SCI Finance Ltd v Van Delden HC Auckland CIV 2007-404-5338
[2007] NZHC 2128
•25 September 2007
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2007-404-5338
BETWEEN SCI FINANCE LTD Plaintiff
AND BORIS VAN DELDEN AND DENNIS JOHN WOOD (AS LIQUIDATORS OF DIRECT LABOUR SERVICES LTD) Defendant
Hearing: 25 September 2007
Appearances: G Denholm for Plaintiff
W Manning for Defendant Judgment: 25 September 2007 at 4.30 pm Reasons: 25 September 2007
REASONS FOR ORAL JUDGMENT OF ASSOCIATE JUDGE SARGISSON
This judgment was delivered by Associate Judge Sargisson on 26 September 2007 at 4.30 pm pursuant to Rule 540(4) of the High Court Rules
Registrar/Deputy Registrar
Date:………………………
Solicitors:
Foy & Halse, PO Box 26-128, Epsom, Auckland
Christopher Taylor, PO Box 109731, Newmarket, Auckland
SCI FINANCE LTD V BORIS VAN DELDEN AND DENNIS JOHN WOOD (AS LIQUIDATORS OF DIRECT LABOUR SERVICES LTD) HC AK CIV 2007-404-5338 25 September 2007
[1] The plaintiff has lodged caveats against dealings in two pieces of land owned by Direct Labour Services Limited which is now in liquidation.
[2] The relevant certificates of title are:
a) NA80C/902 b) NA8C/903.
[3] The Registrar-General of Land has given notice to the plaintiff under s 145A of the Land Transfer Act 1952 of an application made by the company’s liquidators on behalf of the company as registered proprietor, for the caveats to lapse.
[4] The plaintiff has made application to the High Court under the Act for an order to the contrary. The application states that it is made under s 145 but as the Registrar’s notice is given under s 145A, the plaintiff’s application is governed also by s 145A. I proceed on that basis.
[5] The material part of s 145A provides:
(3)The caveat lapses with the close of the prescribed period after the date on which notice under subsection (2) is given unless –
(a) the caveator has earlier given to the Registrar notice that an application for an order to the contrary has been made to the High Court; and
(b) An order to that effect has been made and served on the Registrar within the prescribed period after the date on which notice under paragraph (a) is given to the Registrar.
[6] It is common ground that the prescribed period is the period of 14 days after the date on which the Registrar has given notice to the caveator of receipt by the Registrar of a lapse notice under s 145A.
[7] The Registrar’s notice was despatched on 13 August 2007 and received by the plaintiff’s solicitor on 15 August 2007. The prescribed period of 14 days therefore expired on 29 August 2007.
[8] Mr Denholm advises that he gave notice of the caveator’s application to the
High Court personally to the Registrar on that day.
[9] On 13 September 2007, the plaintiff’s application was listed for mention. I adjourned the application and on the joint request of counsel, I allocated a telephone conference to take place this morning on the basis that Mr Denholm was to advise whether or not the application is to proceed, in which event he indicated he would be seeking an interim order. Mr Manning in turn reserved his client’s right to challenge the making of an interim order on jurisdictional grounds.
[10] At this morning’s telephone conference Mr Denholm indicated that he had taken further instructions and his clients intended to proceed with the application. Mr Manning opposed, raising jurisdictional grounds. I adjourned the telephone conference until this afternoon so that Mr Manning could file a memorandum setting out the jurisdictional arguments and Mr Denholm could file a further affidavit expanding on the substantive grounds for his client’s application.
[11] Mr Denholm advises that the caveat will lapse tomorrow unless orders are made today. I am told by Mr Manning that the liquidators wish to proceed with a settlement of their own sale of the two properties on Friday and will do so unless orders are made that the caveat not lapse.
[12] I therefore proceed on an urgent basis.
The jurisdictional arguments
[13] The first argument is that the plaintiff’s notice to the Registrar of its High
Court proceeding was defective for the reasons which can be summarised as follows:
a) The proceeding should name the company in liquidation as the defendant, the company in liquidation is the registered proprietor and the vendor. The liquidators are not the company, they are the agents of the company. The company’s property does not vest in them.
b)The plaintiff’s application was made against the liquidators (although described on the entitulling as liquidators of the company). It was not made against the company. The company is not named as a party.
c) Had the proceeding been brought against the company, the plaintiff required consent of the liquidators or leave of the Court under s 248 of the Companies Act 1993. The liquidators’ consent has not been requested or given. No application for leave has been made to the Court. It follows that no proceedings have been commenced against the company.
[14] The liquidators raise a further argument that even if leave is granted under s 248 today, the proceeding against the company would be deemed to commence today. Commencement would not be retrospective to the date the plaintiff commenced the original proceeding.
[15] The basis for this submission is:
a) The Court does not have jurisdiction under s 248 to give retrospective leave to commence a proceeding against a company in liquidation.
b)The Court cannot add the company in liquidation as a party retrospectively. To do so would defeat the plaintiff’s obligation under s 145A to file a proceeding within the prescribed 14 days and to give notice to the Registrar of the proceeding within that period.
c) The notice to the Registrar was notice of an application made against the wrong party. The notice was therefore a nullity.
d)As no notice was given to the Registrar within the prescribed 14 days, the plaintiff’s caveats are deemed to lapse under s 145A(3). The caveats having lapsed, the Court has no jurisdiction to revive them.
Discussion
[16] I deal first the question of leave under s 248. It is common ground that irrespective of who is the correct defendant the plaintiff should have obtained leave to commence the proceeding under s 248 (1)(c) of the Companies Act. This is because the proceeding affects or “is in relation to” the property of the company in liquidation.
[17] Mr Manning was not able to point to any authority for the proposition that leave under s 248 cannot be given retrospectively for such a proceeding where the proceeding was in fact commenced without leave
[18] I do not accept that leave cannot be given retrospectively to bring a proceeding relating to the property of the company. Assuming the plaintiff has an arguable claim to an interest under the agreements for sale and purchase between the plaintiff and its purchaser, then given the time constraints it faced after receipt of the Registrar’s notice, the interests of justice would be best served if leave is given.
[19] The more significant point is whether the proceeding is beyond effective repair because the wrong party has been named as defendant and to substitute a company in liquidation would mean the proceeding against the company would have been commenced too late.
[20] I accept that ordinarily the substitution of a new defendant cannot take effect so as to defeat a statutory time period.
[21] However, Mr Manning’s argument presupposes that s 145A requires that the caveator’s application to the High Court must name the company in liquidation as the defendant, failing which it will be a nullity. He argued in support that any order could only be made against the company and therefore that the caveator’s application must necessarily name the company.
[22] Section 145A does not stipulate who should be made a party to an application for an order that a caveat not lapse.
[23] I can accept that ordinarily the Court should not make an order that a caveat not lapse where the estate or interest the caveator claims is derived from a registered proprietor who is not named. Importantly, the registered proprietor should have the opportunity to be heard before an order is made that affects its interests.
[24] However, as Mr Manning recognised, this is a case where the failure to name the company is really a technical point. The liquidators are the custodians of the company’s property. It was the liquidators, acting as agents for the company and on its behalf, who made the application to the Registrar. Harrison J noted in Sleepyhead Manufacturing Co Ltd v Dunphy and Shephard (2006) 9 NZCLC 264,000 in the context of s 36(1) of the Personal Property Securities Act 1999, that the liquidators were acting as the agents for the company in liquidation when they sold goods that were subject to the plaintiff’s security interest. He went on to say:
Alternatively put, the liquidators were the company and thus the debtor for the purposes of the PPSA. They were not collectively a third party.
[25] The present situation is, in my view, analogous. If the liquidators were the company’s agents or, alternatively put, the company, when they made their application to the Registrar then the plaintiff’s proceeding cannot be flawed fatally by naming the liquidators of the company in liquidation as the defendants. Even if it is wrong to conclude that the liquidators were the company for the purposes of s
145A of the Land Transfer Act, they were nevertheless the agent for the company and the custodians of its property and were placed squarely on notice by the plaintiff’s proceeding. In reality there has been no prejudice to the company. This is a case where no one could have been misled or prejudiced by the misnaming of the defendant. The case is really one of misnomer and not of any material misidentification.
[26] In all the circumstances, I do not accept that the proceeding is fatally flawed and that there is no jurisdiction to make orders on the application. I am satisfied that the interests of justice would be best served by an order changing the name of the defendant and by an order giving retrospective leave to commence the proceeding. I am also satisfied there should be an interim order that the caveat not lapse but on a strictly limited basis to allow time for the substantive argument to be heard and
determined quickly. The critical issue will be, of course, whether the plaintiff has an arguable equitable interest in the two pieces of land.
Orders
[27] I make the following orders:
a) An order changing the name of the defendant to that of the company in liquidation, to take effect retrospectively from the date that the plaintiff’s application was filed.
b)An order giving leave to commence the plaintiff’s proceeding taking effect retrospectively to the date that the plaintiff’s application was filed.
c) The plaintiff is to file and serve an amended application recording the change of name by 4:00 pm tomorrow.
d) An interim order that the caveats not lapse pending further order.
e) That there be a telephone hearing of the substantive issue in the application on Friday, 28 September 2007 at 9:00 am. As I indicated to counsel, it may be necessary to allocate a further hearing later in the day, but they should anticipate the possibility that they will have to proceed at 9.00 am.
f) The liquidator is to file and serve any affidavit in reply by noon,
Thursday, 27 September 2007.
[28] Leave is reserved to counsel to file and serve a joint memorandum on or before Thursday morning, requesting that the hearing on 28 September be vacated. Mr Manning has indicated that the liquidators may be able to negotiate an extended date for settlement, in which case he would prefer a little more time to file affidavit in reply and to prepare for hearing. Mr Denholm indicates he would not oppose.
[29] Costs to date are reserved pending further order.
Dated at Auckland on at am/pm.
Associate Judge Sargisson
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