New Zealand Transport Agency v Transport & Structure Limited

[2020] NZHC 2356

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2020-404-001353

[2020] NZHC 2356

UNDER

Section 323 of the Companies Act 1993

BETWEEN

NEW ZEALAND TRANSPORT AGENCY

Applicant

AND

TRANSPORT & STRUCTURE LIMITED

Respondent

Hearing:

28 September 2020

Appearances:

H L Hui for the Applicant

No appearance for the Respondent

Judgment:

28 September 2020

ORAL JUDGMENT OF CAMPBELL J

Solicitors/Counsel:

Meredith Connell, Auckland

NEW ZEALAND TRANSPORT AGENCY v TRANSPORT & STRUCTURE LIMITED [2020] NZHC 2356 [28
September 2020]

[1]    The applicant, the New Zealand Transport Agency (NZTA), says that it is a creditor with an undischarged claim against the respondent company, Transport & Structure Ltd (T&S). The NZTA applies for an order under s 323 of the Companies Act 1993 (the Act) that T&S not be removed from the New Zealand companies register. The NZTA also applies for leave under rule 19.5 to commence this proceeding by way of originating application.

[2]    The originating application procedure is appropriate for this proceeding. I grant leave under rule 19.5.

Background

[3]    Earlier this year the shareholders or directors of T&S sent a request to the Registrar of Companies that T&S be removed from the companies register. That request was made under s 318(1)(d) of the Act. Such a request can be made on the grounds set out s 318(2). Essentially those grounds are that the company has paid all its known creditors in full.

[4]    The Registrar, having received the request, gave public notice under s 320 of intention to remove T&S from the register. Once such a notice is given, certain persons can object under s 321.   The NZTA then delivered to the Registrar, under     s 321, an objection to T&S’s removal. The NZTA’s objection was broadly that it had asserted a claim against T&S, of which T&S’s shareholders and directors were aware.

[5]    The Registrar accepted  NZTA’s  objection on 20 July 2020.   The effect of    s 322(3) is that this only stops the removal process temporarily. The Registrar must proceed with the removal of T&S from the register unless the NZTA applies for and obtains an order under s 323. Hence this application.

[6]    The NZTA’s application is supported by a detailed affidavit made by its General Counsel – Litigation, Mr Penlington. This sets out the circumstances that have led the NZTA to assert a claim against T&S. The affidavit includes correspondence showing that T&S was made well aware of the NZTA’s claim. This includes letters from T&S’s then solicitors responding to NZTA’s assertion of a claim.

[7]    The NZTA served the application and affidavit on T&S on 31 August 2020. The application was first called on 11 September 2020 before Associate Judge Gardiner. There was no appearance from T&S. The Associate Judge lacked jurisdiction to make an order under s 323, and so adjourned the application to today’s list. Today there has been no appearance by T&S.

Decision

[8]    Section 323 confers a discretion on the Court. In order to be able to exercise that discretion the Court first has to be satisfied, in the circumstances of this case, that the NZTA is a creditor of T&S or has an undischarged claim against T&S. Having read Mr Penlington’s affidavit, I am satisfied that the NZTA has an undischarged claim against T&S. Given the lack of any opposition to the application, it is not necessary for me to traverse the basis of the NZTA’s claim.

[9]    It is appropriate that I exercise my discretion under s 323 to order that T&S is not to be removed from the register. The claim by NZTA is a substantial one. T&S was well aware of it. Where, in such circumstances, the company has nonetheless requested removal on the ground that it has paid all its known creditors in full, it will usually be appropriate to make an order that the company not be removed from the register.

[10]   Accordingly, I order under s 323(2) of the Companies Act 1993 that Transport & Structure Limited is not to be removed from the New Zealand register of companies.

[11]   The NZTA is also entitled to costs. A schedule of costs was attached to a memorandum of counsel dated 10 September 2020. I approve the costs set out in that schedule.

Campbell J