Body Corporate 68792 v Memelink

[2015] NZHC 3115

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2015-485-940 [2015] NZHC 3115

BETWEEN

BODY CORPORATE 68792

Applicant

AND

HARRY MEMELINK AND TREVOR NEIL HAMILTON

Respondents

CIV-2015-485-941

BETWEEN  BODY CORPORATE 68792

Applicant

ANDCUDBY & MEADE LIMITED Respondent

Hearing:	8 December 2015
Counsel:	J Mahuta-Coyle for the Applicant in both proceedings Q Haines for the Respondent in proceeding CIV-2015-485-941 H Memelink in person No appearance for N Hamilton
Judgment:	8 December 2015

ORAL JUDGMENT OF ASSOCIATE JUDGE SMITH

[1]      On 10 November 2015 Cudby & Meade Ltd served a statutory demand on the Body Corporate.    The  amount  claimed  was  $46,966.40,  said  to  be  owing  for “overpayment of and incorrectly charged special levies that were authorised by the Body Corporate”.

[2]      On the same date, Mr Memelink and Mr Hamilton served a statutory demand on the Body Corporate, claiming the sum of $180,168.24, again for “overpayment of and incorrectly charged special levies”.  Copies of the statutory demands had been

sent to the Body Corporate’s solicitors the previous day.

BODY CORPORATE 68792 v HARRY MEMELINK AND TREVOR NEIL HAMILTON [2015] NZHC 3115 [8

December 2015]

[3]      The Body Corporate is in administration, pursuant to an order made under s 141  of  the  Unit  Titles  Act  2010  on  28  July  2010.     The  administrator  is Mr Greenwood.

[4]      Mr Greenwood moved promptly to have the statutory demands set aside. Originating applications were filed in this Court on 13 November 2015.

[5]      When the applications were first called on 1 December 2015, Mr Gilbert appeared  for  all  respondents.    No  notices  of  opposition  had  been  filed,  and Mr Gilbert had only received instruction shortly before the hearing.  I adjourned the hearing to today’s date to allow Mr Gilbert to consider the position, and I directed that any applications for extensions of time to file notices of opposition were to be filed and served by 2 December 2015.

[6]      No applications for extension of time have been filed.  Instead, Mr Memelink has filed memoranda and an affidavit, in which he contends that he withdrew the statutory demands.

[7]      At today’s hearing Mr Gilbert appeared and sought leave to withdraw.   He explained that he had been unable to obtain adequate instructions from the respondents.  Leave was duly granted to Mr Gilbert to withdraw.

[8]      While Mr Memelink continued to act in person, he could not of course act for Cudby & Meade Ltd.   Shortly before the hearing, Mr Haines was briefed for that company, and he has filed a memorandum directed to the issue of costs.

[9]      In an affidavit filed by Mr Memelink on 2 December 2015, he referred to two emails he had sent to Mr Greenwood.  Only the first of them is relevant for present purposes.  It is dated 16 November 2015, and it refers to a proposed meeting with Mr Greenwood at which the validity of the respondents’ claims would be discussed. The  email  refers  to  the  claim  “we  pulled”,  which  might  be  a  reference  to  the statutory demands having been withdrawn.

[10]     In his affidavit Mr Memelink referred to a number of phone calls in which he says he advised verbally that the demands were withdrawn.  He does not say in his affidavit when those phone calls were made, and in particular whether they were made before the Body Corporate made its originating applications to set aside the statutory demands.  In his memorandum, Mr Haines advises that he is instructed that the first time the withdrawal of the statutory demand by Cudby & Meade Ltd was articulated to Mr Greenwood was on 11 November 2015.  But there is no evidence of that, and Mr Greenwood has not had any opportunity to respond to it.  In the absence of any notice of opposition, and in the absence of any evidence establishing that the demands   were   withdrawn   before   the   Body Corporate   filed   its   originating applications, I am not prepared to accept the submission that the Body Corporate acted prematurely or improperly in commencing the present proceedings.

[11]     In  his  submissions,  Mr  Mahuta-Coyle  has  referred  to  the  very  recent Court of Appeal decision in AAI Ltd v 92 Lichfield Street Ltd,1  a case in which the Court adopted the following comments made by the Judge in Rembrandt Custodians Ltd v Pro-Drill (Auckland) Ltd:2

[38]     One of the most significant potential consequences [of service of a statutory demand] is the establishment of jurisdiction to immediately place the  company  in  liquidation.     If   a  company  wishes  to  avoid  those consequences it must either persuade the issuer of the statutory demand to withdraw it or, alternatively, apply to the Court for an order setting the demand aside.  The timeframe for the filing of such an application is very tight.  There is no room for error, because the Court has no power to extend the time within which the application to set aside the statutory demand may be filed.  In those circumstances, it is obviously encumbent on the issuer of a statutory demand to ensure that the demand is being issued on a proper basis. In particular, it must take care to ensure that the debt which is claimed in the statutory demand is not the subject of a genuine dispute.

[12]     Mr Haines has referred me to the decision of Associate Judge Gendall (as he then was) in Coastal Mortgages Ltd v Collins & May Law,3  a case in which the Associate Judge considered the proceedings should not have been brought, as the

demand had been withdrawn by the respondent before the setting aside application

1      AAI Ltd v 92 Lichfield Street Ltd (in receivership and in liquidation) [2015] NZCA 559.

2      Rembrandt Custodians Ltd v Pro-Drill (Auckland) Ltd, HC Auckland M337-IM03,13 June 2003.

3      Coastal Mortgages Ltd v Collins & May Law HC Wellington CIV-2010-485-1115, 4 August

2010.

was filed.  But that is not this case.  Here, I have not been satisfied that the demands were withdrawn before the proceedings were commenced.

[13]     Mr Haines also refers to various minor errors on the statutory demand issued by Cudby & Meade Ltd, including an error in the spelling of that company’s name. The intent of the submission was presumably that the defects rendered the document a nullity, and the Body Corporate should have appreciated that fact and ignored the document.   Section 290(5) of the Companies Act 1993 provides that a demand should not be set aside by reason only of a defect or irregularity, unless the Court considers that substantial injustice would be caused if it were not set aside.  In my view the Body Corporate was entirely justified in electing not to take the risk that the Court would regard the Cudby & Meade demand as a nullity.

[14]     In  the  result,  I  am  satisfied  on  the  evidence  that  the  proceedings  were properly filed.  As the demands have now been withdrawn it is appropriate that they should now be set aside.  I make orders accordingly.

[15]     Mr Mahuta-Coyle seeks two sets of costs on a 2B basis.   Mr Haines and Mr Memelink also apply for costs, on the basis that the proceedings should not have been commenced.

[16]     The applications by Mr Memelink and by Cudby & Meade Ltd are dismissed. That result follows inevitably from my finding that the Body Corporate did not act prematurely in filing the applications, and from the fact that it has not subsequently filed any unnecessary further affidavits or caused or contributed to any unnecessary further hearings.

[17]     Mr   Mahuta-Coyle   claims   costs   in   the   total   sum   of   $12,338   plus disbursements in both proceedings.  In my view that sum should be reduced to allow for a degree of duplication in the two sets of proceedings. Also, I am not prepared to allow full 2B costs for preparing written submissions in this case, where the only matter in issue turned out to be costs.  Also, today’s hearing has occupied somewhat less than the half day allowed for by Mr Mahuta-Coyle in his calculations.

[18]     In my view, the justice of the case will be met by an award of costs to the Body Corporate  of  $3,750   in   each   proceeding,   with   disbursements   in   each proceeding as fixed by the registrar. There will be orders accordingly.

Associate Judge Smith

Solicitors: