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28 Aug 2018
Appeal Status

Application for restoration to the Register of Companies

The applicants sought orders to restore five companies to Register of Companies (“the Register”).

Commercial Management Ltd v Commissioner of Inland Revenue [2018] NZHC 2224


The applicants sought orders to restore five companies to Register of Companies (“the Register”). The Court considered that on balance, the private and public interests favoured restoration of the relevant companies to the Register.


The judgment confirms the balancing exercise conducted by the court when considering an application to restore a company to the Register.


The applicants sought restoration of the relevant companies relying primarily on the decision of the High Court in FB Duvall Ltd v Commissioner of Inland Revenue HC Auckland CIV-2009-404-1193, 15 December 2011, where Ellis J determined that the Commissioner of Inland Revenue (“the Commissioner”) had erred in refusing to accept late objections by a number of companies controlled by the late Mr J G Russell or his firm in relation to assessments for GST. In that matter the Commissioner was ordered to accept and consider the objections.

Since that judgment, there have been on-going negotiations between the parties to resolve the dispute. The applicants maintained that other companies, including those that are the subject of this application, are in a comparable position to the plaintiffs in the FB Duvall case and wanted negotiations to include these companies. The Commissioner had advised that no such settlement could proceed, noting that the companies were struck off and no longer existed.


The Court confirmed that as the Commissioner was a party to the litigation, she had standing to oppose the application. As for the form of the proceeding, the Court accepted that the application was not “run-of-the-mill” but was not especially complex either factually or legally. The Court noted that as the application, opposition and affidavits along with detailed submissions had been filed, there had been no handicap caused by the format of the proceeding and the better course was to simply dispose of the matter on that basis.

The Court confirmed that the factors the Court should have regard to in an application under s 329 are those set out in Re Saxpack Foods Ltd [1994] 1 NZLR 605 (HC).

In particular, the Court referred to the delay of time since the companies were struck off, with his Honour inferring from Re Saxpack that there will be times when an application will fail where there is no reasonable explanation for the delay and the delay may result in prejudice. The five companies in this matter were removed between seven and twenty-two years ago. The Court recognised that these appeared to be extreme periods of time but went on to say that there is an explanation, namely that it was not until the decision in FB Duvall and the negotiations that followed that the need to apply for restoration became apparent to the applicants. Further, his Honour considered that the delay caused no obvious prejudice to the Commissioner. The delay was therefore not a bar to the application albeit the Court stated that such a delay meant it must look carefully at the other relevant factors.

The Court also referred to the fact that s 329(1)(A) provides that the Court is obliged to have regard to the reasons for the company’s removal and whether those grounds still exist. The Court accepted that it was fair to conclude that the grounds for removal from the Register had not changed and that this weighed against restoration.

The Commissioner submitted that as the companies were not carrying on business at the time of removal there was no proper reason for them to be restored. However, the Court held that whether there was a proper reason to order restoration depended on whether it was proper to do so to enable the applicants to test the issue of whether the companies were in the same position as the plaintiffs in FB Duvall. His Honour held that this factor weighed in favour of granting the application.

Additionally, the Court did not regard the fact that there was no live issue between the five defunct companies and the Commissioner as being a factor to influence the outcome of this application.

The Court saw the balancing exercise of private and public interests as the dispositive and most difficult aspect of the case. From the perspective of the applicants and the five defunct companies, they clearly envisaged a private advantage to be gained by restoration. The Court also held that there may be a public interest involved too, namely that the restoration of the five defunct companies to the Register would enable five corporate taxpayers - as they would then be - to pursue their rights through the methods available to all taxpayers. The Court stated that the right to do so is fundamental and there is public good in its reinforcement.

The Commissioner referred to the long history of litigation between Mr Russell and the Commissioner, and she submitted that this application was just another example of Mr Russell, and those associated with Mr Russell, looking to prolong meritless claims against the Commissioner.

The Court felt that it would not be appropriate in the context of this application to form any conclusions based on the history of litigation between Mr Russell and the Commissioner, either as to the propriety of the applicants’ motives in seeking to have the five defunct companies restored or as to the merits of the claims they might wish to make. While his Honour accepted that it is not in the public interest that the Commissioner be embroiled in what on its face appeared to be long standing disputes, there was a pre-existing dispute between the FB Duvall plaintiffs and the Commissioner and the marginal cost of including five additional claimants would be minimal.

On balance, the Court’s view was that the private and public interests favoured the making of the orders sought.

Companies Act 1993 s 329