Asset Finance Limited v Stenner
[2013] NZHC 2128
•21 August 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2013-404-002650 [2013] NZHC 2128
BETWEEN ASSET FINANCE LIMITED Applicant
ANDMATTHEW STENNER Respondent
Hearing: 21 August 2013
Appearances: K J Crossland for applicant
R B Hucker for respondent
Judgment: 21 August 2013
(ORAL) JUDGMENT OF ASSOCIATE JUDGE ABBOTT
Solicitors:
Sheiff Angland, Auckland
Hucker & Associates, Auckland
ASSET FINANCE LIMITED v STENNER [2013] NZHC 2128 [21 August 2013]
[1] This case concerns a dispute over damage to a motor car. The respondent (Mr Matthew Stenner) left the car by the roadside when it ran out of petrol. An agent of the applicant, Asset Finance Limited, mistakenly thought that the applicant was entitled to seize it (he believed it to be owned by Mr Stenner’s parents, and that the applicant was entitled to seize it under a financing arrangement made with them). Asset Finance now accepts that it was not entitled to repossess the vehicle.
[2] The dispute has come before the Court because Mr Stenner has issued a statutory demand for the costs of repairing damage to the roof of the car that he observed after he recovered it. He contends that the damage could only have occurred whilst it was in Asset Finance’s possession, and as there has been no contest to the value of the repair work being claimed, he has an incontestable claim that comprises a debt due to him by Asset Finance.
[3] Asset Finance has applied to set aside the statutory demand. It says that there is a genuine dispute over the debt, which dispute should be determined in another forum (given that the demand is for $3,547.75 that could be either the Disputes Tribunal or the District Court).
Background
[4] Mr Stenner says that he is the owner of the car. It is registered in the name of his brother, but that is not material to the present application as Mr Stenner says that at all material times he was entitled to possession. He says that he left the car on the roadside one evening, as it had run out of petrol. He returned to collect it the following day, only to find it was not there.
[5] A repossession agent with authority from Asset Finance observed the car by the roadside at about 7pm on the evening of 3 September 2012. He noticed it because it was parked in an unusual place and recognised it as a car for which he had a repossession authority. He says that he stopped, had a look at it, and then made arrangements for it to be recovered. He says he was present while the vehicle was unlocked and winched onto a recovery vehicle.
[6] There is no evidence as to where the vehicle was taken that evening, but it was delivered to the premises of Turners Auction the following day, where it remained until about 1 October 2012.
[7] When Mr Stenner found the car gone, he reported the matter to the police and was informed that it had been repossessed by Asset Finance. He consulted his solicitors who wrote to Asset Finance’s solicitors on 14 September 2012 requesting return of the car on the grounds that Mr Stenner was the owner and Asset Finance had no right to possession of it. It appears that there had been previous correspondence between Mr Stenner’s solicitors and Asset Finance’s solicitors over issues between Asset Finance and Mr Stenner’s parents. Although those issues are not material to the present application, they are part of a background which explains why feelings run high over this particular dispute.
[8] Asset Finance accepted that the car should be returned to Mr Stenner. On 1
October 2012 its solicitors informed Mr Stenner’s solicitors that the vehicle was at
Turners and Mr Stenner went there and collected it.
[9] Mr Stenner says that he inspected the vehicle the following day, and noticed that there was damage to the roof which he had not noticed the previous day (it was dark by the time that he was able to remove the vehicle from Turners).
[10] Mr Stenner did nothing about that damage (in terms of looking into what was required to repair it) until 8 January 2013, when he obtained a quote for repair. The quote was for the sum of $3,547.75.
[11] On 4 February 2013 Mr Stenner had his solicitors write to Asset Finance’s solicitors to claim the repair costs. The solicitors had written on two other occasions subsequent to Mr Stenner recovering the vehicle (on 10 October 2012 and 18
December 2012) claiming reimbursement of legal costs incurred in recovering the vehicle, as well as general damages for conversion. It is of some significance that they did not advance a claim for the repair costs (or even refer to the damage to the vehicle) in those letters. It was raised first in the letter of 4 February 2013, at the same time as saying that Mr Stenner was intending to pursue his claim for general
damages as well (Asset Finance by that time had met the demand for reimbursement of legal costs).
[12] Immediately after receipt of Mr Stenner’s solicitor’s letter of 4 February 2013 (on 7 February 2013) Asset Finance’s solicitors replied, simply stating:
No damage was caused to your client’s vehicle whilst it was in our client’s
possession.
[13] Mr Stenner says that his solicitors wrote back immediately (by letter dated 8
February 2013) setting out the factual basis on which he contends that damage was caused whilst in Asset Finance’s possession (referring to the inspection undertaken the day after its recovery and asserting that there was no such damage to the vehicle upon seizure). Mr Stenner has accepted (through counsel today) that that letter (sent by email) did not reach them.
[14] Nothing further occurred until Mr Stenner (through his solicitors) issued his statutory demand on 2 May 2013. He has not yet taken any further steps in relation to his potential claim for general damages for conversion.
The application
[15] Mr Stenner contends that Asset Finance has clear liability for the repair cost: there is no dispute that the vehicle was wrongly seized, and although Asset Finance has referred to a dispute over whether the vehicle is economic to repair, no evidence has been put before the Court on this point. Mr Stenner’s case is that the damage occurred whilst it was in the possession of Asset Finance’s agents. The nature of the damage and the repair costs having been established, there is therefore a clear debt owing.
[16] Asset Finance says that the matter is not as clear as Mr Stenner would have it. It says that on Mr Stenner’s own case, the vehicle was left unattended for a period before it was ever taken into the possession of its agents, and that the background disputes between it and Mr Stenner’s parents gives reason to question the otherwise clear evidence given by Mr Stenner and members of his family that car was undamaged at the point that he left it by the roadside.
The critical issue
[17] The issue on which this application turns is whether Asset Finance has made out an arguable case for a genuine dispute. Although counsel for Asset Finance has referred to ancillary issues, the critical issue is whether there is an arguable dispute as to when the damage occurred. Asset Finance has produced evidence from Turners that the damage was present when the vehicle was received by it. Mr Stenner does not necessarily accept that evidence, but says nevertheless that it is for Asset Finance to show that the damage did not occur whilst in its possession, and the weight of evidence is that it had not occurred when Mr Stenner left the vehicle.
Legal principles
[18] The Court may grant an application to set aside a statutory demand if it is satisfied that there is a substantial dispute whether or not the debt is owing or is due: s 290(4) of the Companies Act 1993. Although there are also other grounds on which the Court could set a demand aside, they are not being advanced on this application.
[19] There is no dispute over the principles that the Court applies when determining these applications:
(a) Asset Finance has the onus of showing there is arguably a genuine and substantial dispute as to the existence of the debt.
(b) Mere assertion of a genuine and substantial dispute is not sufficient.
Material, short of proof, is required to support the contention.
(c) The Court is not required to resolve the dispute, but to determine whether there is a substantial dispute that the debt is due.[1]
[1] Industrial Group Ltd v Bakker [2011] NZCA 142 at [24].
(d)As with all summary applications, it is not usually possible, nor appropriate, to resolve disputed questions of fact on affidavit evidence
alone. This is particularly so where the dispute comes down to matters of credibility.
(e) If there is sufficient material available to support a claim of genuine and substantial dispute, the dispute will normally be resolved by means other than proceedings in the companies Court.
Submissions
[20] The case for Asset Finance is that it has adduced sufficient evidence to raise an arguable dispute. Counsel pointed to the possibility of the damage having occurred at several different points:
(a) First, before Mr Stenner left the vehicle by the roadside (counsel submitted this involved issues of credibility, linked to the background disputes between Asset Finance and the members of the Stenner family, and could only be dealt with at trial and with cross- examination);
(b)Secondly, the time between the time being left by the roadside and it being seen by the repossession agent;
(c) Thirdly, in the period between being collected by the recovery company and being delivered to Turners; and
(d) Fourthly, whilst in the possession of Turners.
He submitted that there was sufficient evidence from the repossession agent and the manager for Turners to raise an arguable case.
[21] Counsel for Mr Stenner submitted that Asset Finance had not discharged its evidential onus. He pointed to the evidence of Mr Stenner (supported by family members) that the damage did not exist when the vehicle was left by him, together with evidence from the panel beater who inspected the damage on 8 January 2013 as to the unusual nature of the damage (suggesting a scraping rather than force caused,
for example, by a person jumping on the roof). He submitted that there was no basis to question Mr Stenner’s evidence, and the evidence of the panel beater suggested damage caused whilst in Asset Finance’s possession. Significantly, he submitted that Asset Finance had not adduced any affirmative evidence as to the cause of the damage or as to its timing, and given that the repossession agent had acknowledged that he had not noticed the damage in the evening when he repossessed the vehicle, it was unlikely that Asset Finance would be able to improve its case to show that damage existed at that time. Counsel also challenged the evidence given by the manager of Turners, that the damage was present when Turners received the vehicle, noting the statement in his affidavit to this effect but pointing out that there was no obvious support for it in any of the documents produced in support: the photographs produced did not clearly show the damage, there was no evidence of the date that the photographs were taken, or of the subsequent steps taken by Turners in storing the vehicle.
[22] In reply, counsel for Asset Finance submitted that the challenge to the paucity of its evidence could also be levelled against Mr Stenner. In particular he noted Mr Stenner’s evidence that he observed the damage on the day after he collected the vehicle, and referred to it has “severe” yet made no mention of it to his solicitors (it was not raised in their subsequent letter of demand of 10 October 2012). He also noted that Mr Stenner had not sought a quotation for the repair cost until 8 January
2013. He submitted that this was support for Asset Finance’s case that there were issues of credibility to resolve, commenting that it could be expected (in light of the background of issues between Asset Finance and the Stenner family) that Mr Stenner would have been outraged if damage had been noted at that time.
[23] Counsel further submitted that the evidence of the manager of Turners could be admitted under the business records exception, and noted the evidence of the repossession agent (who has had many years of experience) that he had never seen damage of the type in issue being caused previously in the repossession process.
Analysis
[24] There can be no question that Asset Finance has the onus of establishing that there is a genuine dispute. Counsel for Mr Stenner essentially based his case on the submission that Asset Finance had to establish affirmatively that the damage had not occurred whilst it was in its possession (or that of its agents). That they may well be a submission properly made on a substantial determination of the dispute. However, for the purposes of the present application the Court merely has to be satisfied that there is evidence before the Court from which the Court can find that there is an arguable basis for a genuine dispute.
[25] It will be obvious from the matters I have already recounted that there is a possibility that the damage could have been caused before the vehicle went into the possession of Asset Finance. This could have occurred either whilst it was still in Mr Stenner’s possession, or while it was standing on the roadside. Without wishing to determine the matter, I accept the submission of counsel for Mr Stenner that there is no evidential basis currently put forward for a challenge to the evidence of Mr Stenner and his family that the damage in issue did not exist before he left the vehicle at the roadside. If the case was to be determined simply at this point, I would be minded to accept the submission that Asset Finance had not established a sufficient evidential basis for a genuine dispute. However, that is not the end of the story. There is a significant window of time in respect of which there is no evidence before the Court, namely from the point that Mr Stenner left the car until the repossession agent collected it. This leaves open the possibility that the damage occurred in that period.
[26] Counsel for Mr Stenner argued that the repossession agent’s evidence was significant in that he did not refer to the damage being present at that time. However, although the evidence does not make an affirmative statement, it does make it clear that because of the poor light the damage may not have been detectable:
The light was poor and I didn’t take note of any particular damage beyond the generally poor condition of the body/panel work. I note from the letter that is exhibit E to the respondent’s affidavit of 6 June 2013 that the damage the respondent complains of was “undetectable at night”.
I add that the letter in question is the “missing” letter of 8 February 2013, which refers to Mr Stenner’s inability to detect the damage on the night that he collected the car from Turners.
[27] It is not for me to try to determine what may have caused the damage, or when it occurred. In my view there is sufficient evidence before me to come to the view that there is an arguable case for a genuine dispute. There are a number of matters that leave open questions to be answered:
(a) Mr Stenner is vague as to precisely when he left the car (he says in his affidavit that it was in August, yet the repossession agent is explicit that he saw the vehicle on the evening of 3 September). This may simply be a matter of faulty recall, but so too could be the period of time that it was left by the roadside.
(b)It seems likely that the damage was not readily apparent in bad light, although that seems somewhat surprising when the cost to repair is in the order of $3,500. Nevertheless, it is a matter that needs to be explored particularly in relation to the repossession agent’s evidence, and what inference is to be drawn from the fact that he did not notice the damage on the night.
(c) There is no evidence as to what took place in the time between the repossession agent seizing the vehicle and the vehicle being delivered to Turners for storage, but this period also needs to be taken into account, particularly given the evidence of the repossession agent that the damage is not the damage that would be expected from uplifting the vehicle.
(d)There are matters to be explored as to the steps taken by Turners to inspect the vehicle, when those occurred, and whether the photographs produced by the Turners manager do in fact show the damage at that point.
(e) Evidence may be needed to try to identify what could have caused the damage (the parties may need to explore the reference to this being scratching rather than compression damage), and whether that gives any further enlightenment as to when it may have occurred.
[28] There are also issues of credibility to explore in relation to the delayed raising of the claim. This may or may not reflect on the credibility of Mr Stenner’s evidence as to the state of the car when he left it by the roadside.
[29] A final factor that has been raised in the pleadings and written submissions but not emphasised in the oral hearing, was Asset Finance’s solvency. Solvency of itself is not a consideration when deciding these applications, but it can be taken into account in reaching a conclusion as to whether a genuine dispute has been raised. I accept from the evidence that has been produced that Asset Finance would be in a position to meet what is a relatively small debt. This confirms the view that I have reached that the demand has not been met because there is a genuine dispute. The debt may well have been disputed in part because of the background of disputes with Mr Stenner’s parents, but Asset Finance is still a commercial party and I consider it most unlikely that it would have resisted the demand if it did not consider that there was a real issue to resolve as to how and when the damage occurred.
[30] Finally, I note that there are ancillary issues as to quantum (whether it would be economic to repair this vehicle at this cost) and as to whether Mr Stenner in fact has the right to bring this proceeding (because he is not the registered owner of the vehicle), but do not see those as having been established sufficiently clearly on the evidence or law to give rise to a substantial dispute on that basis.
Decision
[31] For the reasons I have given the application to set aside the statutory demand is granted.
Costs
[32] I have heard from counsel on the question of costs after giving my decision. After further submissions I have come to the view that there was a basis for Mr Stenner to issue the statutory demand (given the context of unlawful repossession and real doubts about the evidence over the cause of the damage), and I can accept that some confusion was created by the fact that Mr Stenner’s solicitors letter of 8
February 2013 was not seen by Asset Finance’s solicitors.
[33] I have considered also the argument for Asset Finance that it would have been a relatively easy matter to have referred this dispute to the Disputes Tribunal (or even the District Court), and invoking the jurisdiction of this Court was disproportionate to the dispute. There is something to be said for that.
[34] I have also considered whether to defer fixing costs, to await the outcome to the dispute in another form. However, I have decided against that, as I fear that it will simply introduce yet another aspect of costs for the parties. The issue for this Court is not the substantive determination but whether there was a genuine dispute. I am not prepared to hold that the issue of the demand was an abuse of process in itself, but I have found that there is an arguable basis for the dispute. The decision has turned on careful examination of evidence. The significant aspects of the evidence did not emerge until late. There is some force to both parties’ submissions that factual matters could have been presented more fully and earlier. That is another aspect of proportionality, given the small amount at stake.
[35] Weighing all of these matters, and taking into account that Asset Finance had been seeking either solicitor client costs or increased costs, I consider that the appropriate outcome is to award costs now to Asset Finance on a standard scale 2B basis. I order accordingly. Asset Finance is also entitled to disbursements as fixed
by the Registrar.
Associate Judge Abbott
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