Hewitt v Registrar of Companies

[2020] NZHC 3206

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-002356

[2020] NZHC 3206

UNDER THE

Companies Act 1993

IN THE MATTER

of the restoration of Ruapehu Cottages Limited (Removed) to the New Zealand register of companies

BETWEEN

CLAIRE ELIZABETH HEWITT

Applicant

AND

REGISTRAR OF COMPANIES

Respondent

Hearing:	(On the papers)
Judgment:	7 December 2020

JUDGMENT OF VENNING J

This judgment was delivered by me on 7 December 2020 at 11.45 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Keegan Alexander, Auckland

HEWITT v REGISTRAR OF COMPANIES [2020] NZHC 3206 [7 December 2020]

[1]Claire Elizabeth Hewitt (the applicant) applies to the Court for orders:

(a)restoring Ruapehu Cottages Limited (Removed) (the company) to the New Zealand register of companies; and

(b)dispensing with service of these proceedings.

[2]        The application was made under s 329 of the Companies Act 1993. As relevant the section provides:

329     Court may restore company to New Zealand register

(1)The court may, on the application of a person referred to in subsection (2), order that a company that has been removed from the New Zealand register be restored to the register if it is satisfied that,—

(a)at the time the company was removed from the register,—

(i)the company was carrying on business or a proper reason existed for the company to continue in existence; or

(ii)the company was a party to legal proceedings; or

(iii)the company was in receivership, or liquidation, or both; or

(iv)the applicant was a creditor, or a shareholder, or a person who had an undischarged claim against the company; or

(v)the applicant believed that a right of action existed, or intended to pursue a right of action, on behalf of the company under Part 9; or

(b)for any other reason it is just and equitable to restore the company to the New Zealand register.

(1A) In considering whether to restore a company to the register on the ground referred to in subsection (1)(a)(i) or (b), the court must have regard to the reasons for the company’s removal and whether those grounds existed at the time of removal or exist at the time of the hearing of the application.

(2)The following persons may make an application under subsection (1):

(a)any person who, at the time the company was removed from the New Zealand register,—

(i)was a shareholder or director of the company; or

(ii)was a creditor of the company; or

(iii)was a party to any legal proceedings against the company; or

(iv)had an undischarged claim against the company; or

(v)was the liquidator, or a receiver of the property of, the company:

(b)the Registrar:

(c)with the leave of the court, any other person.

…

[3]        The applicant was the sole director and majority shareholder. She says the company has claims against third parties (former solicitor and accountant) in relation to negligent advice (failure to advise) concerning a right of first refusal over a property at Hospital Terrace, Napier.

[4]        The proceedings can only be pursued by the company. If the proceedings are to be pursued the company will need to be restored to the register.

[5]        There is a degree of urgency in determining the application as there may be limitation issues in relation to the claims.

[6]        The application does not satisfy any of the criteria in s 329(1)(a) of the Act. It is pursued on the grounds it would be just and equitable to restore the company to the register. The applicant has explained in an affidavit the background to the factual situation giving rise to the potential claim. She has also annexed a copy of a decision of the New Zealand Law Society Hawke’s Bay Lawyers Standards Committee in relation to the lawyer’s conduct and an opinion of Mr Nolan, which supports the possibility of a claim against the former adviser.

[7]        The Commentary to s 329 suggests the Court will not simply restore a company to the register because it is asked to even if it was purportedly for the purpose of allowing the company to pursue litigation against a third party.1

1      Company Law (online ed, Thomson Reuters) at [CA329.08].

[8]        There have been a number of cases where the Court has considered whether to restore a company to the register for that purpose. Although decided under previous legislation the principles discussed in the case of Re Saxpack Foods Ltd are often cited.2 Relevantly in the present case the company was a solvent company when removed from the register. It had complied with its obligations under the Companies Act (including filing annual returns on time). In her affidavit the applicant has explained the reason for the delay. She only became aware of the potential claim in 2019. She then initiated a complaint to the New Zealand Law Society. The outcome of the complaint was notified to her on 9 September 2020. She then obtained a legal opinion from Mr Nolan.

[9]        While the claim may not be entirely straightforward it certainly cannot be described as vexatious or specious.

[10]      In the circumstances the Court is satisfied it is just and equitable to restore the company. The applications are granted and there will be orders:

(a)restoring the company to the register of companies; and

(b)confirming service of the application is not required.

Venning J

2      Re Saxpack Foods Ltd [1994] 1 NZLR 605.