Mules v Registrar of Companies

[2016] NZHC 986

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-2733 [2016] NZHC 986

UNDER	the Companies Act 1993 ss 284 and 329
IN THE MATTER OF	an application by PHILIPPA JANE MULES for orders that VILLAGE RESTAURANTS LTD (IN LIQ), TUTANEKAI ENTERPRISES LIMITED (IN LIQ) and FAIRY SPRINGS ENTERPRISES LTD (IN LIQ) be restored ot the Companies Register
BETWEEN	PHILIPPA JANE MULES Applicant
AND	REGISTRAR OF COMPANIES Respondent

On thepapers:
Appearances:	C Murphy for Applicant
Judgment:	17 May 2016

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 17 May 2016 at 11:00am

pursuant to Rule 11.5 of the High Court Rules

…………………………………………………….

Registrar/Deputy Registrar

Solicitors/Counsel:

Cathy Murphy, Auckland, for Applicant

Gregory Simon Law, Herne Bay, Auckland, for Applicant

MULES v REGISTRAR OF COMPANIES [2016] NZHC 986 [17 May 2016]

[a]       Village Restaurants Ltd (in liq) No.197445;

[b]       Tutanekai Enterprises Ltd (in liq) No.890857; and

[c]       Fairy Springs Enterprises Ltd (in liq) No.964966.

She also asks for the liquidators’ final reports to be reversed under s 284(1)(b) of the

Companies Act 1993 and for the liquidations to be terminated under s 250.

Service

[2]      In accordance with the guidance in Re Durweston Properties Ltd1, Mrs Mules served the application on the Registrar of Companies, Treasury, the former liquidators, a Mr King (one of the trustees of the Okere Trust which owned shares in Village Restaurants Ltd), and Mr Philip Mules, former director of all of the companies, ex-husband of Mrs Mules and former shareholder of the companies.

[3] There are two service matters that need to be noted. There was an irregularity in service on Mr Mules. He was served in Australia, but was not given the information required under s 15 of the Trans-Tasman Proceedings Act 2010. Under s 16 of that act, the failure to provide that information does not invalidate the proceeding. I did not require Mr Mules to be served afresh. That is because there would be no point in giving the information under s 15 to advise a party served in Australia of the option of applying for the proceeding to be heard in Australia rather than New Zealand. It is unthinkable that under pt 2 sub-pt 2 of the Trans-Tasman Proceedings Act 2010 an Australian court would be more appropriate than a New Zealand court to decide whether to restore New Zealand companies to the register under the Companies Act.

[4]      Mrs Mules says that Mr Mules was adjudicated bankrupt.  He owned shares in Tutanekai Enterprises Ltd and Fairy Springs Enterprises Ltd.  They vested in the

1      Re Durweston Properties Ltd (1992) 6 PRNZ 95 (HC)..

Official Assignee when he was made bankrupt.  Strictly then, Mrs Mules ought to have served the Official Assignee as the owner of shares in these two companies. I do not require the Official Assignee to be served.  That is because the same lawyers advise both the Registrar of Companies and the Official Assignee.  If the Registrar considered that the Official Assignee should take an active part in this proceeding, the Registrar would most likely have told him.   In any event in such cases the Official Assignee usually abides the decision of the court.

[5]      None of the parties served has taken any steps.  There is no opposition to the application.  Notwithstanding the absence of opposition, I had questions.  I asked for and received further submissions.

Mrs Mules’ reasons for applying

[6]      Mrs Mules believes that her former husband used the companies to dissipate assets she was entitled to.  I have considered potential claims against the companies on the basis of her evidence and liquidators’ reports which I have accessed on the Companies’ Office website.   I am not satisfied that any useful purpose would be served by restoring these companies to the register.  Mrs Mules may have a case that following the break-up in 2000 of her marriage to Mr Mules she received less than her proper share of relationship property.   But she has not shown any basis for believing that she could have any useful claim against the companies that her former husband ran or that restoring the companies to the register might produce anything for her.

[7]      While the companies were in liquidation, the liquidators had the opportunity to take proceedings in the names of the companies to obtain value for those entitled to claim in the liquidations.  The liquidations are now completed.  The liquidators did not take any proceedings or other steps to obtain the benefits that Mrs Mules would  hope  for.    She  has  not  shown  any  plausible  grounds  for  believing  that restoring the companies to the register now would result in further value for those entitled to claim in the liquidations.

[8]      Village Restaurant Ltd (in liq) was incorporated in 1978.  Mr Mules was the only director.  There are 5,000 shares.  Mr Mules held one share.  The other 4,999 shares were held by Mr Mules and Mr King as trustees of the Okere Trust.   The beneficiaries of that trust include Mrs Mules and her children.  Village Restaurant Ltd went into liquidation by shareholders’ resolution on 29 October 2002.   The company was insolvent.  According to the liquidators’ final report of 29 November

2007, the total realisations were $515,551.  Preferential creditors were paid in full, but unsecured creditors received a distribution of 17 cents in the dollar.  There was nothing available for shareholders.  The company was removed from the register on

1 March 2008.

[9]      Fairy  Springs  Enterprises  Ltd  (in  liq)  was  incorporated  in  June  1999. Mr Mules is the sole director and shareholder.  As shareholder, he resolved to put the company into liquidation on 29 October 2002.   The liquidator’s final report dated

29 November 2007 shows that from realisations of $187,837, preferential creditors were paid in full but there was only a partial distribution to unsecured creditors. There were no distributions to shareholders.  The company was removed from the register on 1 March 2008.

[10]     Tutanekai Enterprises  Ltd (in liq) was incorporated on 2 February 1998. Mr Mules was its sole director and shareholder.  He resolved to put the company into liquidation on 29 October 2002.   The liquidators’ final report dated 29 November

2007 shows total realisations of $80,058.00.  Preferential creditors were paid in full while unsecured creditors received a distribution of 16 cents in the dollar.   There were no distributions to shareholders.

[11]     The three companies had the same liquidators, who are from a recognised, reputable firm of insolvency practitioners, independent of Mr Mules.

[12]     Mrs Mules is the former wife of Mr Mules.  Aside from being the beneficiary of the Okere Trust, a shareholder of Village Restaurant Ltd, Mrs Mules had no interest in any of the companies, either as shareholder or director.   Each of the

companies ran a McDonald’s restaurant in the Rotorua area.   She and Mr Mules separated in August 2000 after 16 years of marriage.  She says that at separation the companies  were  worth  $3,815,804  but  were  subject  to  debts  to  McDonalds Restaurant (New Zealand) Ltd and the ASB Bank totalling $1,346,000.  She brought proceedings seeking a division of matrimonial property in October 2000.   In 2002 she applied to the Family Court at Rotorua for orders restraining Mr Mules from dealing   with   any   relationship   property   pending   resolution   of   her   claims. Undertakings were given by Mr Mules and trustees of the Mules Family Trust that they would not encumber, dispose or transfer the shares or any assets of the companies.   On 24 July 2002 the Family Court made an interim order restraining dispositions of property in terms of the undertakings.   In October 2002 that order was varied to allow the restaurants to be sold and for creditors to be paid.

[13]     Mrs Mules says that despite the Family Court  orders, between June and October 2002 there were transactions in breach of the undertakings and the court’s interim order.  The ASB facility was increased to $1,764,500.81.  Village Restaurant Ltd and Fairy Springs Ltd granted all-obligations debentures to Trustee Management Ltd.    Village  Restaurant  Ltd,  Fairy  Springs  Ltd  and  Tutanekai  Enterprises  Ltd granted  all-obligations  debentures  to  Edgewater  Motel  Ltd.    The  Philip  Mules Family Trust and Tutanekai Enterprises Ltd took out a loan for $130,000 from Budget Loans Ltd.

[14]     While  on  Mrs  Mules’  account  the  companies  apparently  had  substantial equity at the time of separation in August 2000, after the sales of the restaurants there was nothing available for shareholders and, on liquidation, there was a shortfall for unsecured creditors.  Mr Mules was later adjudicated bankrupt.2   The liquidators’ final reports for each of the companies show proceeds from his bankruptcy among the realisations.

[15]     Mrs Mules is suspicious that Mr Mules has cheated her out of her share of relationship  property,  which  on  her  account  was  approximately  $1.2  million  at

separation.   She believes that he has control of assets, “high value classic cars”,

2      As the Insolvency Act 2006 did not come into force until 3 December 2007 (Insolvency Act

2006 Commencement Order 2007 (SR 2007/332), the Insolvency Act 1967 governs Mr
Mules’ bankruptcy – Insolvency Act 2006, s 444(2).

which apparently did not vest in the Official Assignee on his bankruptcy or come under his control.   She also has queries as to distributions her husband may have made from the Philip Mules Family Trust and the Okere Trust in December 2000. She believes that her former husband has arranged his affairs carefully to minimise assets in his name, but to retain access to assets not in his ownership.  He has refused to provide her with any information.   She accepts that she did not take any steps from 2002 until late 2014, but explains that by saying that she did not have any inkling of the considerable financial arrangements contrived by her husband to avoid an equal division of property.  She uplifted her former solicitor’s file in May 2015 and with information from it now wishes to take action.

What legal avenues does Mrs Mules have to extract value from the companies?

[16]     It is necessary to work out what useful claims Mrs Mules could have.  Her complaint is that her former husband concealed assets with the result that she has not received her due share of relationship property.  She has included with her additional submissions Judge Ingram’s decision in National Mortgage Company Ltd v Mules.3

Mrs Mules was sued unsuccessfully for return of a car which she had received from

the Okere Trust under a division of relationship property with her husband in 2002. In finding that Mrs Mules became owner of the vehicle in 2002, Judge Ingram referred  to  a  judgment  of the  Family Court  at  Rotorua4   and  to  a  “matrimonial property settlement”5  apparently by consent but approved by the court.  Mrs Mules has  not  said  what  the  terms  of  the  settlement  were  and  whether  she  received

everything due to her under the settlement.  If the settlement was full and final, she has not set out any grounds for looking past it or setting it aside.  There is a gap in her case that she has not received her entitlement, either under the 2002 settlement or under the Property (Relationships) Act generally.  Although this aspect of her case is not substantiated, I continue on the basis that there might be something in what she says and that she can still claim for a division of relationship property.  At the same time I record a concern that she may be trying to re-open a relationship property

settlement made in 2002.

3      National Mortgage Company Ltd v Mules DC Taupo CIV 2013-69-86, 23 July 2015.

4 At [11].

5      At [30] and [31].

[17]     I take it that Mr Mules’ shares in Fairy Springs Enterprises Ltd and Tutanekai

Enterprises Ltd were relationship property under the Property (Relationships) Act

1976 and could be subject to division orders under Part 7 of that Act.  I assume that, if necessary, she could revive the proceeding she started in 2002, that she is not time- barred under s 24 of the Property (Relationships) Act and that she would survive any application to strike out for want of prosecution.    Ordinarily, relationship property would be divided equally between Mr and Mrs Mules.     Any orders against her husband as the owner of the shares would typically take into account the value of the shares in a division of property, require him to pay her a sum on account of the shares or vest some or all of the shares in her.  There is no evidence that any order has been made under the Property (Relationships) Act vesting the shares in her. Until there is such an order, she has no more than a claim against her former husband for division of property.

[18]     When Mr Mules was adjudicated bankrupt, his shares vested in the Official Assignee.6    Mrs Mules’ claim against her husband under Property (Relationships) Act  transmuted  into  a  right  to  prove  in  her  husband’s  bankruptcy  under  the Insolvency Act 1967.   She would not necessarily share pari passu with all other unsecured creditors, but may come after some of them.7   That is because of the way the division rules in the Property (Relationships) Act work.  In working out the net value of relationship property for division, relationship debts must be brought into account.8     To the extent that any creditors in Mr Mules’ bankruptcy proved for relationship debts (for example, incurred in carrying on a common enterprise9), their claims would rank ahead of hers: she will have no relationship property entitlement

until relationship creditors are satisfied in full.

[19]     Some of Mr Mules’ creditors may have been for personal debts.  That comes from her evidence of debts he incurred after separation.   Creditors for Mr Mules’

personal debts have the same rights against Mr Mules or his estate as if the Property

6      Insolvency Act 1967, s 42, Property (Relationships) Act 1976, s 20A(2).

7As an exception, spouses of bankrupts take priority over unsecured creditors with the protected interest in the family home under ss 20B and 20C but that does not apply here.

8      Property (Relationships) Act, s 20D. For “relationship debts” and “personal debts” see s 20(1).

9      See definition of “relationship debt” in s 20(1).

(Relationships) Act had not been passed.10   That includes their rights to prove in his bankruptcy.  It is not clear whether those rights prevail over hers in his bankruptcy. There is a possible argument that because their rights against Mr Mules and his assets are unaffected by her claims under the Property (Relationships) Act, their distributions from his bankruptcy should not be reduced on account of her proof in his bankruptcy.   That is an untested argument.   For Mrs Mules I assume that she would rank pari passu with Mr Mules’ personal creditors but that her proof would be calculated by deducting the value of all  relationship creditors  (but not personal creditors) from the relationship assets.

[20]      Mrs Mules does not say whether she proved in Mr Mules’ bankruptcy.   If she did, it is unlikely that she would have received a significant distribution.  The distributions from his bankruptcy to the companies in liquidation were relatively small: $598 for Fairy Springs Enterprises Ltd and $45 for Tutanekai Enterprises Ltd.

[21]     I understand that Mr Mules is out of bankruptcy now.  His discharge released him from all debts provable in his bankruptcy.11    That includes Mrs Mules’ claims under the Property (Relationships) Act.  She has not explained how she is able to bring any claim based on her rights under the Property (Relationships) Act after his discharge from bankruptcy.   Instead, if she is to have any claim, it can only be through his bankruptcy – that is, by proving in his bankruptcy and sharing in any realisations of his assets brought about by the Official Assignee.

[22]     As Fairy Springs Enterprises Ltd and Tutanekai Enterprises Ltd went into insolvent  liquidation  and  unsecured  creditors  received  only  partial  distributions, Mr Mules’ shares were seemingly valueless.   But what if it were thought that the liquidations should realise something more for shareholders so as to increase the realisations in Mr Mules’ bankruptcy?     As a creditor in Mr Mules’ bankruptcy, Mrs Mules can do little more than make suggestions for steps to be taken.   The

Official Assignee cannot directly take steps to increase the value of the shares.  He

10     Property (Relationships) Act, s 20A. See Somers J in R v R (1979) 2 MPC 161 (SC):

The Act contemplates that the rights of creditors in a bankruptcy are unaffected by the existence of possible claims by the bankrupt’s spouse save so far as it affords protection to the (solvent) spouse in respect of the matrimonial home or its alternative.

11     Insolvency Act 1967, s 114.

has  no  more  rights  or  powers  in  the  liquidations  than  Mr  Mules  would  as shareholder.  But the Official Assignee could take the matter up with the liquidators to see if they could obtain further realisations.

[23]     The  liquidators  might  enquire  into  the  transactions  under  which  the company’s indebtedness was increased.  On Mrs Mules’ case, that indebtedness was to the disadvantage of unsecured creditors and shareholders.  The creditors in [13] above were secured and apparently for money actually advanced or paid.  If those securities could be attacked, for example as voidable transactions under pt 16 of the Companies Act, that is something the liquidators would most likely have picked up already.  Instead the inquiry might turn to those in management responsible for the indebtedness.  In this case, that was Mr Mules.  But Mr Mules was bankrupt, so the liquidators could not have recourse against him directly.  They brought into account the distributions from his bankruptcy.

[24]     Instead, the liquidators would have to scout around to see if there was anyone else  against  whom  a claim  could  be made.    Apparently the liquidators  did  not consider that there were any claims available against others.  Their final reports do not express this point directly, but I infer it because their reports do not mention that any such  claims  were  brought,  and  because there is  no  reference to  significant litigation expenses in their statements of realisations and distributions.

[25]     The following points emerge:

[a]      Mrs Mules has not shown that she was a creditor of either company or that she had any claim against the companies.

[b]      Her only apparent claims are against her former husband under the Property (Relationships) Act, but she has not explained how she can continue to assert any such claims after the 2002 final settlement of relationship property.

[c]      If any relationship property claim did survive the settlement, it was discharged at the end of Mr Mules’ bankruptcy.

[d]      The only connection between the companies and her proof in his

bankruptcy is Mr Mules’ shares, but they were clearly valueless.

[e]      Any suggestion that she could obtain more from his bankruptcy is no more than speculative.   It assumes that the liquidators’ realisations could be supplemented by other recoveries, which they missed or overlooked.   The recoveries would have to be enough to clear all relationship creditors, if not personal creditors.

[f]      Mrs   Mules   might   have   other   remedies   if   her   husband   acted improperly to  put  assets  out  of  her  reach  or  out  of  reach  of  his creditors.   An example might be an application under s 44 of the Property (Relationships) Act to set aside dispositions made to defeat her claim.   But those remedies do not involve these companies or Mr Mules’  shares.    She  can  pursue  the  alternative  remedies  for whatever they are worth without the companies being restored to the register.

[26]     There is a broadly similar result for Village Restaurant Ltd.   Mrs Mules cannot rely on the Property (Relationships) Act because Mr Mules and Mr King held the shares on trust.12   I take it that, as is common with most family trusts, Mrs Mules was a discretionary beneficiary.   She describes herself as a beneficiary along with her children.  She does not say that the shares were held in trust for her alone.  To make any headway, Mrs Mules needs to be able to assert the rights of a trustee, even

though she is not one herself.  For present purposes I assume that she may be able to assert those rights derivatively at equity by reason of special circumstances.13    As shareholders  of  Village  Restaurant  Ltd,  the  trustees  have  an  interest  in  any distribution in the liquidation of the company in the same way as any other shareholder.  Any distribution to shareholders will depend on the successful conduct of  the  liquidation  first  satisfying  all  creditors  of  the  company.     Mr  Mules’

bankruptcy  will  not  impinge  on  any  distributions  that  trustees  might  make  to

12     Property (Relationships) Act, s 4B.

13     See Hayim v Citibank [1987] AC 730 (PC) and Roberts v Gill [2011] 1 AC 240 (UKSC).

beneficiaries.   That aside, Mrs Mules faces similar difficulties to those with Fairy

Springs Enterprises Ltd and Tutanekai Enterprises Ltd.

[27]     I  come  back  to  Mrs  Mules’  belief  that  her  former  husband  used  the companies to dissipate assets she was entitled to.  She has not shown any entitlement outside any relationship property claim.  But what if she did have?  Two of the ways that the companies might be involved in dissipation by her husband are that he transferred assets into the companies or he transferred assets out of the companies.  It is improbable that a debtor and husband trying to defeat or delay his creditors and his wife would put assets into insolvent companies.   They would be at risk of being applied to satisfy creditors under insolvency administration.   If there has been dissipation by transfer into the companies, those assets would have been realised in the liquidations.

[28]     As for dissipation by transferring assets out of the companies, recovery and realisation of assets is a matter for liquidators.  Again, Mrs Mules’ prospects of any further recovery from the liquidations are no more than speculative.

[29]     Another  possible  use  of  the  companies  for  dissipation  of  assets  is  as  a conduit.  But if Mrs Mules has any property claim under which she would follow assets through the companies, it should not be necessary to restore the companies to the register.  To trace assets into the hands of those presently in control, the conduit does not need to be brought back into existence.

Section 329 – standing

[30]     I have not so far referred directly to s 329 of the Companies Act under which the court may restore a company to the register.  It says:

239     Court may restore company to New Zealand register

(1)       The  Court  may,  on  the  application  of  a  person  referred  to  in subsection (2) of this section, 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 of this Act; 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)

of this section:

(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)       Before the Court makes an order restoring a company to the New Zealand register under this section, it may require any provisions of this Act or any regulations made under this Act, being provisions with which the company had failed to comply before it was removed from the register, to be complied with.

(4)       The Court may give such directions or make such orders as may be necessary or desirable for the purpose of placing the company and

any other persons as nearly as possible in the same position as if the company had not been removed from the New Zealand register.

[31]     Mrs Mules does not have standing to apply as of right under s 329(2)(a).  In particular she has  not  shown  that  when  the companies  were removed  from  the register she was a creditor of any of the companies, a party to any legal proceedings against any of them or had an undischarged claim against any of them.  Her interest is derivative.  Instead of claiming directly against any of the companies, she can only benefit if others can establish successful claims against the companies: the Official Assignee  as  shareholder  of  Tutanekai  Enterprises  Ltd  and  of  Fairy  Springs Enterprises Ltd and the trustees of the Okere Trust as shareholders of Village Restaurants Ltd.  Accordingly she requires leave under s 329(2)(c).

[32]     These factors that count against leave go to the lack of substantive merit in her application:

[a]       The absence of any claims by her against the companies;

[b]      The apparent absence of a property relationship claim against her husband under or after the 2002 settlement;

[c]      The absence of any claim against her husband after his discharge from bankruptcy;

[d]      The  improbability  of  anything  fresh  coming  to  light  after  the liquidations   were   carried   out   by   independent   and   competent insolvency practitioners.

[33]     The passage of time also goes against her application.   It is over thirteen years since the companies went into liquidation and eight years since they were removed from the register.  Admittedly a “wind the clock back” order under s 329(4) would  mean  that  for  limitation  purposes  time  has  not  been  running  while  the

companies were removed from the register.14     So it might be possible to sue on

14     Re Donald Kenyon Ltd [1956] 1 WLR 1397 (Ch), John Hammonds & Co Ltd v Registrar of

Companies [1999] 3 NZLR 690 (HC); Spencer v Commissioner of Inland Revenue (2004) 21
NZTC 18,818 (HC) and Thornton Estates Ltd v Registrar of Companies (2006) 3 NZCCLR 590.

causes of action that accrued in mid to late 2002, if proceedings are started promptly. But there would be real practical difficulties for all parties in litigating over transactions that occurred so long ago.  Business records are likely to have been put out, liquidators’ records in particular.   Memories are bound to be affected by the lapse of time.

[34]     That leads to another consideration.  In the circumstances of this case Mrs Mules needs to show that some advantage will arise from restoring the companies to the register.   When the companies have been removed from the register after apparently orthodox liquidations, the starting position is that the liquidations should not be reopened.   There is a benefit in that finality.   All those involved in the companies, officers, shareholders, staff, creditors and liquidators, are entitled to the assurance that with the removals from the register, the companies’ affairs have been finally wound up.  That allows those involved to arrange their lives and businesses on the basis that the liquidations will not be revisited.   While the need for that finality is not conclusive, in this case Mrs Mules has not shown adequate reasons for disturbing it.

[35]     For the above reasons leave to apply under s 329(2)(c) is refused.

Section 329 – substantive merits

[36]     Even if Mrs Mules had standing, I would not restore the companies to the register under s 329(1).  Under that subsection Mrs Mules starts with some factors in her favour:

[a]      Under s 329(1)(a)(iii) the companies were in liquidation when they were removed from the register.  She therefore does not need to rely on the just and equitable ground under s 329(1)(b).

[b]      The establishment of a ground under s 329(1)(a) gives prima facie reason to restore.15

15     Re Trade Indemnity New Zealand Ltd, McSwain v Registrar of Companies HC Auckland CIV

2003-404-006684, 12 December 2003 at [6], Re Salamanca Properties Ltd, Wellington City
Council v Registrar of Companies [2015] NZHC 572, [2015] 3 NZLR 411 at [97].

[c]      In John Hammonds & Co Ltd v Registrar of Companies Hammond J observed that cases in which the court will decline to restore a company to the register will be quite unusual.16   And in Re Pranfield Holdings Ltd it was said:17

…  the  principle  must  be  that  the  somewhat  peremptory power of the Registrar to remove deadwood from the corporate scene, will not prevail against the rights of those so removed, or of others with whom they have dealt, to reinstate the company to pursue remedies provided by substantive law, unless it is plain that the proceeding, if unsuccessful,  will  still  be  nugatory.    This  principle  puts grand notions of access to law ahead of mere rules for administrative ease.

[d]      In cases of claims against a company sought to be restored, the courts do  not  require  the  merits  of  the  claim  to  be  proved  to  a  high standard.18

[37]     However,  the  matters  I  applied  in  [32]-[34]  above  in  refusing  leave  for standing also count against restoring the companies to the register and override the above factors.  In the end Mrs Mules’ hopes of getting anything out of the companies are nebulous and speculative.  Her prospects of success are not realistic.  It is better to recognise now that they will not come to anything.

Application to terminate liquidations

[38]     If I had restored the companies to the register, I would have set aside the liquidators’ final reports so as to allow the liquidators to resume.   I would not however have terminated the liquidations under s 250 of the Companies Act.  The companies were not trading when they went into liquidation and there is no proposal for them to go back into business.  If there were any prospects of further recovery, the liquidators would be able to follow them up.  Liquidators have extensive powers

to investigate19 and rights of recovery not always available to directors.20   Taking the

companies out of liquidation would also require a director to be appointed to satisfy

16     John Hammonds & Co Ltd v Registrar of Companies [1999] 3 NZLR 690 (HC) at [57].

17     Re Pranfield Holdings Ltd (2001) 9 NZCLC 262,577 (HC) at [20].

18     Re Salamanca Properties Ltd above n 15, at [104].

19     For example, Companies Act ss 260, 261, 264, 265 and 266.

20     For example, Companies Act ss 292- 301

the requirement under s 10(d) of the Companies Act that at least one director live in New Zealand. (Mr Mules now lives in Australia).   Mrs Mules volunteered for the job, but given that she was not a shareholder or creditor, I doubt whether that is appropriate.

Result

[39]     Because  I  cannot  see  that  there  would  be  any  use  in  restoring  these

companies to the register, I dismiss Mrs Mules’ applications.

………………………............

Associate Judge R M Bell