Cain and Gemmell [2014] NZHC 165

Cain and Gemmell [2014] NZHC 165

The s305(8) notice was validly served at the mortgagee's registered office; the mortgagee failed to elect within the 20 working day period, and therefore by operation of s305(9) the mortgage was deemed surrendered and vested in the liquidators; the liquidators were entitled to directions under s284 to realise the property and s99 of the Land Transfer Act applies to give effect to vesting; determining the application without notice was justified by urgency, prejudice from delay, and because the mortgagee retains the statutory right under s305(10) to apply to set aside the surrender.

Citation
[2014] NZHC 165
Parties
Applicants Liquidators of Splendide Structures Limited (in Liquidation): Rhys James Cain and Bruce Donald Gemmell; Company in Liquidation: Splendide Structures Limited; Mortgagee / Secured Creditor: David Young Limited; Director of David Young Limited: David Young; Creditor and Applicant Who Obtained Liquidation Order: Mr Barltrop; Local Authority and Enforcement Party Under Building Act 2004: Christchurch City Council; Previous Registered Owner of the Property: Goodman Investment Nominee Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
14 February 2014
Procedural Posture
Originating Application Under Section 284 Companies Act 1993 / Application Heard and Determined on the Papers Without Notice; Orders and Directions Made by High Court on Substantive Application
Outcome
Application granted in part. Court declared the mortgage surrendered by operation of s305(9) and vested in the liquidators; orders made authorising sale process, distribution of proceeds in accordance with the Seventh Schedule, service of sealed orders, and granting leave to DYL to apply to set aside within 10...
Legal Topics
Surrender of Security Under S305 Companies Act, Vesting of Mortgage in Liquidators, Service of Documents on Companies, Applications Without Notice (high Court Rule 7.46), Realisation and Sale of Company Property, Priority of Distribution Under Seventh Schedule
Companies Law Insolvency Property Law Land Transfer Law Civil Procedure Surrender of Security Under S305 Companies Act Vesting of Mortgage in Liquidators Service of Documents on Companies +3 more

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Parties

Rhys James Cain and Bruce Donald Gemmell

Applicants Liquidators of Splendide Structures Limited (in Liquidation)

Splendide Structures Limited

Company in Liquidation

David Young Limited

Mortgagee / Secured Creditor

David Young

Director of David Young Limited

Mr Barltrop

Creditor and Applicant Who Obtained Liquidation Order

Christchurch City Council

Local Authority and Enforcement Party Under Building Act 2004

Goodman Investment Nominee Limited

Previous Registered Owner of the Property

Procedural Posture

Originating Application Under Section 284 Companies Act 1993 / Application Heard and Determined on the Papers Without Notice; Orders and Directions Made by High Court on Substantive Application

Legal Issues

  1. 1 Whether a mortgagee who fails to comply with a s305(8) notice is taken to have surrendered the charge under s305(9)
  2. 2 Whether service of a s305 notice at the registered office complies with Companies Act service provisions
  3. 3 Whether the application could be determined without notice under High Court Rule 7.46

Ratio Decidendi

The s305(8) notice was validly served at the mortgagee's registered office; the mortgagee failed to elect within the 20 working day period, and therefore by operation of s305(9) the mortgage was deemed surrendered and vested in the liquidators; the liquidators were entitled to directions under s284 to realise the property and s99 of the Land Transfer Act applies to give effect to vesting; determining the application without notice was justified by urgency, prejudice from delay, and because the mortgagee retains the statutory right under s305(10) to apply to set aside the surrender.

Court Disposition

Application granted in part. Court declared the mortgage surrendered by operation of s305(9) and vested in the liquidators; orders made authorising sale process, distribution of proceeds in accordance with the Seventh Schedule, service of sealed orders, and granting leave to DYL to apply to set aside within 10...

Orders

  • The originating application for directions pursuant to s 284 of the Companies Act 1993 dated 19 December 2013 be dealt with without notice pursuant to High Court Rule 7.46
  • The mortgage instrument number 8879815.2 registered on the title of CB18F/425 in favour of David Young Limited has been surrendered to the applicants by operation of s 305(9) of the Companies Act 1993