Millennium Securities Limited v Parekura Bay Vineyard Estates Limited (in liquidation)

[2016] NZHC 2873

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-000617 [2016] NZHC 2873

UNDER

Section 328 of the Companies Act 1993

and rules 19.2 to 19.4 of the High Court
Rules

BETWEEN

MILLENNIUM SECURITIES LIMITED Applicant

AND

PAREKURA BAY VINEYARD ESTATES LIMITED (IN LIQUIDATION) Respondent

AND

REGISTRAR OF COMPANIES Interested Third Party

Hearing:	(On the papers)
Counsel:	Sam Carey and Doug Burgess for the Applicant Bruce Pamatatau for the Respondent Guy Caro for the Interested Third Party
Judgment:	30 November 2016

JUDGMENT OF MOORE J

This judgment was delivered by me on 30 November 2016 at 2:00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Date:

MILLENNIUM SECURITIES LIMITED v PAREKURA BAY VINEYARD ESTATES LIMITED (IN LIQUIDATION) [2016] NZHC 2873 [30 November 2016]

[1]      This matter relates to a judgment I delivered on 16 June 2016.1   Millennium Securities  Limited (“Millennium”) filed a memorandum, dated 23 August 2016, seeking clarification as to the effect of this judgment as well as associated orders if these are found to be necessary.

[2]      Ordinarily, I would have simply issued a Minute to deal with a matter of this sort.  However, because several aspects of my earlier decision have been called into question by recent developments, I consider it more appropriate that a formal judgment be issued so as to ensure that a potentially erroneous and/or conflicting authority is not left to stand on its own.

[3]      My original judgment concerned an application by a shareholder company, Millennium, to restore Parekura Bay Vineyard Estates Limited (“Parekura”) to the New Zealand Register of Companies (“the Register”).

[4]      The purpose of this application was to allow real property (“the property”) of which Parekura was, and remains, the registered proprietor to be sold to meet the debt owed to the mortgagee.  The property has an estimated market value of between

$700,000 to $800,000.

[5]      Parekura was placed in liquidation on 22 June 2006 after a third party took steps to enforce a costs order that had been made against it in relation to earlier proceedings.  There was no dispute that the liquidator, Mr Pamatatau, undertook his duties diligently and lawfully and that he did not prematurely complete the liquidation.  Because the mortgage over the property exceeded its value at the time, the property was disclaimed by the liquidator and was never an asset in the liquidation.  Mr Pamatatau filed his final report on 5 August 2013.  The company

was struck off the Register on 13 September 2013.

1      Millennium Securities Limited v Parekura Bay Estates Vineyard Limited (in liq) [2016] NZHC

1302.

[6]      It  had  been  intended  that  the  property  would  have  been  dealt  with  by Parekura and the mortgagee but the filing of the liquidator’s final report obviously created issues in that it triggered the removal of the company from the Register. Counsel for Parekura accepted that either its director(s) or its shareholders should have objected to the proposed removal at the time.

[7]      In any event, I was satisfied that Millennium was a shareholder of Parekura at all material times and that it therefore had the standing to bring the application under s 329(2) of the Companies Act 1993 (“the Act”).

[8]      I was also satisfied that Parekura should be restored to the Register under either s  329(1)(a)(iii)  or under s  329(1)(b) on  the grounds  that  it  was  just  and equitable to do so.

[9]      Finally,  I determined that there was no reason why the liquidator’s final report should be reversed or for there to be an order made for termination of the liquidation  under s  250 of the Act.  I did  so,  at  the time, because the property concerned was never an asset in the liquidation and because the purpose of the liquidation had been to recover funds to meet the sum owed to the third party under the costs order that had been made against Parekura.  This was done without issue, and I considered that the unrelated property was of no interest to the (now former) liquidator.

[10]     Several  issues  have arisen  since my judgment  was  delivered  and  sealed. Parekura was restored to the Register on 21 June 2016.  However, the Registrar took steps to remove it again the next day with the effect of negating my judgment.

[11]     The Registrar did so because she considered she was obliged to through the operation of s 318(e)(i) of the Act, which provides that the Registrar must remove a company from the Register if a liquidator sends or delivers to the Registrar the document referred to in s 257(1)(a), being the final report of the liquidator and several associated documents, along with the original notice of intention to remove the company.   These documents  were  filed  and  delivered  by Mr Pamatatau on

5 August 2013.  So long as these documents remained in place (and in light of my

decision not to reverse them it is clear that they did) the Registrar considered that she was  required  to  remove,  or  more  accurately  remove  again,  Parekura  from  the Register.  The Registrar considered that the recent Court of Appeal case of Registrar of Companies v Body Corporate 307730,2  as well as the decision of Katz J in Williams v Registrar of Companies,3 supported this interpretation.  In effect, she was left in the impossible position of having to comply with both my order and what she

considered to be, the proper and contradictory operation of s 318(e)(i).

[12]       Millennium is sympathetic as to the position the Registrar finds herself in. So am I.  Neither Body Corporate 307730 nor Williams was referred to me when I issued  my  earlier  judgment  on  the  papers  and  I  was  not  made  aware  that  the operation of s 318(e)(i) could operate in conflict with the orders I had made.   In hindsight, the Registrar should have been named as a respondent to the original proceeding as the relief sought was against her and at that time Parekura itself was a non-existent entity having been struck off.  Alternatively, I should have ordered that the Registrar be served with Millenium’s original application for restoration which prompted my earlier judgment.

[13]     Millennium now suggests the Court has three courses of action available to it. If I consider that s 318(e)(i) does not apply in the manner the Registrar considers it does, Millennium suggests I could now make a second order restoring Parekura pursuant to s 329, along with a direction under subsection (4) that the Registrar not take any further steps to remove it.

[14]   Alternatively, if I consider that the Registar’s interpretation is correct, Millennium suggests that I could make an order reversing the liquidator’s final report and terminating the liquidation, and then make another order under s 329 restoring Parekura  to  the  Register.    However,  Millenium  submits  this  would  lead  to  an

artificial and unnecessarily cumbersome process.

2      Registrar of Companies v Body Corporate 307730 [2013] NZCA 659, [2014] 2 NZLR 623.

3      Williams v Registrar of Companies [2015] NZHC 3217.

[15]     Finally, in the event that I consider that I am now functus officio, my earlier judgment having already been sealed, Millennium suggests that it could make a fresh application in respect of the same matter.

[16]     The  Registrar  has  now  filed  a  helpful  memorandum  in  response  to Millennium’s memorandum of 23 August 2016 and seeks leave to be heard.  I am grateful for the Registrar’s input and I grant leave accordingly.

[17]     The Registrar suggests that neither the first nor the second course of action described is now available because my earlier judgment was sealed on 17 June 2016. She submits that Millennium was correct in observing that I am now functus officio in  relation  to  this  proceeding.   Therefore the  Registrar submits  that  the correct approach would be for the applicant to bring a fresh application, this time naming the Registrar as a respondent.  This, she submits, would allow for all the issues to be properly ventilated.

[18]     I am of the view I am now functus officio in respect of the present proceeding for  the  reasons  the  parties  have  identified.   As  such  I cannot  make  the  orders suggested by Millennium, even if I believed this to be the correct course of action. For the avoidance of doubt, I express no view as to the correct interpretation of s 318(e)(i).  Katz J with the benefit of hearing full argument squarely considered this issue in Williams and endorsed the Registrar’s interpretation.

[19]   The only appropriate, indeed the only possible course of action, is for Millennium  to  bring a fresh  application  if  it  chooses  to  do  so.4      However,  the Registrar has also made a helpful submission as to the wisdom of this step.   She points out that the effect of the liquidator disclaiming the property was to vest it in the Crown.   She thus argues that even if Parekura was restored to the Register it would no longer have this property to sell.  In any event, she also points out that the mortgagee has its own separate remedy under s 269(5) of the Act which can be

invoked in preference.

4      This should, as noted, name the Registrar as a respondent if it is ultimately filed.

[20]     This is obviously not a question for this Court.  I leave it to Millennium to

consider its position and determine for itself as to how it wishes to proceed.

Moore J

Counsel/Solicitors:
Mr Burgess, Auckland

Mr Carey, Auckland

Mr Pamatatau, Auckland
Ministry of Business, Innovation and Employment, Auckland