Attorney-General v Papa Robs Contractors Limited
[2024] NZHC 1275
•22 May 2024
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2023-463-74
[2024] NZHC 1275
BETWEEN ATTORNEY-GENERAL
Plaintiff
AND
PAPA ROBS CONTRACTORS LIMITED
Defendant
Hearing: 7 May 2024 Appearances:
N Malarao and A Tapsell for the Plaintiff
A Fraser for the Defendant (self-represented)
Judgment:
22 May 2024
JUDGMENT OF ASSOCIATE JUDGE TAYLOR
[Application for Summary Judgment]
This judgment was delivered by me on 22 May 2024 at 3 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Meredith Connell, Auckland: [email protected]
Copy to:
Ms A Fraser, Papa Robs Contractors: [email protected]
ATTORNEY-GENERAL v PAPA ROBS CONTRACTORS LIMITED [2024] NZHC 1275 [22 May 2024]
Introduction
[1] The Attorney-General in respect of actions taken by the Ministry of Social Development (MSD) applies for summary against Papa Robs Contractors Limited (Papa Robs).
Background
[2] In response to the COVID-19 pandemic and alert level changes, the New Zealand Government implemented the COVID-19 wage subsidy scheme (wage subsidy scheme) to provide support for business and employers.
[3] MSD was tasked by the Attorney-General with the administration of the scheme.
[4] Papa Robs submitted a total of 18 applications for the wage subsidy scheme and completed a comprehensive declaration for each application, representing that (among other matters):
(a)it met the relevance revenue decline conditions;
(b)it agreed to provide relevant information upon MSD’s request; and
(c)it agreed to repay the subsidy if it was not, or stopped, being eligible.
[5] Between 26 March and 17 September 2021, 16 of Papa Robs’ wage subsidy applications were successful.
[6] On 8 September 2020, MSD conducted an integrity check into Papa Robs in order to verify the legitimacy of its applications. As part of the integrity check, MSD requested IRD for information for Papa Robs.
[7] The information was provided by IRD on 9 September 2020. The documentation confirmed:
(a)Papa Robs was not trading for the months of January 2020 and February 2020; and
(b)Papa Robs’ revenue increased from March 2020 to May 2020.
[8]On 10 September 2020, the matter was referred to a formal investigation.
[9] On 5 November 2020, MSD sent an Information Request Letter to Ms Fraser, the director of Papa Robs. This information was requested from Papa Robs due to MSD’s concerns that Papa Robs did not meet the relevant wage subsidy requirements.
[10] On 27 November 2020, Ms Fraser provided MSD with the documentations requested.
[11] On 27 May 2021, MSD advised Ms Fraser that Papa Robs was not eligible for its 17 March 2020 and 26 April 2020 wage subsidy applications, for which it had been paid a total of $109,644. MSD’s finding was grounded in the GST returns which provided that Papa Robs had experienced an increase in revenue from February 2020 to May 2020.
[12] On 3 June 2021, Ms Fraser acknowledged that Papa Robs was not eligible for those payments. On 9 July 2021, a verbal agreement was entered into by Papa Robs and MSD where Ms Fraser advised that Papa Robs would pay back $109,644 in instalments of $100 per week commencing on 16 July 2021.
[13] Papa Robs made payments until 24 November 2021 when those payments ceased. Between 15 July and 25 November 2021, Papa Robs repaid a total of $2,000.
[14] From August 2021, Papa Robs made a further ten wage subsidy applications. However, due to the earlier investigations, MSD considered that Papa Robs’ application should be subject to an integrity check and further investigation. As a result, MSD requested Papa Robs to provide with further information.
[15] When requests for further information were unanswered, MSD formed the view that Papa Robs was not entitled to those wage subsidy funds.
[16] On 30 November 2022, MSD’s solicitors contacted the new director, Mr Fraser, demanding repayment of the remaining $445,398.40.
[17] Between 9 and 13 December 2022, MSD and Papa Robs engaged in correspondence via email and phone. Papa Robs offered partial repayment of the wage subsidy funds, however, this offer was not accepted by MSD. This was communicated to Mr Fraser by MSD’s solicitors via email on 23 December 2022.
[18] On 28 December 2022, Mr Fraser considered Papa Robs would not make the repayment requested and no further information was provided.
[19] On 29 December 2022, MSD’s solicitors responded to Mr Fraser and noted the amount to be repaid and the availability of a repayment plan. Papa Robs has not responded to that correspondence.
Attorney-General’s application for summary judgment
[20]Attorney-General seeks orders:1
(a)judgment against Papa Robs in respect of breach of contract for the sum of $445,398.40, comprising:
(i)the balance of the amount Papa Robs received subsequent to its wage subsidy applications across March and April 2020, being
$107,644.00;
(ii)the amount Papa Robs received subsequent to its June 2020 wage subsidy application, being $37,491.20;
(iii)the amount Papa Robs received subsequent to its wage subsidy applications across July and August 2020, being $245,063.20; and
1 Interlocutory application on notice for summary judgment dated 29 September 2023 at [1].
(iv)the amount Papa Robs received subsequent to its wage subsidy applications across August and September 2021, being
$55,200.00.
(b)Interest on the judgment sum pursuant to s 10 of the Interest on Money Claims Act 2016 from the dates when MSD paid the relevant funds to Papa Robs until the date of repayment.
[21]The grounds on which the orders are sought are:2
(a)Papa Robs made multiple wage subsidy applications between 27 March 2020 and 17 September 2021. MSD paid Papa Robs a total of
$447,398.40 in wage subsidy funds pursuant to those applications, on the basis the relevant criteria was met:
(i)Papa Robs’ wage subsidy applications between 27 March and 26 April 2020 required Papa Robs to experience a 30 per cent decline in revenue in the relevant period.
(ii)Papa Robs’ wage subsidy extension applications between 10 June and 9 August 2020 required Papa Robs to experience a 40 per cent decline in revenue in the relevant period, and that decline was to be attributable to the COVID-19 pandemic.
(iii)Papa Robs’ wage subsidy applications between 26 August 2021 and 17 September 2021 required Papa Robs to experience a 40 per cent decline in revenue in relevant period.
(b)MSD reviewed Papa Robs’ 27 March and 16 April 2020 wage subsidy applications and concluded that it had not met the relevant decline in revenue conditions and was not eligible to receive wage subsidy funds. Papa Robs was required to repay $109,644.00 in wage subsidy funds it had received from those applications.
2 At [2].
(c)Papa Robs agreed with MSD’s collection team to repay the amount of
$109,644.00 in weekly $100 instalments. These payments ceased on 24 November 2021. Papa Robs had only repaid $2,000, and no further payments have been made.
(d)MSD advised Papa Robs that it had commenced reviewing Papa Robs’s further wage subsidy applications, requesting further information from Papa Robs to assist with that assessment. Papa Robs did not provide any information.
(e)MSD subsequently concluded none of the wage subsidy applications submitted by Papa Robs met the relevant revenue decline requirements.
(f)Accordingly, Papa Robs is obliged to repay the sum of $445,398.40 (the total amount paid to Papa Robs by MSD, less the $2,000 already paid). MSD advised Papa Robs of this decision, by letter on 30 November 2022.
(g)By email on 28 December 2022, Papa Robs advised that it could not repay the amount it had obtained from MSD.
[22]Papa Robs has no arguable defence to:
(a)the first cause of action set out in the statement of claim dated 29 September 2023; and
(b)the further grounds set out in the affidavit of Ashveena Nand affirmed 28 September 2023.
Papa Rob’s opposition
[23] Papa Robs opposes the application on the basis of breach of contract for the sum of $445,398.00.3
3 Notice of opposition dated 17 October 2023.
Legal principles
[24]Rule 12.2(1) of the High Court Rules 2016 provides:
12.2 Judgment when there is no defence or when no cause of action can succeed.
(1)The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
[25] The relevant principles governing a summary judgment application are well established:4
The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell. The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart. The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable: Eng Mee Yong v Letchumanan. In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel.
[26]The wording of r 12.2 “may give judgment” indicates a residual discretion.
Having regard to the various authorities, the position appears to be as follows:5
(a)The discretion implied by the use of the word “may” is to be restrictively applied. In a great majority of cases, once the court is satisfied the defendant has no defence, there is no room for the exercise of discretion.
(b)The residual discretion may be invoked to avoid oppression or injustice to the defendant where:
(i)The proceeding involves the actions or possible liability of a third party which is not before the court;
4 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26] (citations omitted).
5 Andrew Beck and others (eds) McGechan on Procedure (online ed, Thomson Reuters) at [HR12.2.11].
(ii)The proceedings are such that the opportunity should be given to allow discovery or other interlocutory applications to be concluded;
(iii)The circumstances of the case disclose very unusual features, the presence of which leads the court to conclude that the entry of summary judgment would be oppressive or unjust; or
(iv)The combination of complex issues of fact and law justify the dismissal of the application for summary judgment, either as a matter of discretion or because the court cannot be satisfied that the defendant has no defence.
(c)Even where the court is not satisfied that a defence has been made out, in exceptional circumstances the application may be adjourned to allow for other processes to be followed.
Analysis
[27] The issue to be determined in this judgment is whether Papa Robs has any arguable defence to the Attorney-General’s statement of claim alleging breach of contract by Papa Robs.
[28] The notice of opposition filed by Papa Robs and the affidavit of Ms Fraser in support dated 17 October 2023, do not, in my view, disclose any grounds for a defence to the Attorney-General’s claim. No further defence was put forward on behalf of Papa Robs by Ms Fraser at the hearing, and she referred the Court to her affidavit.
Formation of contract
[29] I am of the view that a valid contract was formed between the MSD and Papa Robs in the following way:
(a)Applications for the Wage Subsidy Scheme were made through a web-based application on the Work and Income website. The website sets out MSD’s offer being that an exchange for certain promises, MSD would pay wage subsidy funds to an applicant to subsidise the applicant’s wage payments. The terms of the contract included a relevant decline in revenue condition, an information condition, and a repayment clause.
(b)Papa Robs accepted MSD’s offer by submitting the wage subsidy applications and making the relevant declarations confirming that it agreed to the obligations required.
(c)MSD’s consideration was a disbursement of the wage subsidy funds and Papa Robs’ consideration was its promise to meet the obligations of the Wage Subsidy Scheme as contained in the relevant declarations.
(d)The content of the declaration set out Papa Robs’ obligations under the Wage Subsidy Scheme and required Papa Robs to confirm it understood those obligations and agreed to them indicative of an intention to create a legally enforceable relationship.
Breach of contract
[30] In my view in respect of each of the Wage Subsidy applications, Papa Robs is in breach of a contract either because it did not suffer the revenue decline required during the relevant periods, or in a period it did suffer the relevant decline in revenue, it failed to provide information that this was due to the COVID-19 pandemic.
[31] I also note that there has been at least partial acknowledgement from Papa Robs that repayment amounts were due to MSD, in particular the arrangement made in July 2021 whereby Papa Robs agreed to pay back $109,644 in instalments of $100 per week commencing on 16 July 2021.
Result
[32] I am of the view that Papa Robs has no defence to the application made by the Attorney-General for repayment of the subsidy amounts for which Papa Robs was ineligible, and accordingly summary judgment should be given in favour of the Attorney-General.
Orders
[33]I make the following orders:
(a)judgment is given in favour of the Attorney-General in respect of breach of contract by Papa Robs for the sum of $445,398.40 comprising:
(i)the balance of the amount Papa Robs received subsequent to its wage subsidy applications across March and April 2020, being
$107,644;
(ii)the amount Papa Robs received subsequent to its June 2020 wage subsidy application, being $37,491.20;
(iii)the amount Papa Robs received subsequent to its wage subsidy applications across July and August 2020, being $245,063.20; and
(iv)the amount Papa Robs received subsequent to its wage subsidy applications across August and September 2021, being $55,200.
(b)interest on the judgment sum pursuant to s 10 of the Interest on Money Claims Act 2016, from the dates when MSD paid the relevant funds to Papa Robs until the date of repayment; and
(c)costs on a 2B basis together with disbursements as fixed by the Registrar.
Associate Judge Taylor
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