BENEFICIAL INSURANCE LTD v THE REGISTRAR OF COMPANIES [2017] NZHC 2437

BENEFICIAL INSURANCE LTD v THE REGISTRAR OF COMPANIES [2017] NZHC 2437 [30 October 2017]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2017-404-002277[2017] NZHC 2437UNDER Sections 321(1)(d) and 323 of theCompanies Act 1993IN THE MATTER OF an objection to the removal of a companyfrom the Companies RegisterBETWEEN BENEFICIAL INSURANCE LIMITEDApplicantAND THE REGISTRAR OF COMPANIESRespondentHearing: 30 October 2017Counsel: M Singh for the ApplicantNo Appearance of, or for the RespondentJudgment: 30 October 2017(ORAL) JUDGMENT OF EDWARDS JSolicitors: Glaister Ennor, AucklandIntroduction[1] The applicant seeks orders:(a) Granting leave pursuant to High Court Rule 19.5 for this proceeding tobe brought by way of originating application; and(b) That Mordarth Ltd (No 1202416), (formerly known as MRL FinanceLtd), not be removed from the Companies Register pursuant to s 323of the Companies Act 1993.[2] The Registrar of Companies has been served and abides the decision of theCourt.Background[3] On 17 August 2017, the Registrar of Companies gave notice of its intention toremove Mordarth from the Register. It appears that Mordarth had failed to file itsannual return.[4] The applicant (Beneficial) objected to the removal of Mordarth from theCompanies Register on 7 September 2017. That was accepted and acknowledged bythe Registrar on 11 September 2017, provided that the present application was madewithin 20 working days of that date.[5] This is not the first time that an application to prevent the removal of MordarthLtd has been made. There have been numerous occasions where the applicant, or itspredecessors, have applied to have Mordarth restored to the Companies Register orobjected to its removal. Those occasions date back to 20 November 2008.Grounds for the application[6] The application is made pursuant to s 321(1)(d) of the Companies Act 1993.That subsection allows a person to object to the removal of the company from theRegister on the grounds that the person is a creditor or a shareholder or a person whohas an undischarged claim against the company.[7] In this case, the orders are sought because the applicant is a creditor ofMordarth Ltd pursuant to a financing facility agreement. That agreement is currentlyin default with approximately $1,680,000 of the book value outstanding.[8] The applicant continues to exercise its security rights in order to reduce thesum owing and it may wish to take formal action against Mordarth in relation to thoserights. That will not, of course, be possible if Mordarth is removed from theCompanies Register.Decision[9] I am satisfied that this is an appropriate proceeding for leave to be granted tocommence the proceeding by way of originating application. Leave is grantedaccordingly.[10] I am also satisfied that little would be gained by directing service onMordarth's shareholders and directors given the persistent failure to comply withprovisions of the Companies Act.[11] The grounds for the substantive order sought are made out. However, I notethat there does not appear to be any immediate plans to pursue enforcement actionagainst Mordarth. There must come a time where companies that should no longer beregistered are either liquidated or struck off, and the applicant makes its election inthat respect.[12] I am prepared to grant the application on this occasion but caution that theapplicant must take all reasonable steps to exercise its enforcement rights. It cannotrely on the success of future applications designed to maintain registration in theabsence of evidence regarding the enforcement of those security rights.Result[13] As a result, I order that:(a) Leave is granted to the applicant to bring the application by way oforiginating application;(b) Mordarth Ltd shall not be removed from the New Zealand Register ofCompanies; and(c) A sealed copy of this order shall be lodged with the Registrar ofCompanies and shall be served on the registered office of Mordarth Ltd.Edwards J