ELIAS v MARTIN AIRCRAFT COMPANY LIMITED [2021] NZHC 101

ELIAS v MARTIN AIRCRAFT COMPANY LIMITED [2021] NZHC 101 [9 February 2021]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2020-409-635[2021] NZHC 101UNDER Companies Act 1993IN THE MATTER of the liquidation of MARTIN AIRCRAFTCOMPANY LIMITEDBETWEEN RAN ELIASPlaintiffAND MARTIN AIRCRAFTCOMPANY LIMITEDDefendantHearing: Determined on the papersCounsel: J H Stevens and S J Leslie for the PlaintiffJudgment: 9 February 2021JUDGMENT OF ASSOCIATE JUDGE LESTERThis judgment was delivered by me on 9 February 2021 at 12.00 pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy Registrar9 February 2021Introduction[1] Martin Aircraft Company Limited (the defendant company) ceased carrying onbusiness in or about February 2019. The plaintiff, Ran Elias, is the sole remainingdirector of the defendant company. The plaintiff has sought an order that the defendantcompany be liquidated. To this end, the plaintiff, who is based in Australia but whohas Wellington based solicitors, has applied to the court for orders transferring theproceeding from the Christchurch High Court to the Wellington High Court.[2] The plaintiff applies for the proceeding to be transferred on the grounds that:(a) he is the sole director of the defendant company;(b) his solicitors are located in Wellington (and the cost to the plaintiff willbe increased if they are required to travel to Christchurch);(c) three quarters of the defendant company's shareholders are largelybased outside New Zealand;(d) owing to restrictions in the defendant company's constitution, it has noboard with the ability to change its registered office;(e) it is not anticipated that the liquidation application will be opposed ordefended; and(f) in all the circumstances, transfer of the proceeding to the High Court atWellington would be more convenient to the parties.[3] The plaintiff has sought orders under rr 5.1(5) and 31.4(5) that the proceedingbe transferred to the High Court at Wellington, and under r 31.6(2) that the place forthe hearing of the proceeding is the High Court at Wellington.Principles applicable to transfer of proceedings[4] Rule 5.1(5) provides:(5) If it appears to a Judge, on application made, that a different registryof the court would be more convenient to the parties, he or she maydirect that the statement of claim or all documents be transferred tothat registry and that registry becomes the proper registry.[5] The onus is on the applicant to establish that another registry is moreconvenient, but it is not especially difficult to discharge.1 In Houghton, the counseland solicitors for the majority of the parties were based in Auckland. The Judgeaccepted the fact counsel were Auckland-based was a measure of conveniencetranslating into aggregate cost, but considered the geographical base of instructingsolicitors to be much less relevant. The application to transfer the proceeding toAuckland was declined as the cost savings achieved by transfer were deemed to beoutweighed by the convenience and efficacy of continuing the close management andcontrol of the proceeding (which already had an extensive procedural history) in theChristchurch registry and thereby expeditiously achieving a fair and just outcome.2[6] Considerations of convenience do not simply mean the convenience of oneparty or the court but rather the convenience having regard to the case in all itsbearings.3 The rule requires not only an assessment of physical, financial and anyother matters affecting convenience, but also the overall justice of the case.4[7] Rule 5.1(5) assumes that a proceeding has been filed in its proper registry. It isto be noted that transfer on the basis of convenience is not available before theproceeding is commenced.5[8] Counsel for the plaintiff also refers to r 31.4(2). Rule 31.4 provides:(1) Despite rules 5.1(1) to (3) and 5.25, the proper registry of the court for thepurposes of the filing of a statement of claim under rule 31.3 is—(a) the registry of the court in the town where, or the registry of the courtin the town nearest to which, the defendant company's registeredoffice is situated; or1 Houghton v Saunders HC Christchurch CIV-2008-409-348, 7 October 2011.2 At [53]. See also [14]-[36] for recital of the matter's considerable procedural history.3 Consumer Council v Pest Free Service [1978] 2 NZLR 15 (CA) at 19.4 Morgan v Sovereign Assurance Co Ltd [2013] NZHC 1195, (2013) 21 PRNZ 593 at [31].5 Andrew Beck and others (eds) McGechan on Procedure (looseleaf ed, Brookers) at [HR5.1.18(2)];Vine-Tech Contracting Ltd v South River Ltd [2016] NZHC 420 at [16].(b) if the defendant company does not have a registered office, theregistry of the court in the town where, or the registry of the court inthe town nearest to which, the defendant company's principal or lastknown place of business is or was situated.(2) This rule does not limit rule 5.1(4) and (5).[9] Accordingly, transfer under r 5.1(5) of an application to liquidate a companyis confirmed by r 31.4(2).Application of principles to grounds advanced by the plaintiff[10] Consideration of what would be more convenient to the parties requires"having regard to the case in all its bearings". The primary ground advanced by theplaintiff regarding the convenience test in r 5.1(5) is the increased cost associated withrequiring his Wellington-based solicitors to travel to Christchurch for the liquidationproceeding.[11] Without more, the cost above to the plaintiff of his solicitors travelling toChristchurch would likely be insufficient to discharge the onus under r 5.1(5).However, the plaintiff is the sole remaining director of the defendant company andwithout the practical ability to appoint additional directors. As a result, under thecompany's constitution, the plaintiff has limited authority to act on behalf ofthe company.[12] Shareholders have standing to defend a liquidation application.6 The fact threequarters of the defendant company's shareholders are based outside New Zealandmeans a transfer of proceedings from Christchurch to Wellington will be of limitedrelevance to the majority of shareholders. As the proceeding has only just beencommenced, it does not have an extensive procedural history or significant legalcomplexity as in Houghton that necessitates continued close management and controlof the proceeding in the Christchurch registry.[13] The cost savings to be achieved by transfer and the lack of other directlyaffected parties means no apparent detriment arises from a transfer of proceedings.6 High Court Rules 2016, r 31.5(2).[14] Therefore, having regard to the case in all its bearings, I am satisfiedthe plaintiff has established that it would be more convenient to the parties for theproceeding to be transferred to the Wellington registry. I so order.__________________________________Associate Judge LesterSolicitors:Bell Gully, Wellington