] 1 NZLR 605 (HC).

2      Skeates v Bruce [2008] NZCCLR 27 (HC) at [28].

[16]             I am satisfied that under s 329(1)(a)(iv), the applicants have an undischarged claim against the company and it is appropriate that it be restored to the Companies Office Register.

[17]             Accordingly, there is an order that Inlandia Ltd is restored to the Companies Office Register pursuant to s 329 of the Companies Act 1993. That order is subject to the following condition.

[18]             The  steps  to  be  taken  in  the  restoration  of  a  company,  as  set  out  in  Re Durweston Properties Ltd, require an application to restore to be brought to the attention of the Secretary of the Treasury.3 Mr Lange advised that step had not yet been taken.

[19]             The above order is to lie in Court until Mr Lange confirms that the Secretary of the Treasury does not wish to be heard in respect of the application.

[20]             Leave is reserved to apply further in the event that any issues arise in respect of the restoration.

Associate Judge Lester

Solicitors:
Raymond Donnelly & Co, Christchurch

3      Re Durweston Properties Ltd (1992) 6 NZCLC 67,854 (HC).