REGISTRAR OF COMPANIES V NEW ZEALAND CONSULTANCY GROUP LTD HC AK CIV-2010-404-002380

REGISTRAR OF COMPANIES V NEW ZEALAND CONSULTANCY GROUP LTD HC AK CIV-2010-404- 002380 23 April 2010IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2010-404-002380UNDER the Companies Act 1993 BETWEEN REGISTRAR OF COMPANIES Plaintiff AND NEW ZEALAND CONSULTANCY GROUP LTD Defendant Appearances: On the papers M A Woolford for Plaintiff Judgment: 23 April 2010 at 2:30 pmJUDGMENT OF ASSOCIATE JUDGE BELLThis judgment was delivered by me on 23 April 2010 at 2:30 pm pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate: .Solicitors: Meredith Connell, PO Box 2213, Auckland[1] The Registrar of Companies has begun a proceeding for New Zealand Consultancy Group Ltd to be put into liquidation. The Registrar relies on s 241(4)(d) of the Companies Act: "That it is just and equitable that the company be put into liquidation." [2] In summary, the Registrar of Companies says that Michael John Bradley is the director and a shareholder of New Zealand Consultancy Group Ltd. Mr Bradley and his wife are associated with other companies now in liquidation which had received very substantial payments from the public for investment. The liquidators say that large sums received from the public are now missing. The Registrar is concerned that Mr Bradley is continuing to receive money from the public and to apply it for unauthorised purposes. Investigations carried out disclose that New Zealand Consultancy Group Ltd received a payment of $15,000 from a Patrick Greenwood, and a payment of $30,000 from an Eileen Harris. Mr Greenwood paid the money to buy Government stock but he has not received any allocation of Government stock. Mrs Harris paid her money to buy shares in a company called Total Communications Ltd but New Zealand Consultancy Group Ltd does not own any shares in that company and no such shares have been transferred to Mrs Harris. Instead, the money paid into the company's bank account has been spent on other purposes. The Registrar says that there is a need to protect members of the public and there is a strong public interest in preventing Mr Bradley from using the defendant company to receive money from other potential investors. Affidavits filed for the Registrar show a proper foundation for the case. [3] In addition, the Registrar of Companies has applied without notice for the appointment of interim liquidators. The Registrar relies on two provisions: a) Section 246(1) of the Companies Act:If an application has been made to the Court for an order that a company be put into liquidation, the Court may, if it is satisfied it is necessary or expedient for the purpose of maintaining the value of assets owned or managed by the company, appoint a named person, or an official assignee for a named district as interim liquidator.b) Rule 31.23 of the High Court Rules:1. When a proceeding for putting a company into liquidation has been commenced under r 31.3, the plaintiff and any person entitled to apply to the Court for the appointment of a liquidator under s 241(2)(c) of the Companies Act 1993 may apply to the Court for the appointment of an interim liquidator. 2. If the Court is satisfied, upon proof by affidavit, that there was sufficient ground for the appointment of an interim liquidator, it may make the appointment, and may limit the rights and powers of the interim liquidator in any manner it thinks just.[4] Section 246 of the Companies Act provides a sole ground for appointment of a liquidator – the necessity or expediency of maintaining the value of assets owned and managed by the company. [5] I do not find that there is a basis for the appointment of an interim liquidator under s 246. A plaintiff seeking the appointment of an interim liquidator under s 246(1) of the Companies Act needs to show that the company owns or manages assets whose value needs to be maintained. Where there are minimal assets, there can be little sense in appointing an interim liquidator. The remedy is likely to be self- defeating. The costs of interim liquidation will consume any available assets. In the absence of significant assets there is no basis for an order. [6] The Deputy Registrar of Companies has authorised Mr I Ramsay and Mr J McPherson, officers in the Ministry of Economic Development, to carry out an investigation of the affairs of New Zealand Consultancy Group Ltd under s 19 of the Corporations (Investigation Management) Act 1989. The present proceeding was launched only after these officers had started their investigation. They have had the opportunity to investigate the company and find out what assets it holds. The only asset owned or managed by New Zealand Consultancy Group Ltd referred to in their affidavits is an account at the Broadway branch of the ASB Bank, holding $193.32. The plaintiff does not submit that there are other assets requiring protection. [7] While the Registrar of Companies may have good grounds for fearing that the funds in this account might be dissipated or misappropriated, the appointment of an interim liquidator under s 246(1) is not an appropriate response. The sum is so triflingly small that it is a waste of time, money and effort appointing an interimliquidator to protect that fund against potential depredations by directors and shareholders of New Zealand Consultancy Group Ltd. [8] The Registrar also relies on r 31.23 of the High Court Rules. This does not provide a wider power to appoint an interim liquidator than s 246 of the Companies Act. Rule 31.23 is a machinery provision in the High Court Rules, not an additional power for appointment of an interim liquidator. "Sufficient ground for the appointment of an interim liquidator" in r 31.23(2) means sufficient ground under the Companies Act, not some independent sufficient ground. Accordingly, r 31.23 cannot be invoked to appoint an interim liquidator, if there are not grounds for appointment under s 246(1) of the Companies Act. [9] On the information provided, there is not a proper basis for the appointment of an interim liquidator. [10] I reserve leave to the plaintiff to apply further, if more information comes to hand which shows that there is a proper basis for the appointment of an interim liquidator under s 246(1) of the Companies Act. __________________________ R M Bell Associate Judge