MILLENNIUM SECURITIES LIMITED v PAREKURA BAY VINEYARD ESTATES LIMITED (IN LIQUIDATION) [2016] NZHC 2873

MILLENNIUM SECURITIES LIMITED v PAREKURA BAY VINEYARD ESTATES LIMITED (IN LIQUIDATION) [2016] NZHC 2873 [30 November 2016]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2016-404-000617[2016] NZHC 2873UNDER Section 328 of the Companies Act 1993and rules 19.2 to 19.4 of the High CourtRulesBETWEEN MILLENNIUM SECURITIES LIMITEDApplicantAND PAREKURA BAY VINEYARD ESTATESLIMITED (IN LIQUIDATION)RespondentAND REGISTRAR OF COMPANIESInterested Third PartyHearing: (On the papers)Counsel: Sam Carey and Doug Burgess for the ApplicantBruce Pamatatau for the RespondentGuy Caro for the Interested Third PartyJudgment: 30 November 2016JUDGMENT OF MOORE JThis judgment was delivered by me on 30 November 2016 at 2:00 pmpursuant to Rule 11.5 of the High Court Rules.Registrar/ Deputy RegistrarDate:[1] This matter relates to a judgment I delivered on 16 June 2016.1 MillenniumSecurities Limited ("Millennium") filed a memorandum, dated 23 August 2016,seeking clarification as to the effect of this judgment as well as associated orders if these are found to be necessary.[2] Ordinarily, I would have simply issued a Minute to deal with a matter of this sort. However, because several aspects of my earlier decision have been called into question by recent developments, I consider it more appropriate that a formal judgment be issued so as to ensure that a potentially erroneous and/or conflicting authority is not left to stand on its own.[3] My original judgment concerned an application by a shareholder company,Millennium, to restore Parekura Bay Vineyard Estates Limited ("Parekura") to theNew Zealand Register of Companies ("the Register").[4] The purpose of this application was to allow real property ("the property") ofwhich Parekura was, and remains, the registered proprietor to be sold to meet the debt owed to the mortgagee. The property has an estimated market value of between $700,000 to $800,000.[5] Parekura was placed in liquidation on 22 June 2006 after a third party took steps to enforce a costs order that had been made against it in relation to earlier proceedings. There was no dispute that the liquidator, Mr Pamatatau, undertook his duties diligently and lawfully and that he did not prematurely complete the liquidation. Because the mortgage over the property exceeded its value at the time, the property was disclaimed by the liquidator and was never an asset in the liquidation. Mr Pamatatau filed his final report on 5 August 2013. The company was struck off the Register on 13 September 2013.1 Millennium Securities Limited v Parekura Bay Estates Vineyard Limited (in liq) [2016] NZHC 1302.[6] It had been intended that the property would have been dealt with by Parekura and the mortgagee but the filing of the liquidator's final report obviouslycreated issues in that it triggered the removal of the company from the Register. Counsel for Parekura accepted that either its director(s) or its shareholders should have objected to the proposed removal at the time.[7] In any event, I was satisfied that Millennium was a shareholder of Parekura at all material times and that it therefore had the standing to bring the application unders 329(2) of the Companies Act 1993 ("the Act").[8] I was also satisfied that Parekura should be restored to the Register under either s 329(1)(a)(iii) or under s 329(1)(b) on the grounds that it was just and equitable to do so.[9] Finally, I determined that there was no reason why the liquidator's finalreport should be reversed or for there to be an order made for termination of the liquidation under s 250 of the Act. I did so, at the time, because the property concerned was never an asset in the liquidation and because the purpose of the liquidation had been to recover funds to meet the sum owed to the third party under the costs order that had been made against Parekura. This was done without issue, and I considered that the unrelated property was of no interest to the (now former) liquidator.[10] Several issues have arisen since my judgment was delivered and sealed. Parekura was restored to the Register on 21 June 2016. However, the Registrar took steps to remove it again the next day with the effect of negating my judgment.[11] The Registrar did so because she considered she was obliged to through the operation of s 318(e)(i) of the Act, which provides that the Registrar must remove a company from the Register if a liquidator sends or delivers to the Registrar the document referred to in s 257(1)(a), being the final report of the liquidator and several associated documents, along with the original notice of intention to remove the company. These documents were filed and delivered by Mr Pamatatau on 5 August 2013. So long as these documents remained in place (and in light of mydecision not to reverse them it is clear that they did) the Registrar considered that she was required to remove, or more accurately remove again, Parekura from the Register. The Registrar considered that the recent Court of Appeal case of Registrar of Companies v Body Corporate 307730,2 as well as the decision of Katz J inWilliams v Registrar of Companies,3 supported this interpretation. In effect, she was left in the impossible position of having to comply with both my order and what she considered to be, the proper and contradictory operation of s 318(e)(i).[12] Millennium is sympathetic as to the position the Registrar finds herself in. So am I. Neither Body Corporate 307730 nor Williams was referred to me when I issued my earlier judgment on the papers and I was not made aware that the operation of s 318(e)(i) could operate in conflict with the orders I had made. In hindsight, the Registrar should have been named as a respondent to the original proceeding as the relief sought was against her and at that time Parekura itself was a non-existent entity having been struck off. Alternatively, I should have ordered thatthe Registrar be served with Millenium's original application for restoration whichprompted my earlier judgment.[13] Millennium now suggests the Court has three courses of action available to it. If I consider that s 318(e)(i) does not apply in the manner the Registrar considers it does, Millennium suggests I could now make a second order restoring Parekura pursuant to s 329, along with a direction under subsection (4) that the Registrar not take any further steps to remove it.[14] Alternatively, if I consider that the Registar's interpretation is correct, Millennium suggests that I could make an order reversing the liquidator's final reportand terminating the liquidation, and then make another order under s 329 restoring Parekura to the Register. However, Millenium submits this would lead to an artificial and unnecessarily cumbersome process.2 Registrar of Companies v Body Corporate 307730 [2013] NZCA 659, [2014] 2 NZLR 623.3 Williams v Registrar of Companies [2015] NZHC 3217.[15] Finally, in the event that I consider that I am now functus officio, my earlier judgment having already been sealed, Millennium suggests that it could make a fresh application in respect of the same matter.[16] The Registrar has now filed a helpful memorandum in response toMillennium's memorandum of 23 August 2016 and seeks leave to be heard. I am grateful for the Registrar's input and I grant leave accordingly.[17] The Registrar suggests that neither the first nor the second course of action described is now available because my earlier judgment was sealed on 17 June 2016. She submits that Millennium was correct in observing that I am now functus officioin relation to this proceeding. Therefore the Registrar submits that the correct approach would be for the applicant to bring a fresh application, this time naming the Registrar as a respondent. This, she submits, would allow for all the issues to be properly ventilated.[18] I am of the view I am now functus officio in respect of the present proceeding for the reasons the parties have identified. As such I cannot make the orders suggested by Millennium, even if I believed this to be the correct course of action. For the avoidance of doubt, I express no view as to the correct interpretation of s 318(e)(i). Katz J with the benefit of hearing full argument squarely considered this issue in Williams and endorsed the Registrar's interpretation.[19] The only appropriate, indeed the only possible course of action, is for Millennium to bring a fresh application if it chooses to do so.4 However, the Registrar has also made a helpful submission as to the wisdom of this step. She points out that the effect of the liquidator disclaiming the property was to vest it in the Crown. She thus argues that even if Parekura was restored to the Register it would no longer have this property to sell. In any event, she also points out that the mortgagee has its own separate remedy under s 269(5) of the Act which can be invoked in preference.4 This should, as noted, name the Registrar as a respondent if it is ultimately filed.[20] This is obviously not a question for this Court. I leave it to Millennium to consider its position and determine for itself as to how it wishes to proceed.Moore JCounsel/Solicitors:Mr Burgess, AucklandMr Carey, AucklandMr Pamatatau, AucklandMinistry of Business, Innovation and Employment, Auckland