Paterson v GLW Group Limited (in liquidation)

[2020] NZHC 2391

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2020-441-54

[2020] NZHC 2391

BETWEEN

GARTH BOWKETT PATERSON

Plaintiff

AND

GLW GROUP LIMITED (in liquidation) Defendant

Hearing:

11 September 2020 (by AVL)

Appearances:

G B Paterson (in-person) Plaintiff

V P Bowkett (in-person) Intended Second Plaintiff A S Botterill for Defendant (appearance excused)

Judgment:

15 September 2020

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 15 September 2020 at 12.30pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 15 September 2020

PATERSON v GLW GROUP LIMITED (in liq) [2020] NZHC 2391 [15 September 2020]

[1]    This proceeding was commenced on 24 July 2020. The plaintiff is Mr Garth Paterson. The defendant is GLW Group Ltd (GLW), a company in liquidation, of which Mr Paterson was formerly a director. GLW’s liquidator is Mr Damien Grant.

[2]    The proceeding suffers from a  fundamental  flaw.  It  was commenced  by  Mr Paterson against a company in liquidation without first obtaining the liquidator’s formal express consent or leave from this Court, as required by s 248(1)(c) of the Companies Act 1993 (the Act).

[3]    Mr Bowkett applies to be joined as second plaintiff and that his amended statement of claim dated 7 September 2020 be accepted for filing.

[4]    Mr Botterill,  counsel  for  the  liquidator,  has  filed  a  memorandum  dated  9 September 2020 on behalf of the liquidator, confirming the liquidator has not consented to this proceeding being brought in any form. No application for leave under s 248(1)(c) of the Act has been brought by Mr Paterson or Mr Bowkett.

[5]    Mr Paterson contends that he did not need consent or leave because GLW was only ever, and is now no longer, a trustee of the properties that are the subject of the proceeding and all that is sought in the proceeding is an order transferring the title from GLW  to the current trustees or the beneficiaries of the Trust.  Mr Bowkett, in   a memorandum dated 7 September 2020 in support of the informal application to be joined, asserts “… it is now beyond doubt that this proceeding is not affected by section 248(1)(c)” of the Act. What that amounts to is an argument that the merits of the case are so strong that the Court should overlook the requirements of the Act. Such a suggestion  only has  to  be  stated  to  be  rejected.  The  proceeding is  effectively a nullity.

[6]    Moreover, since the proceeding was commenced, this Court has made an order pursuant to s 166 of the Senior Courts Act 2016 prohibiting Mr Paterson from commencing or continuing any civil proceedings relating to any interest in land at Kahuranaki Road in Hawke’s Bay (including the two properties which are the subject of this proceeding) for three years.1

1      Paterson v Lepionka & Co Investments Ltd [2020] NZHC 2184 at [170].

[7]    The current application is to add Mr Bowkett, Mr Paterson’s brother-in-law, as second plaintiff. It is said that Mr Bowkett was appointed as a trustee of the Trust as recently as 20 August 2020. Mr Bowkett, in his 7 September 2020 memorandum, acknowledges there is no material difference between his claim and Mr Paterson’s claim. During the hearing on 11 September 2020, Mr Bowkett confirmed he had become involved at Mr Paterson’s request as Mr Paterson was no longer allowed to conduct the case. The introduction of Mr Bowkett to the proceeding by Mr Paterson has the appearance of being on Mr Paterson’s part an attempt  to  circumvent  Doogue J’s order. To that extent, it is an abuse of the Court’s process. In any event, the proposed second plaintiff would also require the liquidator’s consent or leave under s 248(1)(c), which he does not have.

[8]    If there is a genuine case that these properties are not owned, legally or otherwise by GLW, that they are only registered in the name of GLW because of historical events that have been overtaken, and there is a proper basis for contending that the properties should be transferred to the current trustees or the beneficiaries, then a new proceeding should be commenced in the name of all of the current trustees for an order for the transfer of the titles. The trustees will need either to obtain the formal written consent of the liquidator to commence such a proceeding against GLW or seek the Court’s leave to do so.

[9]    If the position is as clear and straightforward as Mr Paterson suggests, then in all likelihood upon the liquidator being presented with full evidence that GLW held the land as trustee, the liquidator would execute a transfer of the titles in question.

[10]   In the meantime I decline to make orders joining Mr Vaughan  Bowkett as     a second plaintiff in the proceeding. The proceeding is stayed on the dual grounds that Mr Paterson is not entitled to pursue a claim against the company in liquidation without formal written consent from the liquidator or leave of the Court. Mr Paterson is, in any event, precluded from continuing this proceeding by Doogue J’s decision of 26 August 2020. Justice Doogue’s decision means Mr Paterson cannot apply for leave under s 248(1)(c) without  first  seeking  leave  to  continue  the  proceedings  under s 169(3) of the Senior Courts Act 2016.

[11]   The Registry is not to accept any further documents from Mr Paterson on this proceeding unless he has obtained leave to take steps in this proceeding under s 169 of the Senior Courts Act 2016, nor is the Registry to accept any further documents from Mr Bowkett as he is not a party to this proceeding.

Associate Judge Lester

Solicitors:
Mr A S Botterill, Auckland

Copy to:

Mr G B Paterson Mr V A Bowkett