Grainger v Orion New Zealand

[2024] NZHC 1355

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2023-409-42

[2024] NZHC 1355

BETWEEN

ROSS ARTHUR GRAINGER and VIRGINIA KATE LANGMUIR
First Plaintiffs

SHANE CUNNINGHAM COAKLEY and JOANNE ELIZABETH BLAKE
Second Plaintiffs

CHRISTOPHER JOHN ROYDS, as trustee of the MP FAMILY TRUST

Third Plaintiff

IAN HARTLEY DUFF and GLENYS GRACE DUFF
Fourth Plaintiffs

EARLY VALLEY FARM LIMITED
Fifth Plaintiff

continued….

Hearing:

(On the papers)

Appearances:

C R Gates for Twelfth Plaintiff

T C Weston KC and R J H Scott for First Defendant

Judgment:

27 May 2024

JUDGMENT OF ASSOCIATE JUDGE LESTER

(in respect of application for leave to appeal)

GRAINGER v ORION NEW ZEALAND LIMITED [2024] NZHC 1355 [27 May 2024]

ANDANN LOUISE VAN ASCH, DANIEL GERRIT VAN ASCH and PAUL HENRY

DRURY VAN ASCH, as trustees of the ESTATE OF GD VAN ASCH
Sixth Plaintiffs

AND  CORYSTON FARM LIMITED

Seventh Plaintiff

ANDPETER CHRISTOPHER EASTGATE and ROBYN MARGARET JAMIESON, as

trustees of the ESTATE OF HELEN MARY GRAHAM

Eighth Plaintiffs

AND  IAN TERENCE FORRESTER

Ninth Plaintiff [Discontinued]

AND  LANSDOWNE VALLEY LIMITED

Tenth Plaintiff

AND  MCVICAR HOLDINGS LIMITED

Eleventh Plaintiff [Discontinued]

AND  AF SCOTT FORESTRY LIMITED

Twelfth Plaintiff/Appellant

AND  ORION NEW ZEALAND LIMITED

First Defendant/Respondent

ANDLEISURE INVESTMENTS NZ LIMITED PARTNERSHIP

Second Defendant/Respondent

[1]                  The twelfth plaintiff, AF Scott Forestry Limited (Scott Forestry), which was restored to the Companies Office Register by order of Judge Sussock on 30 April 2024, applies for leave to appeal my decision of 18 December 2023, striking it out from this proceeding.1

[2]                  Properly considered, Scott Forestry has never been a party to this proceeding. When it was commenced on 8 February 2023, Scott Forestry did not exist, it having been removed from the Register on 7 November 2022.

1      Grainger v Orion New Zealand Ltd [2023] NZHC 2239.

[3]                  My judgment of 18 December 2023,2 set out the timetable of counsel for Orion New Zealand Limited (Orion) raising the fact that Scott Forestry did not exist, the Court’s attempt to pragmatically keep Scott Forestry’s involvement in the proceeding in step with the other parties while it was restored to the Register, and what I ultimately concluded was a failure to take reasonably timely steps to have Scott Forestry restored to the Companies Register. The judgment of 18 December 2023 concluded that as Scott Forestry simply did not exist, it had no basis to be a party given reasonable steps to restore Scott Forestry to the Register had not been taken.

[4]                  That proceeding, resulting in Scott Forestry being restored to the Register, was not filed in the Auckland Court until 6 December 2023.3

[5]                  As recorded in the 18 December 2023 judgment, the Court was advised as early as 2 May 2023 that instructions had been given to make an application to retore Scott Forestry to the Register.

[6]                  The fact is that for whatever reason, prompt steps were not taken within what might be seen as a grace period for Scott Forestry’s position to be regularised.          I expressly recorded in a Minute of 30 May 2023 that given I had been told an application for restoration was being completed, I did not see any advantage in Scott Forestry getting out of step with the other parties but that:

It will be a different story if it is clear that the company will not be restored in short order, but I record at Mr Weston’s request, his client’s concerns in that regard … Restoration is a matter that should be dealt with as a matter of urgency.

[7]That simply did not occur.

[8]                  In one sense, the granting of a grace period and the narrative of the time taken to achieve restoration is besides the point. Scott Forestry simply did not exist and could not be a party to this proceeding.

[9]                  That a pragmatic approach was taken by the Court for the reasons I have already noted, does not change that fact.

2      Grainger v Orion New Zealand Ltd, above n 1.

3      Forrester v Registrar of Companies [2024] NZHC 1001.

[10]              Mr Weston KC, counsel for the first defendant, submitted, the mere fact Scott Forestry has been restored to the Register is not of itself sufficient for there to be leave to appeal. He notes that Scott Forestry does not argue that case management during 2023 had miscarried. Scott Forestry was not properly a party from the outset. Orion objected at the first possible opportunity and strictly Scott Forestry should have been removed from the proceeding at the outset.

[11]              Scott Forestry did not take advantage of the indulgence of it being nominally left as a party, while the proceeding progressed through preliminary case management. I accept Mr Weston’s submissions that Scott Forestry had no entitlement to continued indulgences in that regard.

[12]              In terms of the test for granting leave to appeal, set out in Finewood Upholstery Ltd v Vaughan, the applicant must identify an arguable error of law or fact and that error should be of general or public importance warranting determination or otherwise of sufficient importance to outweigh the lack of general or presidential value.4

[13]              The circumstances here are fact specific albeit I recognise that because of limitation, it is likely the timing of the restoration of Scott Forestry to the Register will mean that it cannot now be joined to the proceeding.

[14]              While Scott Forestry is, by s 330(2) of the Companies Act 1993, upon restoration deemed to have continued in existence, that does not retrospectively change the circumstances that existed when the decision sought to be appealed was made.

[15]              Mr Weston refers to Wire Supplies Ltd v Taxation Review Authority (No 2), where the High Court dealt with an application to strike out several plaintiffs on    the grounds they had been removed from the Register, and a continuation of the

4      Finewood    Upholstery Ltd     v     Vaughan    [2017]    NZHC     1679    at    [13];     affirmed    in

Greendrake v District Court of New Zealand [2020] NZCA 122 at [6].

proceeding in their name was an abuse of process.5  Courtney J held the removal of   a company from the Register has the effect that:6

… the company ceases to exist for all relevant legal purposes. I do not see any basis for resisting the obvious effect that removal of a company from the Register has. That effect cannot be denied simply because the company concerned may one day be restored to the Register.

[16]Courtney J also said:7

The fact that a company may later be restored and may deemed at that point to have always remained on the Register does not alter the fact that at the moment it is removed it ceases to have any legal status.

[17]              In Wire Supplies Ltd, the Court did not immediately strike out the parties but instead made unless orders that they would be struck out unless restored to the Register within three months.

[18]              Here, Scott Forestry was granted that indulgence from the outset and did not take advantage of it.

[19]              Mr Gates, counsel for the twelfth plaintiff (Scott Forestry), submits that I erred in not considering r 4.56 of the High Court Rules 2016 (the Rules) when granting the strike out order. Rule 4.56 provides a judge may at any stage of the proceeding order that the name of a party be struck out if they have been improperly joined.

[20]              While my judgment of 18 December 2023 may not have referred to r 4.56 of the Rules, the basis of the strike out application was abundantly clear. The simple fact was the company did not exist and had not taken advantage of the more than reasonable opportunity it was afforded to be restored to the Register.

[21]              Nor do I accept the submission that s 330(2) of the Companies Act can undo orders of this Court made on the basis of the facts as they existed at the time of the order. As Mr Weston submitted, if the proposed appellant’s argument was correct,

5      Wire Supplies Ltd v Taxation Review Authority (No 2) (2005) 22 NZTC 19, 401 (HC).

6 At [29].

7      Wire Supplies Ltd v Taxation Review Authority (No 2), above n 5, at [26].

a struck off company could never be removed from a proceeding because of the potential that it could be restored to the Register.

[22]              While a contract made in the name of a company that has been struck off is saved by s 330(2) of the Companies Act, that is not the correct analogy to the present situation. The correct analogy would be the counterparty to such a contract cancelling it because of the striking off. Restoration of the struck off company does not undo that cancellation, history is not reversed.

[23]              The applicants for leave do not challenge the factual analysis that led me to conclude that reasonable steps were not taken to restore Scott Forestry. The ground of appeal advanced is that restoration automatically makes the 18 December 2023 removal decision arguably wrong. I do not accept that is an arguable ground of appeal. The 18 December 2023 strike out decision was not “voidable” upon restoration being achieved, but that is the effect of the argument advanced in support of the application for leave to appeal.

[24]Leave to appeal is declined.

Costs

[25]              There is an award of costs in favour of Orion on a 2B basis together with disbursements to be fixed by the Registrar.

Associate Judge Lester

Solicitors:

Keegan Alexander, Auckland (for Plaintiffs) Kennedys, Auckland (for First Defendant)

Buddle Findlay, Christchurch (for Second Defendant)

Copy to counsel:
T C Weston KC, Tai Tapu, Christchurch (for First defendant)