TAI PING TRADING COMPANY LTD V REGINA ENTERPRISES LTD HC AK CIV 2009-404-007754

TAI PING TRADING COMPANY LTD V REGINA ENTERPRISES LTD HC AK CIV 2009-404-007754 27 March 2010IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2009-404-007754UNDER the Companies Act 1993 BETWEEN TAI PING TRADING COMPANY LIMITED Plaintiff AND REGINA ENTERPRISES LIMITED Defendant Hearing: 19 and 24 March 2010 Counsel: No appearance for plaintiff T Ram for defendant KM Wakelin for Official Assignee Judgment: 27 March 2010 at 3:00pmJUDGMENT OF ASSOCIATE JUDGE FAIRE [on application to terminate liquidation of defendant company]Solicitors: Christopher Taylor, PO Box 37 772, Parnell for plaintiff company Baker Law, Private Bag 65 902, Mairangi Bay for defendant company[1] Application is made by the defendant company to terminate the liquidation of it. [2] The defendant company was placed into liquidation on the application of Tai Ping Trading Co Ltd. The Official Assignee was appointed the liquidator. The court order was made on 9 February 2010. The defendant company did not appear. Its directors say they had no knowledge of the hearing date. [3] The defendant company's officers claim that the plaintiff was requested to notify the directors of any proceeding. They say they received no such notification. Be that as it may, service appears to have occurred both in respect of a statutory demand and in relation to the proceedings themselves, in accordance with the provisions of the Companies Act 1993, s 387. [4] No foundation has been laid out for the proposition that the order placing the company into liquidation and appointing a liquidator was irregularly obtained. [5] The plaintiff company has been served with this application but has entered no appearance. It has been in communication with the Official Assignee, who was the appointed liquidator. It indicates that it does not consent to the termination of the liquidation. [6] The defendant company's directors dispute the debt claimed by the plaintiff company. That matter, clearly, is something that will ultimately have to be determined by proceedings issued, in all probability, in the District Court. Ms Wakelin confirmed to me that if no order terminating the liquidation was made, the liquidator would have to establish an appropriate procedure to determine whether or not the debt claimed by the plaintiff company could be admitted in the liquidation. [7] Arrangements have been made with all other creditors. [8] I have received advice that the Official Assignee has now received a further $27,132.09 from the defendant company. That sum is sufficient to:a) pay the creditors who have been identified by the Official Assignee, other than the plaintiff; b) pay the Official Assignee costs; and c) to cover the amount claimed by the plaintiff company. [9] The Companies Act 1993, s 250 gives the court a discretion to terminate a liquidation if it is satisfied that it is just and equitable to do so. The Companies Act 1993, s 250(4) permits the court to make any additional or consequential order in connection with the order terminating the liquidation. [10] The court's jurisdiction to terminate a liquidation is routinely exercised if: a) All the creditors have been paid in full or satisfactory provision has been made for them to be paid, or they have consented; and b) The liquidator's costs have been paid or secured; and c) The shareholders have given their consent or would be in no worse position than if the liquidation had proceeded to its conclusion. [11] The liquidator's costs have been paid. The defendant company's shareholders all support the current application. The Official Assignee has sufficient funds to pay the creditors who have filed proofs of debt, save in respect of the plaintiff company. [12] The one problem that needs to be considered is how to deal with the disputed debt. The Official Assignee has undertaken to act as stakeholder. The problem can be dealt with by the Official Assignee holding $20,670 pending further order and, in particular, to await the outcome of proceedings to be issued in the District Court by the plaintiff company against the defendant company in respect of the disputed debt. I would expect such proceedings to be issued within two months of the service of a sealed copy of this judgment on the plaintiff company. In the orders that I make,leave is reserved to seek further orders as appropriate and, in particular, if no steps are taken by the plaintiff company. [13] The implementation of the above, in my view, properly addresses all the concerns that arise in this case and permit a company that is otherwise solvent to carry on its business. At the same time, it will give a measure of protection to the plaintiff company in the event that it is able to prove that it is entitled to the disputed sum by a proceeding issued which leads to judgment. Taking these matters into account, in my view, it is just and equitable to make an order terminating the liquidation.Orders[14] I order: a) Terminating the liquidation of Regina Enterprises Limited; b) That the Official Assignee hold $20,670.00 as stakeholder pending determination of proceedings to be issued by the plaintiff company in the District Court in respect of the plaintiff company's claim against the defendant company. Leave is reserved to the parties to apply for further orders, including orders for payment out, if proceedings are not issued within two months of the service of a sealed copy of this judgment on the plaintiff company; and c) These orders have been made at 3:00pm. _____________________ JA Faire Associate Judge