Global Cover Insurances Limited (in liquidation) v Mario

[2019] NZHC 2680

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2219

[2019] NZHC 2680

UNDER

the Companies Act 1993, ss 135-137 and Part 18 of the High Court Rules

BETWEEN

GLOBAL COVER INSURANCES LIMITED (IN LIQUIDATION)

First Plaintiff

VIVIAN JUDITH FATUPAITO
Second Plaintiff

AND

JIURIA REIJELI MARIO

Defendant

Hearing:	On the papers
Appearances:	J C Caird/S L Hawksworth for the Plaintiffs
Judgment:	22 October 2019

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 22 October 2019 at 11:00am

pursuant to Rule 11.5 of the High Court Rules.

…………………………………

Deputy Registrar

Solicitors:

Simpson Grierson (J C Caird/S L Hawksworth), Auckland, for the Plaintiffs

GLOBAL COVER INSURANCES LIMITED (IN LIQUIDATION) v JIURIA REIJELI MARIO [2019] NZHC

2680 [22 October 2019]

[1]                   The company in liquidation and the liquidator sue the director for breaches of duties under ss 135, 136 and 137 of the Companies Act 1993. The liquidator claims under s 301 of the Companies Act. The plaintiffs have applied for directions as to service, saying that the proceeding is under Part 18 of the High Court Rules 2016 (r 18.1(b)(iii)). They have applied for directions as to service because of rr 18.4 and 18.7.

[2]                   They propose service on the director and on nobody else. That is clear and obvious. I directly accordingly.

[3]                   It is not however clear that the plaintiffs had to apply for directions as to service in this case. In this decision I suggest that they did not have to. While there are many proceedings by liquidators against directors for breaches of duty, I do not see many applications for directions as to service. The proceedings still run smoothly. No difficulties arise because there has not been an application for directions as to service. In cases of claims by companies or liquidators against directors for breaches of duty, it would be unusual to require anyone else to be served, except the directors.

[4]Rule 18.4 says:

Commencement of proceedings

(1)A proceeding under this Part must be—

(a)commenced by statement of claim; and

(b)accompanied by an application for directions as to service and representation under rule 18.7.

…

[5]Rule 18.7 says:

Applications for directions as to service

(1)This rule applies when—

(a)the law requires the making of an application for directions as to service; or

(b)the plaintiff is in doubt regarding the persons on whom the statement of claim should be served; or

(c)an order is sought that any person represent any other person or class of persons who should be served; or

(d)the proceeding is under the Companies Act 1993 and is not a proceeding in the liquidation of a company or an application to set aside a statutory demand under section 290 of that Act; or

(e)the court directs that the plaintiff should apply to the court under this rule.

(2)The plaintiff must apply to the court without notice for directions as to service and for any orders for representation that may be required.

…

[6]                   Rule 18.7(2) requires an application for directions as to service only in some cases – those in cl (1). If a proceeding is outside r 18.7(1), no application is required. I take it that the plaintiffs assumed that the case came within r 8.7 (1)(d). It is not caught by any of the other cases. The proceeding is under the Companies Act, as the plaintiffs are enforcing duties under the act and the liquidator is suing under s 301. But the clause does not apply, because this is “a proceeding in the liquidation of a company”. There are limits to that term. Not every proceeding by a liquidator is a proceeding in the liquidation. A liquidator is required to take possession of and realise assets of the company and in doing so may need to take proceedings.1 Having control of the company, he or she may issue a proceeding in the name of the company to enforce the company’s rights to property.2 That may be a conventional claim enforcing common law or statutory rights, as in the typical claim on a shareholder’s overdrawn account. On the other hand claims under Part 16 of the Companies Act, as for example under the voidable transaction provisions or applications for directions under s 284, are proceedings in the liquidation. The liquidator’s claims under s 301 are under Part 16 and are a proceeding in the liquidation. Accordingly, r 18.7 does not require an application for directions as to service in this case.

1      Companies Act 1993, s 253.

2      Companies Act, s 260 and schedule 6(a).

[7]                   That leaves r 18.4. It would be odd to read the rule as applying absolutely, as requiring an application in every case, even if the application is not required under r

18.7. To ensure consistency with the other rule, the better interpretation of r 18.4 is to require an application under r 18.7, if that rule says that an application is required. An application for directions for service where none of the cases in r 18.7(1) apply is not an application under r 18.7 and therefore does not need to be filed under r 18.4.

[8]                   While I make an order directing service on the defendant, I record that for future cases like this, an application under r 18.7 is unnecessary.

……………………………...

Associate Judge R M Bell