BALLANTYNE TRUSTEES LIMITED v THE REGISTRAR OF COMPANIES [2013] NZHC 3271 [9 December 2013]

BALLANTYNE TRUSTEES LIMITED v THE REGISTRAR OF COMPANIES [2013] NZHC 3271 [9 December 2013]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV 2011-409-2499[2013] NZHC 3271UNDER The Companies Act 1993IN THE MATTER of GOOSE BAY RANCH HOLDINGSLIMITED (IN LIQUIDATION)BETWEEN BALLANTYNE TRUSTEES LIMITEDFirst PlaintiffKEUNG INVESTMENTS LIMITEDSecond PlaintiffSENG BOU KEUNG AS TRUSTEE OFTHE KEUNG FAMILY TRUSTThird PlaintiffAND THE REGISTRAR OF COMPANIESDefendantHearing: 9 December 2013Counsel: M J Wallace for PlaintiffsNo appearance for Defendant (abiding outcome)Judgment: 9 December 2013ORAL JUDGMENT OF THE HON JUSTICE KÓS[1] This is an uncontested application by the plaintiffs for orders:(a) that Goose Bay Ranch Holdings Limited in liquidation (the Company) not be removed from the Register of Companies; and(b) recalling of the liquidators' final report dated 30 September 2011.[2] The Company, as it name suggests, owns land at Goose Bay near Kaikoura. The first plaintiff Ballantyne Trustees Limited is a minority shareholder in theCompany. The third plaintiff, Mr Keung, is trustee of the Keung Family Trust. It is said to be a creditor of the Company. The second plaintiff is a company associated with the third plaintiff. It is not clear to me why the second plaintiff is a participant in this proceeding.[3] The application is uncontested because the Registrar of Companies (the only party served with the application) abides the decision of the Court.[4] The reason for the bringing of the application is that the first plaintiff (supported by the other plaintiffs) intends to bring proceedings against the mortgagee of the principal asset of the Company, 314 hectares of land at Goose Bay, Kaikoura. There is an affidavit from Mr Keung which sets out a number of complaints about the way in which the mortgagee conducted a mortgagee sale of that asset. The essence of the complaints is that the property was badly marketed and sold at a significant discount on its true value. It is not necessary for me to detail the complaints further here. The claim is not one the liquidators are willing to undertakeon the Company's behalf. But I am satisfied that a reasonable basis exists for at least the bringing of a claim against the mortgagee. That is not to express any view whatever as to the merits of the claim.[5] Any claim in this case against the mortgagee would have to be brought by the Company (which is in liquidation), unless the Court grants leave to a shareholder (such as the first plaintiff) to bring derivative action under s 165 of the Companies Act 1993. There is a live question here as to whether such leave would be granted given the decisions of this Court in Hedley v Albany Power Centre Limited (In Liquidation)1 and Buxton v Mainline Contracting Limited (In Liquidation).2 The essence of those decisions is that where a company is in liquidation, the more appropriate course is to give directions to the liquidators under s 284. Thus the first plaintiff faces a choice of either proceeding under s 165 or s 284. Which course may be taken is not for me to determine today. I am simply satisfied that there is for the purposes of s 321(1)(e) a sufficient basis for pursuit of a right of action under s 165. That does not in my view necessitate my considering whether a Court separately1 Hedley v Albany Power Centre Limited (In Liquidation) [2005] 2 NZLR 196.2 Buxton v Mainline Contracting Limited (In Liquidation) HC Auckland CIV 2010-404-1224, 22 October 2010.would grant such leave formally or instead prefer the s 284 route. Only a limited merits assessment is required under s 321(1).[6] Accordingly I am prepared to grant the first order sought. But I do so on a strictly time-limited basis. The order will expire four months from today unless prior to then one of the following three steps has occurred:(a) an order has been made under s 165;(b) an order has been made under s 284; or(c) a further order has been made under s 321 extending the present order.[7] I am not prepared to grant the second order sought, for recall of theliquidator's report, for two reasons. First, it is unnecessary. Secondly, theliquidators were not served with the application.[8] Costs are not sought.Stephen Kós JSolicitors:Kearney & Co, Christchurch for Plaintiffs