Hignett v Registrar of Companies

[2014] NZHC 38

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-4899 [2014] NZHC 38

UNDER  The Companies Act 1993, sections 329,

250(1) and 284(1)(b)

BETWEEN  EDWIN WARREN HIGNETT Applicant

ANDTHE REGISTRAR OF COMPANIES First Respondent

THE SECRETARY OF THE TREASURY Second Respondent

PERI MICAELA FINNIGAN AND BORIS VAN DELDEN

Third Respondent

Hearing:                   3 February 2014

Appearances:           S Nicholson for Applicant

Judgment:                3 February 2014 at 10:12 am

ORAL JUDGMENT OF BROWN J

Solicitors:      Lowndes Jordan, Auckland

HIGNETT v REGISTRAR OF COMPANIES [2014] NZHC 38 [3 February 2014]

[1]      Having been granted leave by Associate Judge Doogue on 22 November

2013 to bring this proceeding by way of originating application Mr Hignett now applies for three orders:

(a)      that George and Henry Holdings Limited (Struck off) (“GHHL”) and Ed Hardy (NZ) Limited (Struck off) (“EHL”) be restored to the New Zealand Register of Companies as a matter of urgency pursuant to s 329(1)(b) of the Companies Act 1993 (“the Act”);

(b)for leave to apply under s 284(1)(b) and setting aside the liquidators’ final reports dated 21 and 28 September 2012 in respect of GHHL and EHL respectively; and

(c)      that  the  liquidations  of  the  companies  be  terminated  pursuant  to s 250(1) of the Act.

[2]      GHHL was placed into liquidation on 27 January 2012 by order of the High Court at Auckland on the application of Fuji Xerox Finance Ltd.  EHL was placed into liquidation on 31 January 2012 by resolution of its shareholder, GHHL, effected through the liquidators.

[3]      The  reason  why  the  applications  are  made  is  as  follows.    Mr  Hignett advanced $2,314,985 to the companies during the course of their operations and then paid a further $477,817 during the liquidations in order that all creditors of the companies could be paid in full.  Mr Hignett made no recovery of those sums in the liquidations with the consequence that he is effectively the one remaining creditor and the companies owe him a total of $2,792,802.   Mr Hignett has received accounting and taxation advice that that debt results in a tax loss arising to the benefit of the companies and that tax advantage (which has yet to be quantified) could be utilised by the companies if they were restored to the Register and able to be traded.   Mr Hignett wishes to use the companies to  trade through in a new business venture that is unrelated to the former activities of the two companies.

[4]      I have read the affidavit of Mr Hignett in support of the application and the thorough memorandum of Ms Nicholson in support.  Ms Nicholson submits and I accept that Mr Hignett, having been a director of the companies at the time they were removed from the Register, is a person eligible to make application for the three orders sought.

[5]      The affidavit of Mr Hignett deposes that in November 2013 the applicant served copies of the draft originating application and the supporting affidavit on each of the three respondents.  All replied confirming that they had no objection to the orders sought by the applicant and that they did not wish to be heard at the hearing.

[6]      An affidavit of service of Ms George deposes that the proceedings as issued were served on each of the respondents and annexes acknowledgements of service by each of them.

[7]      Under s 329(1)(b) the Court may order that a company that has been removed from the New Zealand Register be restored to the Register if the Court is satisfied that for any other reason than the reasons in s 329(1)(a) it is just and equitable to do so.   The decision in Re Saxpack Foods Ltd1  provides some guidelines as to the principles relevant to the applications for restoration.

[8]      Ms Nicholson submits that in applying the Saxpack principles it is just and equitable in this case to make an order for restoration for the following reasons:

(a)      There is a valuable asset (tax losses) belonging to the companies the benefit of which could be obtained if the orders sought were granted;

(b)The  asset  could  not  have  been  and  cannot  be  distributed  to  the companies’ creditors.    It is only of benefit to the companies themselves;

(c)       There has been no misconduct on the part of the applicant;

(d)      The liquidators’ costs have been paid in full;

(e)      The creditors of the companies have been paid in full including by the applicant as to $447,817 from his personal funds;

(f)      Termination of the liquidations was contemplated by the liquidators during the course of the liquidations and this was notified to all creditors although the applicant elected not to pursue the course of reinstatement of the companies at that time;

(g)All potentially affected parties have given their consent to the orders sought; and

(h)There is no countervailing public or private disadvantage in granting the orders sought.

[9]      Ms Nicholson also explains why it is necessary to seek an order setting aside the liquidators’ final reports.  The High Court decision in Re Ocean Shipping Ltd2 confirms that where it is desired to restore a company, that has been in liquidation, to the Register, it is appropriate to also reverse the filing of the liquidators’ final reports. This is because the filing of the liquidators’ final reports has the effect of causing the Registrar of Companies to automatically remove the company from the Register.

[10]     Accordingly where it is desired to restore a company that was previously in liquidation to the Register so that it can trade again the appropriate steps to take are:

(a)       To apply to have the company restored;

(b)      To apply to set aside the liquidators’ final report; and

(c)       To apply to terminate the liquidations.

[11]     In the circumstances as deposed in the affidavit of Mr Hignett and on the grounds advanced in the submissions in the memorandum of Ms Nicholson, I consider that this is an appropriate case for making the orders sought.

[12]     Accordingly I make the following orders:

(a)      That George and Henry Holdings Limited (Struck off) and Ed Hardy (NZ) Limited (Struck off) (“the companies”) be restored to the New Zealand Register of Companies pursuant to s 329(1)(b) of the Companies Act 1993;

(b)The applicant is granted leave to apply under s 284(1)(b) to set aside the  liquidators’ final  reports  dated  21  and  28  September  2012  in respect of the companies;

(c)       The liquidators’ final reports dated 21 and 28 September 2012 in

respect of the companies are set aside; and

(d)      The liquidations of the companies are terminated pursuant to s 250(1)

of the Act.

(e)       A sealed copy of the Court’s order is to be served on each of the three

respondents.

[13]     I record that the order for restoration is made at 10:12 am on 3 February

2014.

Brown J