Amalgamated Builders Ltd v Nile Holdings Ltd - [2000] NZCA 217

IN THE COURT OF APPEAL OF NEW ZEALAND

CA 115/00

UNDER	THE COMPANIES ACT 1993
BETWEEN	AMALGAMATED BUILDERS LIMITED
Appellant

AND	NILE HOLDINGS LIMITED
Respondent

Hearing:	26 September 2000
Coram:	Gault J Ellis J Robertson J
Appearances:	A D G Hitchock for Appellant C R French for Respondent
Judgment:	26 September 2000

JUDGMENT OF THE COURT DELIVERED BY ROBERTSON J

This is an appeal from a decision delivered in the High Court at Invercargill on 24 May 2000 following a hearing on 8 May.
The application before that Court was for an order by the appellant (ABL) setting aside a statutory demand issued by the respondent (Nile).
The Master noted by way of background :
ABL is a construction company with offices in Invercargill, Dunedin and Queenstown.   It has carried on business in the lower half of the South Island for years.   More recently it expanded into the Auckland market by purchasing the business of Goodall Construction Ltd.   It formed a new company Goodall ABL Construction Ltd (Goodall). That company operated in the Auckland market. It was unsuccessful. It went in to voluntary liquidation on 1 March 2000.
Goodall employed a Mr J S Greenwood as general manager/managing director.   Mr Greenwood is a director of Nile.   At Mr Greenwood’s request Goodall entered a service contract with Nile pursuant to which Nile agreed to make Mr Greenwood’s services available as managing director for Goodall.
In 1998 Goodall experienced cash flow shortages.   Mr Greenwood agreed to lend $300,000 to Goodall.   Mr Greenwood required Messrs Hill and Burke (directors of ABL) and ABL to guarantee the advance.   An agreement recording the advance of $300,000 was executed in June 1998. The agreement recorded Nile as the lender and Goodall as the borrower. It also recorded Messrs Hill and Burke and ABL were guarantors.   The agreement provided for payment on 20 October 1999.
Goodall failed to repay the monies on 20 October 1999.   Nile subsequently gave notice of demand to Goodall and to the guarantors. The notice was dated 31 March. It required payment by 7 April 2000. Before the notice expired a statutory demand was issued and served on ABL.   Although the statutory demand was dated 7 April it was in fact served on 5 April.
The application to set aside was filed and served within the 10 day period prescribed by s 290 of the Companies Act and was advanced on the basis :
[a]That the debt was not due and owing;
[b]that there was a substantial dispute as to whether or not the debt was owing; and
[c]in the circumstances the applicant had a counterclaim, set-off or cross-demand equal to or exceeding the amount claimed in the statutory demand.
The Master found that as the statutory demand had been served prior to the date upon which payment was required it could not be valid.
Having reviewed the relevant legislation and authorities the Master concluded :
The applicant therefore succeeds on what might be termed a technical defence. In deference to counsels’ submissions,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2000] NZCA 217
Decision Date: 26 September 2000

CaseChat Overview and Summary

The case of Amalgamated Builders Limited v Nile Holdings Limited involves an appeal from a decision made in the High Court at Invercargill on May 24, 2000. The appellant, Amalgamated Builders Limited (ABL), sought an order setting aside a statutory demand issued by the respondent, Nile Holdings Limited (Nile). ABL is a construction company that expanded its operations into the Auckland market by purchasing the business of Goodall Construction Ltd. Goodall Construction Ltd, now referred to as Goodall ABL Construction Ltd, entered a service contract with Nile to provide the services of Mr J S Greenwood, who is a director of Nile, as managing director for Goodall. Goodall experienced cash flow shortages in 1998 and Mr Greenwood agreed to lend $300,000 to Goodall, requiring ABL to guarantee the advance. Goodall failed to repay the loan, and Nile subsequently issued a statutory demand to Goodall and the guarantors. The Master found that the statutory demand was invalid as it was served before the payment was due, and set it aside. ABL appealed the decision, arguing that the Master's findings on the identity and capacity of Nile, as well as the other claims made, were incorrect.

The legal issues before the Court of Appeal were whether the Court had jurisdiction to hear the appeal and whether the Master's findings on the identity and capacity of Nile, as well as the other claims made, were correct. The Court found that the Master's findings on the invalidity of the statutory demand were correct and that the other findings and comments made were not determinative of the outcome of the application. As such, the Court held that there was nothing about which an appeal could properly lie, and dismissed the appeal with costs to the respondent.

In conclusion, the Court of Appeal found that the Master's decision to set aside the statutory demand issued by Nile was correct, and dismissed the appeal brought by ABL. The Court held that the other findings and comments made by the Master were not determinative of the outcome of the application, and as such, there was nothing about which an appeal could properly lie. The appeal was dismissed with costs to the respondent.

Orders