Victor Service Limited v Wise Coach Limited HC Auckland CIV 2010-404-1200
[2010] NZHC 1209
•16 July 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2010-404-001200
UNDER the Companies Act 1993
IN THE MATTER OF Section 289
BETWEEN VICTOR SERVICE LIMITED Plaintiff
ANDWISE COACH LIMITED Defendant
Hearing: 16 July 2010
Counsel: E St John for plaintiff
AV Ram for Maio Shan Wang a director of the defendant company
GS Caro for liquidator
Judgment: 16 July 2010 at 4:30pm
(ORAL) JUDGMENT OF ASSOCIATE JUDGE FAIRE
[on application for order terminating liquidation of defendant company]
Solicitors: Price Baker Berridge, PO Box 21 463, Waitakere City for plaintiff
Baker Law & Conveyancing Ltd, Private Bag 65 902, North Shore City for defendant company
Ministry of Economic Development, Private Bag 92 061, Auckland for liquidator
VICTOR SERVICE LTD V WISE COACH LTD HC AK CIV 2010-404-001200 16 July 2010
[1] Mr Ram seeks an amendment so that the application is made by Mrs Maio Shan Wang, a director of the defendant company. Mr Ram assures me that he has Mrs Wang’s authority for this amendment. Accordingly, I amend the application to show Maio Shan Wang as the applicant.
[2] The application was made as an interlocutory application. It should have been made as an originating application. I am satisfied that I should treat it as an originating application. I proceed on that basis.
The application
[3] Application is made by Maio Shan Wang, a director of Wise Coach Ltd, for an order to terminate the liquidation of that company.
[4] The application is made in reliance on the Companies Act 1993, s 250.
The appointment of a liquidator
[5] Wise Coach Ltd was placed into liquidation on the application of Victor Service Ltd by the High Court at Auckland on 9 June 2010. The Official Assignee was appointed by the court as liquidator.
[6] The application to place the defendant company into liquidation was based on the non-compliance by the defendant with the service of a statutory demand under the Companies Act 1993, s 289. The application was made in reliance on the Companies Act 1993, ss 241(4)(a) and 287 and is based on the proposition that the defendant company was unable to pay its debts.
[7] The defendant company did not appear on 9 June 2010 despite the fact that service of both the statutory demand and the proceedings complied with the provisions of the Companies Act 1993.
[8] Mr Caro advises me that the following position in relation to creditors and costs apply in relation to this case:
a) The liquidator’s costs to date are $2,767.75;
b)A debt is claimed by the Commissioner of Inland Revenue in the sum of $2,070.91;
c) A debt is claimed by a creditor, Greenstone Energy Ltd in the sum of
$540.00;
d)The plaintiff’s costs on the application to appoint a liquidator as ordered by the court are $2,377.00;
e) The plaintiff’s costs calculated on a 2 B basis in respect of this application are $1,880.00; and
f) The debt which is the subject of the statutory demand is in the sum of
$4,270.80.
The company’s current financial position
[9] Mr Ram reports to me that save for the sum of $1,880.00 his instructing solicitors hold in their trust account with authority to disperse to the Official Assignee the sum of $12,026.46. He anticipates that given a few days the additional sum of $1,880.00 will be provided to his instructing solicitors to be paid as directed by the court. I proceed on that basis.
The law in relation to termination of liquidations
[10] The Companies Act 1993, s 250 gives the court for the first time an express statutory power to terminate a liquidation. Section 250 permits an application to be
made by persons referred in (2), which include a director or a shareholder of company. The application, in this case, is made by a director as a result of an amendment which I allowed and which I have referred to under the heading Preliminary matters in this judgment.
The section does not specify the particular matters which are important in the exercise of the court’s discretion. Some caution was expressed on laying down hard and fast rules in re Bell Block Lumber Ltd (in liquidation).[1]
[1] re Bell Block Lumber Ltd (in liquidation) (1992) 5 PRNZ 642.
[11] In re Bell Block Lumber Ltd (in liquidation)[2] when dealing with the former provision in the Companies Act 1955, s 250, the court considered that the criteria specified in Re Calgary v Edmonton Land Co Ltd[3] were entirely appropriate in considering the exercise of the discretion. In summary, the matters that are important then are:
[2] Ibid.
[3] Re Calgary and Edmonton Land Co Ltd [1975] 1 All ER 1046 per Megarry J.
a) Whether the creditors consent or have been paid in full;
b) Whether the liquidator’s costs have been fully paid or secured; and c) Whether the shareholders consent or would be no worse off.
[12] In this particular case I am assured by Mr Ram that the shareholders of this company who are represented, effectively, by the director today consent to the application that is being made.
[13] I am also assured that the funds held in Mr Ram’s solicitor’s trust account are sufficient to pay or at least provide security for all creditors who have signalled an indebtedness by the defendant company. There is also sufficient funds to pay the liquidators costs and other costs ordered by the court. When I take all these matters into account provided the question of costs can appropriately be covered I am satisfied that on the making of the payments due to the creditors and those entitled to costs an order terminating the liquidation can be made.
[14] Because this cannot be implemented today I propose to pronounce a conditional order on the basis that the Registrar may seal it as soon as the Registrar receives from the Official Assignee a certificate that the moneys that are referred to in [8] have been paid to the Official Assignee.
[15] Accordingly, I order that:
a) The liquidation of the defendant company is terminated. This order shall take effect on receipt by the Registrar of a certificate by the Official Assignee confirming payments that I have referred to in [8] have been paid to him and may be sealed accordingly. The Registrar shall endorse on the order the time that he receives the certificate from the Official Assignee and that shall be recorded in the order of termination as the time the order of termination was made;
b)The sum of $4,270.80 shall be paid to the Registrar of the High Court to be held by the Registrar in an interest bearing account pending either a decision of the disputes tribunal on proceedings to be issued by the plaintiff determining entitlement to this fund or further order of this court. Leave is reserved to either the plaintiff or the defendant to apply for further orders in the event that the disputes tribunal matter is not prosecuted or some other good reason applies; and
c) Simply as a precaution, this proceeding shall be listed before me at
9am on Friday, 23 July 2010. All counsel shall be excused at that time if the Registrar confirms that he has received a certificate from the Official Assignee confirming that payments have been made and that all funds that are to be held by the Registrar are in fact held by him and that the appropriate order terminating the liquidation has been filed with this court.
Costs
[16] Although the director has been successful in obtaining an order terminating the liquidation it has, in reality, been responsible for the position which has been reached in this case. That is because it has taken no steps on a statutory demand that was properly served on it. It took no steps on an application to appoint the liquidator which was properly served on the defendant company. It now seeks what is, in essence, an indulgence. I do not see any ground for criticism being made concerning the position adopted by the plaintiff company. I conclude that the plaintiff is entitled to costs on this application which I fix at $1,880 and which is the reason why that
sum is to be paid when received by the Official Assignee to the plaintiff’s solicitors.
JA Faire
Associate Judge
0
0
0