Wallace v Assured Systems New Zealand Limited

[2018] NZHC 713

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-661

[2018] NZHC 713

UNDER

the Companies Act 1993

IN THE MATTER

of an application pursuant to section 91 of

the Companies Act 1993 by the executor of a deceased shareholder for rectification of share register

BETWEEN

KEREN FAYE WALLACE AND ANTHONY MARTIN FORTUNE as

executors of the estate of GRANT RICHARD WALLACE

Applicants

AND

ASSURED SYSTEMS NEW ZEALAND LIMITED

Respondent

Hearing:	On the papers
Counsel:	C Fisher for the Applicants
Judgment:	18 April 2018

JUDGMENT OF MUIR J

This judgment was delivered by me on Wednesday 18 April 2018 at 2.30 pm Pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:…………………………

Counsel/Solicitors:

C Fisher, Fortune Manning, Auckland.

WALLACE v ASSURED SYSTEMS NEW ZEALAND LIMITED [2018] NZHC 713 [18 April 2018]

[1]                  The applicants, who are executors of the Estate of the late Grant Richard Wallace (Mr Wallace), seek:

[a]leave to commence proceedings by way of originating application;

[b]dispensation of service; and

[c]substantive orders on their originating application.

[2]                  Such originating application seeks orders pursuant to s 91 of the Companies Act 1993 rectifying the share register of the respondent.

[3]                  Mr Wallace was the sole director of the respondent and held the only voting shares in it. The balance of the shares are held by the sole trustee of Lagden Trust, namely FM Trustees 252 Limited, a corporate trustee. The sole director of FM Trustees 252 Limited is Mr Martin Fortune, one of Mr Wallace’s executors and trustees. The primary beneficiaries of the trust are the deceased’s wife, also an executor/trustee and their children.

[4]                  The originating application is necessary because although s 93 of the Companies Act provides an absolute entitlement for a personal representative of a deceased estate to be registered as the holder of the deceased estate’s shareholding. The Act does not specifically provide a mechanism for the registration in circumstances where the only director and the only person holding voting shares in the company is deceased and there is no living person legally competent to complete registration or appoint a director so that registration can be carried out.

[5]                  The problem arises because although a director has a requisite authority to alter the share register, a director can only be appointed by shareholders with the power to vote on such matters. Although the Lagden Trust holds shares in the respondent company, these shares do not carry any voting rights and therefore it cannot appoint a new director.

[6]I accept the following:

[a]Leave is appropriately granted to commence the proceedings by way of originating application. I come to that conclusion because the proceedings can, in my view, fairly be described as procedural and there is a premium on their prompt disposal. I note that in Masson v Barloy Enterprises Limited the Court likewise permitted a s 91 application to be brought by way of originating application.1

[b]Service is appropriately dispensed with. Although r 18.7 provides that a plaintiff should make a without notice application for directions as to service where a proceeding is under the Companies Act and is not a liquidation proceeding or a proceeding under ss 174 or 290, there are no living directors or holders of voting shares of the respondent company able to act or make decisions on behalf of the company or procure the appointment of natural persons able to so act or make decisions.2 The only other shareholder in the respondent company other than the deceased is Langden Trust. The sole trustee of the Trust is FM Trustees 252 Limited of which Mr Fortune is the sole director. Service of the proceedings would therefore effectively amount to no more than service on the applicant and would serve no useful purpose.

[c]The only persons having an interest in any shares in the respondent company other than the applicants are the beneficiaries of the Langden Trust.

[d]The relief claimed is procedural in as much as it simply effects the transmission of shares which has already occurred by operation of law.

[e]The relief sought does not and cannot create new rights at the expense of any other person.

[7]                  The same considerations in my view determine the substantive originating application.

1      Masson v Barloy Enterprises Limited HC Auckland CIV-2009-404-5243, 23 September 2009.

2      High Court Rules 2016, r 18.7.

Result

[8]                  I grant leave to the applicants to commence this proceeding by way of originating application under Part 19 of the High Court Rules in the form of the originating application simultaneously filed.

[9]I dispense with service of the originating application.

[10]              I order that the share register of the respondent company be rectified so as to record that the applicants jointly hold the 20 shares in the respondent company formerly held by the late Grant Richard Wallace as executors of the deceased estate of the said Grant Richard Wallace.

[11]No order as to costs is sought.

Muir J