Re Body Corporate 206920

[2015] NZHC 320

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-3073 [2015] NZHC 320

UNDER

Section 52 0f the Trustee Act 1956

IN THE MATTER

of BODY CORPORATE 206920
First Applicant

AND

IN THE MATTER

of BODY CORPORATE 206920

NOMINEES LTD Second Applicant

Hearing:	4 February 2015
Appearances:	S J Corlett for First and Second Applicants
Judgment:	2 March 2015

RESERVED JUDGMENT OF ELLIS J

This judgment was delivered by me on Monday 2 March 2015 at pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:………………………….

Counsel/Solicitors:

S J Corlett, Brookfields, Auckland

Body Corporate 206920 [2015] NZHC 320 [2 March 2015]

Introduction

[1]      The applicants seek vesting orders under s 52 of the Trustee Act 1956 (“the Trustee Act”), vesting interests two struck off companies have in a unit title property located at 3-13 Shortland Street, Auckland

Background

[2]      The applicants filed an originating application on 17 November 2014 seeking orders:

[3]      granting leave for the  application  to  be brought  as  an  originating application under r 19.5 of the High Court Rules; and

[4]      vesting all legal and beneficial rights and interests in three companies which were at the time struck off the New Zealand Companies Register, being Infraserv Assets Limited, Shortland Offices Limited, and Cityvest Limited, held in the land legally described as Unit 11A and 1/21 share of the Accessory Unit 38-40 Deposited Plan 206920 in Certificate of Title 289864 (North Auckland) (the Unit) (being 1/8,

1/24  and  1/24  shares  respectively), in  the second  applicant,  Body Corporate    206920    Nominees    Limited    (BCNL),    pursuant    to s 52(1)(b)(iv) of the Trustee Act 1956 (the TA).

[5]      The grounds on which the orders were sought were set out in the application and affidavit of Catherine Jane Jollands sworn and dated 14 November 2014, and filed in support.

[6]      The application was listed in the Duty Judge List on 8 December 2014 before

Her Honour Justice Thomas.

[7]      However, subsequent to the application being filed, Cityvest Limited was restored to the Companies Register.  Counsel for the applicants became aware of the restoration shortly before the scheduled appearance.

[8]      As a result, on 8 December 2014, counsel sought an adjournment of the application to allow discussion relating to transfer of Cityvest’s Unit entitlement to BCNL to take place with Cityvest’s director.

[9]      Those discussions have now taken place and transfer of Cityvest’s unit share

to BCNL was effected on 19 January 2015.

[10]     The applicants have filed an amended application and updating affidavit of in support on 21 January 2015.1   Orders are sought:

[11]     granting  leave  for  the  amended  application  to  be  brought  s  an originating application under r 19.5 of the High Court Rules; and

[12]     vesting all legal and beneficial rights and interests which Infraserv Assets Limited and Shortland Offices Limited (the Companies) currently hold in the Unit (being 1/8 and 1/24 shares respectively), in BCNL pursuant to s 52(1)(b)(iv) of the TA.

Leave to commence by way of originating application

[13]     High Court Rule 19.5 provides that the Court may permit any proceeding to be commenced by way of originating application if it is in the interests of justice. The commentary in McGechan states that the originating application procedure is appropriate where there is no opposition and, even where matters are contested, the process can be used where it is not in the interests of justice for there to be the usual particularised pleadings, or interlocutory steps  such as discovery, for the proper determination of the issues.

[14]    In Re: Landcorp Farming Limited2, the Court considered an originating application for orders vesting property held by a company which had been struck off the Companies Register (Landcorp Property Limited) to purchasers who were the equitable owners of that property.   The Court held that the application had been properly brought as an originating application and that vesting orders should be made as sought under the Trustee Act.

[15]     In the present case, Mr Corlett submitted that it is appropriate for the Court to grant leave to commence because the Companies have been, and remain, struck off the Companies Register, and the only other party which might possibly have a legal interest in the Unit is the Crown pursuant to s 324(1) of the Companies Act.  He said that as the Companies’ interests in the Unit have at all times been held on trust for the benefit of the members of the Body Corporate (as to which see below), the Crown  does  not  have  a  legal  interest  in  the  Unit.    Moreover,  the  Crown  has confirmed that:

[16]     it does not oppose the current application; and

[17]     it will abide by the determination of the Court.

[18]     Accordingly, and on the basis of the authorities there is no question that the present  application  is  appropriately  commenced  in  originating  form.    Leave  is granted accordingly.

Vesting orders

[19]     Section 52 of the TA provides that where a corporate trustee that is entitled to any interest in land and has ceased to carry on business, is in liquidation or has been dissolved, the Court may make an order vesting the land or interest in land in any such person and in any such manner, and for any such estate or interest as the Court may direct.

[20]     Section 324(1) of the Companies Act 1993 (the CA) provides that property which is held by a company immediately prior to that company being removed from the Companies Register, and is not distributed or disclaimed, vests in the Crown with effect  from  the  date  the  company  is  removed  from  the  Companies  Register. However, s 342(2) explicitly states that this does not include property held by the former company “on trust” for any other person.

[21]     I accept Mr Corlett’s submission that the Companies’ interests in the Unit were at  all  times  held by the Companies  as  trustees  for members of the Body Corporate from time to time. That is because because the evidence establishes that:

[22]     the Unit was created from common property originally owned by Body Corporate 20508, being the predecessor of the first applicant, Body Corporate 206920 (the Body Corporate);

[23]     the  Companies  provided  no  consideration  or  payment  for  their interests in the Unit, and have not made any payment(s) toward Body Corporate levies and/or Council rates payable in respect of the Unit since they acquired such an interest;

[24]     it  was  always  intended  that  the  Companies  would  hold  such  an interest on a temporary basis to allow the Unit to be sold with the proceeds to be applied for the benefit of members of the Body Corporate from time to time.  But because the intended sale did not occur, it follows the Companies’ interests are currently held for the benefit of current members of the Body Corporate; and

[25]     all other members of the Body Corporate with a registered interest in the Unit (except for the Companies), have transferred their shares to the second applicant, BCNL and, save for David O’Connell and Christopher Norman Lord (whom transferred pursuant to a separate agreement), have signed a deed agreeing acknowledging that their shares were always held on trust for the members of the Body Corporate from time to time.

[26]     There will be an order in terms of paragraph 1(b) of the second amended

originating application dated 3 February 2015 accordingly.

Rebecca Ellis J