BEST INVEST NZ COMPANY LTD (IN INTERIM LIQ) v EAST WIND COMPANY LTD (IN INTERIM LIQ) [2019] NZHC 1160

BEST INVEST NZ COMPANY LTD (IN INTERIM LIQ) v EAST WIND COMPANY LTD (IN INTERIM LIQ)[2019] NZHC 1160 [24 May 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-000879[2019] NZHC 1160UNDER the Companies Act 1993IN THE MATTER OF the liquidation of Japan Business ConsultingCompany LimitedBETWEEN BEST INVEST NZ COMPANY LIMITED(IN INTERIM LIQUIDATION)PlaintiffAND EAST WIND COMPANY LIMITED (ININTERIM LIQUIDATION)DefendantCIV-2019-404-000872BETWEEN BEST INVEST NZ COMPANY LIMITED(IN INTERIM LIQUIDATION)PlaintiffAND EAST WIND HOLDINGS LIMITED (ININTERIM LIQUIDATIONDefendantCIV-2019-404-000873BETWEEN BEST INVEST NZ COMPANY LIMITED(IN INTERIM LIQUIDATION)PlaintiffAND EAST WIND NOMINEE COMPANYLIMITED (IN INTERIM LIQUIDATION)DefendantCIV-2019-404-000874BETWEEN BEST INVEST NZ COMPANY LIMITED(IN INTERIM LIQUIDATION)PlaintiffAND EAST WEST MEDICARE LIMITEDDefendantCIV-2019-404-000876BETWEEN BEST INVEST NZ COMPANY LIMITED(IN INTERIM LIQUIDATION)PlaintiffAND EAST WIND PROGRAMME LIMITEDDefendantCIV-2019-404-000870BETWEEN BEST INVEST NZ COMPANY LIMITED(IN INTERIM LIQUIDATION)PlaintiffAND JAPAN BUSINESS CONSULTINGCOMPANY LIMITEDDefendantHearing: 24 May 2019Appearances: R Sussock and T E Bielby for PlaintiffsJudgment: 24 May 2019ORAL JUDGMENT OF ASSOCIATE JUDGE P J ANDREWSolicitors:Lowndes Jordan, AucklandIntroduction[1] The plaintiffs seek orders for liquidation and the appointment of MessrsTimothy Downes and Michael Moore as liquidators in respect of all six defendantcompanies.[2] The background to the proceedings is set out in the judgment of AssociateJudge Bell of 13 May 2019. The plaintiff, Best Invest NZ Company Limited, and thedefendant companies, are related companies under s 2(3)(c) of the Companies Act1993. Mr Masatomo Ashikaga was the sole director of the plaintiff, Best Invest NZCompany Ltd (in liquidation), and all of the six defendant companies.[3] Mr Ashikaga died on 21 February 2019. Since his death none of the defendantcompanies has had a director and no steps have been taken to obtain a grant ofadministration for his estate. As Associate Judge Bell noted in his decision, in theabsence of any grant of administration, the shares are presumably vested in the Crownunder s 22(1) of the Administration Act 1969. No papers have been filed by the Crownand Ms Sussock advises me that it is unlikely that the Crown is going to take any steps.No-one has taken any steps to appoint a director to replace Mr Ashikaga. He issurvived by his widow, Ms Siu Tai Tsai. There is no suggestion that she has anyinterest in any of the companies or holds any office in them. Because none of thedefendant companies have a director, they do not meet one of the critical requirementsfor a company under s 10 of the Companies Act 1993.[4] I note also that there are related proceedings. In a judgment Ohara v BestInvest NZ Company Ltd,1 I appointed interim liquidators for Best Invest NZ CompanyLtd.[5] In his decision of 13 May 2019, Associate Judge Bell dismissed theapplications in relation to the following companies:(a) East Wind Programme Ltd (CIV-2019-404-876);(b) East Wind Holdings Ltd (CIV-2019-404-872);(c) East Wind Medicare Ltd (CIV-2019-404-874);1 Ohara v Best Invest NZ Company Ltd [2019] NZHC 850.(d) Japan Business Consulting Company Ltd (CIV-2019-404-870).[6] The applications were dismissed by His Honour on the basis that there wasinsufficient evidence to show that the plaintiff, Best Invest NZ Company Ltd (ininterim liquidation), had standing as a creditor to apply for those companies to be putinto liquidation. However, leave was reserved to apply again if further informationcame to hand showing that the plaintiff was a creditor. Now I address the question ofthe additional plaintiffs in these proceedings.Proceedings as additional plaintiffs[7] The interim liquidators of Best Invest NZ Company Ltd (in liquidation) saythey now have clear evidence that other companies for which they, as interimliquidators have been appointed, namely East Wind Company Ltd (in interimliquidation) and East Wind Holdings Ltd (in interim liquidation) are creditors of someof the companies, the subject of these proceedings.[8] Statements of claim, notices of proceeding and verifying affidavits have beenfiled (on 21 May 2019) in accordance with r 31.24 of the High Court Rules.[9] I am satisfied on the basis of the further documents filed and the updatingaffidavit of Mr Timothy Wilson Downes dated 23 May 2019 that the additionalplaintiffs have established that they are creditors of the relevant companies and theythus have standing to bring the applications for liquidation.Advertising[10] The liquidation proceedings were advertised on 20 May 2019 as set out in theaffidavit of Mr Timothy Downes. The scheduled call of the applications, namelytoday, is at a much earlier time than would ordinarily be the case. I am satisfied,however, in the circumstances here that there are grounds for abridging time andaccordingly I find there is no obstacle in the advertising process to my makingliquidation orders today.[11] Ms Sussock has referred me to the decision of Associate Judge Gendall in Linesv Wakefield Buildings Ltd.2 I am satisfied that there is proper authority for me toproceed in the manner that I do.Decision[12] I now turn to consider the grounds of the liquidations. I am satisfied that theplaintiffs have established that there are grounds under s 241 of the Companies Act1993 for placing all six defendant companies into liquidation. The grounds are asfollows:(a) The companies and their boards have persistently or seriously failed tocomply with the Act at s 241(4)(b);(b) The companies do not comply with s 10 of the 1993 Act at s 241(4)(c);(c) In all the circumstances I find it is just and equitable that all sixcompanies be put into liquidation, s 241(4)(d).[13] I note that the Court has received an updating affidavit from Mr TimothyDownes which confirms there are urgent and compelling reasons for the companies tobe placed into liquidation as soon as reasonably practicable.Result[14] I make orders therefore placing all six defendant companies into liquidation.In respect of each company, Mr Timothy Wilson Downs and Mr Michael Moore areappointed as final liquidators. I also order that the reasonable costs of the plaintiffsfor applying to put the companies into liquidation are to be paid out of the assets ofthe defendant companies at the rates of remuneration as set out in the consent to act asinterim and final liquidators filed in these proceedings and dated 8 May 2019, exceptthat the maximum rates for partners and liquidators is adjusted to $550 per hourexclusive of GST and I note that is in accordance with the judgment of Associate JudgeBell of 13 May 2019. I refer to his paragraph [27](c).2 Lines v Wakefield Buildings Ltd CIV-2005-441-825, 18 July 2006.[15] I also order costs to be paid on a scale 2B basis to the plaintiffs as set out in thesix memoranda dealing with costs as filed by Ms Sussock today. The timing of myorders in respect of all six defendant companies is 10.50 am today, Friday, 24 May2019.__________________________Associate Judge P J Andrew