Backfill Conveyors Limited v Bright - [2024] NZHC 437

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2023-409-554

[2024] NZHC 437

UNDER the Companies Act 1993

BETWEEN

BACKFILL CONVEYORS LIMITED

Applicant

AND

JOSHUA DANIEL BRIGHT

Respondent

Hearing: 26 February 2024

Appearances:

M Hamid and S Caradus for Applicant P B McMenamin for Respondent

Judgment:

7 March 2024

JUDGMENT OF ASSOCIATE JUDGE LESTER

(application to set aside statutory demand)

BACKFILL CONVEYORS LIMITED v BRIGHT [2024] NZHC 437 [7 March 2024]

[1] Joshua Bright issued a statutory demand against Backfill Conveyors Limited (BCL) arising from a truck leasing contract entered into in July 2021. Mr Bright’s then company (it having been removed from the Companies Office Register on 20 October 2022) was called Construction Panel and Cranes Limited (CPC).

[2] The July 2021 agreement is called “Truck Lease To Buy Agreement” (the Agreement). The Agreement recorded the lessor would make the truck available to the lessee for the duration of the Agreement and that the lessee agreed to eventually purchase the truck for $95,000.00 plus GST. The lease rates are specified with cl 4 of the Agreement providing:

4. LEASE RATES It is agreed that the lessee will provide the lessor, time sheets for jobs done using the Truck the lessor will invoice the clients at the rate of $250.000 + GST per hour. The proceeds will be banked into the “FTM920 Account”. The Lessor will take 50% of the proceeds to be offset against the purchase price. ~~The Lessee will be paid his hours worked at the~~
~~rate of $35.00 + GST per hour.~~ The balance will paid at the discretion of the lessee either in cash or to reduce the outstanding on the purchase. ~~be used to~~
~~offset the cost of the Purchase of the Truck (no interest will be applied).~~

[3] Under the Agreement either party could give 14 days’ notice in writing to bring the Agreement to an end. If the Agreement was brought to an end, the truck had to be returned.

[4]Clause 10.6 of the Agreement provided:

In the event of termination payments already credited to the lessor to be paid in cash within ninety (90) days to the lessee.

[5] It seems the intention was that BCL would sub-contract work to CPC. CPC would provide timesheets to BCL to allow it to charge its clients for the work. The amount charged by CPC pursuant to the timesheets would be allocated according to cl 4 of the Agreement, set out above. Mr Bright’s evidence was that, rather than receive the 50 per cent of the proceeds he is entitled to under cl 4, he elected to have all of the payments applied against the purchase price of the truck.

[6] Unfortunately, the relationship between Mr Bright and David Allison, the sole shareholder and director of BCL broke down. BCL exercised the right to terminate on 14 days’ notice in writing on 16 November 2022. Notwithstanding giving the 14…

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: [2024] NZHC 437
Decision Date: 7 March 2024

CaseChat Overview and Summary

Backfill Conveyors Limited (BCL) sought to set aside a statutory demand issued by Joshua Daniel Bright, arising from a truck leasing contract. Bright had issued the statutory demand for $130,407.11 against BCL, which claimed that the demand was improper as the Agreement was between BCL and Construction Panels and Cranes Limited (CPC), not directly with Bright. BCL also argued there were factual disputes regarding the timesheets and the amount owed, and that Bright's claim for BCL's unauthorised use of the truck was for damages, which could not be pursued via a statutory demand.

The court examined the terms of the Agreement, noting that it was clear that Bright was the contracting party despite being identified as the lessee of CPC. The court rejected BCL's argument that the Agreement was with CPC, stating that the plain wording of the Agreement and the absence of witnessed signatures indicated that Bright was the direct contracting party. The court also found that BCL was not entitled to retain any portion of the proceeds from the timesheets issued under the Agreement, and that all such proceeds were repayable upon cancellation of the Agreement. Regarding the disputed jobs, the court noted that some pre-dated the start of the Agreement and that the factual disputes could not be resolved in this context.

The court held that Bright's claim for BCL's unauthorised use of the truck was not suitable for a statutory demand as it was a claim for damages, which could not be pursued in this manner. The court found that BCL's use of the truck did not necessarily result in the damages claimed, and that the real question was what loss the unauthorised use caused to Bright. The court set aside the statutory demand in part, reducing it to $24,069.28 and ordering BCL to pay costs to Bright on a 2B basis.

In summary, the court determined that Bright was the proper contracting party and that BCL was liable for the undisputed amount of $24,069.28, while the remainder of the demand was set aside. BCL was also ordered to pay costs to Bright.

Orders