Official Assignee in Bankruptcy of the Property of McHaffie v Registrar of Companies

[2016] NZHC 643

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

CIV-2016-425-000038 [2016] NZHC 643

UNDER

the Companies Act 1993

BETWEEN

THE OFFICIAL ASSIGNEE IN BANKRUPTCY OF THE PROPERTY OF DAVID HUGH MCHAFFIE

Plaintiff

AND

THE REGISTRAR OF COMPANIES First Defendant

BEN CRUACHAN LIMITED (Struck off) Second Defendant

Hearing:	12 April 2016 (Determined on the papers)
Counsel:	C J Jolliffe for Plaintiff
Judgment:	12 April 2016

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

Introduction

[1]      The Official Assignee in the bankruptcy of Mr DHB McHaffie applies for orders in relation to a company called Ben Cruachan Limited (BCL) which is presently struck off the Register of Companies.  Mr McHaffie is the holder of half the shares in BCL; the other half are held by the trustees in the estate of the late H M McHaffie.  In the substantive proceeding the Official Assignee seeks orders restoring BCL to the Register and placing it into liquidation.  On the interlocutory application now before me the Official Assignee seeks leave to plead for restoration of BCL to

the Register, and orders relating to service and advertising.

THE OFFICIAL ASSIGNEE in Bankruptcy of the property of D MCHAFFIE v THE REGISTRAR OF COMPANIES [2016] NZHC 643 [12 April 2016]

[2]      BCL was struck off the Register because it did not file an annual return in

2015.    At  the  time  this  should  have  occurred  it  did  not  have  a  director,  as

Ms McHaffie was the sole director and had died in September 2014.

Background

[3]      The Official Assignee advises that BCL has net assets in excess of $300,000 and that it does not have any creditors known to the Official Assignee.   Because BCL has  been  struck  off the  Register  and  is  without  a director  this  cannot  be distributed.    Half  of  it  is  an  asset  in  the  control  of  the  Official  Assignee  in Mr McHaffie’s bankruptcy.   BCL can only be restored by way of a shareholders’ resolution or an order of the Court, and it would also need at least one director to be appointed upon reinstatement to the Register.  Mr McHaffie has been asked to pass a resolution, along with the trustees in the estate of Ms McHaffie, restoring BCL to the Register but has declined to do so.  As a result an order is sought from this Court.

Discussion

[4]  As Mr McHaffie has declined to take any steps in relation to the affairs of BCL, and BCL has an asset which should be distributed to its shareholders (which includes his estate in bankruptcy) it is in my view appropriate that the Court make such orders as are required to ensure that the financial affairs of the company are finalised. Before the Court can order that BCL be placed into liquidation, it must first be

restored to the Register.1    The Court may order restoration of BCL to the Register

under s 329 of the Companies Act in certain circumstances, one of which is that at the time it was removed from the Register the applicant (here, the Official Assignee of Mr McHaffie) was a shareholder in BCL.   In considering whether to make an order under this section the Court is required to have regard to the reasons for BCL’s removal, and whether those grounds existed at the time of removal or exist at the time of the hearing of the application.   The ground for BCL’s removal from the Register existed at the time that occurred, and still exists now.  However, the Official Assignee also proposes that BCL be immediately placed into liquidation, so the fact that it has not complied with the requirements of the Act by filing an annual return is

of no material weight as a factor to be taken into account in deciding whether to

1      Section 241(2A) of the Companies Act 1993.

make an order under s 329.  I do not see, either, any need for any ancillary orders to be made under s 329(3) or (4).

[5]      BCL ceased to trade on completion of the venture which gave rise to its net cash position.  It does not have any creditors.  It does not have a director and there is an impasse between the shareholders in relation to taking steps that they might have taken to restore the company to the Register and distribute its assets.   In these circumstances the Official Assignee asks that the Court place BCL into liquidation

on the basis that it is just and equitable that this occur.2

[6]      I am satisfied that grounds exist on which the Court can reasonably conclude that it should restore BCL to the Register, and on which it can reasonably conclude that it should be placed into liquidation immediately upon the order for restoration being made.  For that reason I make an order as sought on the present application granting leave to the applicant to plead for restoration of BCL to the Register.

[7]      The Official Assignee asks for a direction that this proceeding be served only on the estate of the late H M McHaffie as the holder of half the shares in BCL, and on the former registered office of BCL as set out in the application.  These orders are appropriate in the circumstances, in my view, and are made accordingly.

[8]      Finally, the Official Assignee asks for an order excusing non-compliance with r 31.9 of the High Court Rules.   This requires that a proceeding for the appointment of a liquidator by the Court under s 241(2) of the Companies Act must be advertised in the manner set out in the rule.  The Official Assignee asks that this not occur because BCL is currently struck off, is not carrying on business, does not have any known secured or unsecured creditors (and therefore no-one is likely to be affected by its liquidation) and an order for liquidation should be made immediately on restoration to avoid BCL being restored to the Companies Register without a director.

[9]      In the circumstances outlined, and also because this application is made by the  Official  Assignee  of  one  of  the  shareholders,  will  be  served  on  the  other

2      Section 241(4).

shareholder, and is generally in accord with that shareholder’s wishes, this is in my opinion a case where the Court can properly exercise its inherent jurisdiction to control the processes before it, and not require that advertising of the application take place.

Outcome

[10]     As a result I make the following orders:

(a)     Leave is granted to the Official Assignee to plead for restoration of

BCL to the Companies Register under s 329 of the Companies Act.

(b)All documents shall be served on the estate of the late H M McHaffie and  on  the  former  registered  office  of  BCL  as  set  out  in  the interlocutory application.

(c)     The application to restore BCL to the Register and the substantive proceeding to place BCL into liquidation will be heard in the High Court at Invercargill at a time and on a date to be appointed by the Registrar.

(d)     The Official Assignee need not comply with r 31.9 of the High Court

Rules.

J G Matthews

Associate Judge

Solicitors:

Anthony Harper, Christchurch.