FALLOON V THE REGISTRAR OF COMPANIES HC TIM CIV-2011-476-000217

FALLOON V THE REGISTRAR OF COMPANIES HC TIM CIV-2011-476-000217 23 November 2011IN THE HIGH COURT OF NEW ZEALANDTIMARU REGISTRYCIV-2011-476-000217UNDER sections 284 and 329 Companies Act 1993IN THE MATTER OF restoring Tufton Farm Limited (inliquidation) to the Companies RegisterBETWEEN JOHN HAMILTON CHARLESFALLOON AND ALLAN BRUCEALLRED, AS LIQUIDATORS OFTUFTON FARM LTD (INLIQUIDATION)ApplicantsAND THE REGISTRAR OF COMPANIESRespondentHearing: On the PapersCounsel: H R Smith for ApplicantsW More for RespondentJudgment: 23 November 2011JUDGMENT OF WHATA JThis judgment was delivered by Justice Whata on23 November 2011 at 2.00 p.m., pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors:Duncan Cotterill, PO Box 5, ChristchurchCopy to:W More, The Treasury, PO Box 3724, Wellington 6140[1] The applicants, John Hamilton Charles Falloon and Allan Bruce Allred, as liquidators of Tufton Farm Ltd (in liquidation), apply for the following orders:(a) Tufton Farm Ltd (in liquidation) be restored to the Companies Register;(b) The liquidators' first and final report dated 23 December 2009 bemodified to a first report.[2] The grounds are usefully set out in the application namely:(a) The applicants were, at the time the company was removed from the Register, the joint liquidators of Tufton Farm Limited (in liquidation)("Tufton").(b) Tufton was removed from the Companies Register on 23 January 2010 because the liquidators inadvertently recorded their first reportas the "first and final report". This was a clerical error and the report was never intended to be a final report.(c) Tufton should not have [been] removed from the register because it was still carrying on business and/or because there are loans outstanding to the company. The company needs to be restored to the register and taken out of liquidation to avoid a potential tax liability to the shareholder of $2 million.(d) The liquidators' first and final report needs to be modified to a firstreport in order to allow the company to be removed from liquidation and to continue trading.(e) It is just and equitable to restore Tufton to the Companies Register and to modify the first and final report.[3] The application is supported by an affidavit of John Hamilton Charles Falloon wherein he details the background to the liquidation of Tufton Farm. Heconfirms the allegations set out in the grounds are correct. Of particular relevance he notes that:At the time Tufton was removed from the Companies Register it had assets of loans to associated companies which were financed by a small loan from the shareholder and the remainder from reserves held by Tufton. If Tufton is not restored to the Register these loans would be distributed in specie to the shareholder via a dividend which could be treated as a taxable distribution to the shareholder which could give rise to a tax liability of $2 million.[4] Given the circumstances of the application as detailed in the affidavit of Mr Hamilton and there being no objection from the Registrar of Companies, I grant the orders as sought. In particular, I order that:(a) Tufton Farm Ltd (in liquidation) be restored to the Companies Register;(b) The liquidators' first and final report dated 23 December 2009 bemodified to a first report._________________________Whata J