Buildfirst Limited v Bespoke Systems Limited - [2017] NZHC 2971

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2017-409-000794 [2017] NZHC 2971

IN THE MATTER of Section 290 of the Companies Act 1993

BETWEEN

BUILDFIRST LIMITED Applicant

AND

BESPOKE SYSTEMS LIMITED Respondent

Hearing: 28 November 2017

Appearances:

S T Cottrell and B X Smith for Applicant
D M Jackson for Respondent

Judgment:

1 December 2017

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1] On 15 September 2017 the respondent, Bespoke Systems Limited (Bespoke) issued to the applicant, Buildfirst Limited (Buildfirst) a demand under s 289 of the Companies Act 1993. It required payment of the sum of $7,337.58, being an amount said to be owing under two invoices for the installation of underlay heating systems in two apartments at 2/284 and 3/286 Manchester Street. Buildfirst applies to set aside this demand.

Legal principles

[2] If a company fails to comply with a demand under s 289 of the Companies Act a presumption arises that the company is unable to pay its debts. That, in turn, is a ground on which a creditor may apply to the Court for an order appointing a
liquidator.

BUILDFIRST LTD v BESPOKE SYSTEMS LTD [2017] NZHC 2971 [1 December 2017]

[3] Section 290 provides that the Court may set aside a statutory demand. The grounds on which it may do so include there being a substantial dispute whether or not the debt is owing or is due. In considering an application under s 290 it is not the task of the Court to determine any dispute which may be found to exist. Its role is confined to determining whether there is or there is not a substantial dispute. In Industrial Group Ltd v Bakker, the Court of Appeal laid down the way in which the
Court is to approach an application under s 290:1

[24] We note that the statutory scheme is for applications to set aside statutory demands to be a summary proceeding. ... The section calls for a prompt judgment as to whether there is a genuine and substantial dispute. It is not the task of the Court to resolve the dispute. The test may be compared with the principles developed in cognate fields such as applications to remove caveats, leave to appeal an arbitrator’s award and opposition to summary judgment.

[25] … The tight time constraints distinguish the s 290 discretion from that to be exercised on, say, a summary judgment application, where the presence of complex legal issues is not necessarily a bar to a remedy. As with leave to appeal an arbitrator’s award, the hearing should, in the normal course, be short and to the point, and the judgment likewise.

[4] More recently, in AAI Ltd v 92 Lichfield Street Ltd (in rec and in liq) the

Court of Appeal said:2

[22] It is important to keep in mind the words of the statute. What the applicant must show is that the dispute it raises has substance; the applicant must explain to…

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: [2017] NZHC 2971
Decision Date: 1 December 2017

CaseChat Overview and Summary

Buildfirst Limited applied to set aside a statutory demand issued by Bespoke Systems Limited. The demand required Buildfirst to pay $7,337.58, an amount said to be owing under two invoices for the installation of underlay heating systems in two apartments at 2/284 and 3/286 Manchester Street. The key legal issues were whether Buildfirst had established an arguable case that it did not contract with Bespoke, whether there was a variation of the contract or an estoppel that would prevent Bespoke from claiming against Buildfirst, and whether Bespoke had already been paid. The court found that Buildfirst had not established an arguable case that it did not contract with Bespoke, that there was no evidence of a variation of the contract or estoppel, and that Bespoke had not been paid. The application to set aside the statutory demand was dismissed, with the time for compliance extended to 5:00 pm on 13 December 2017. Buildfirst was ordered to pay costs to Bespoke on a 2B basis, together with disbursements fixed by the Registrar.

The case of Buildfirst Limited v Bespoke Systems Limited involved a statutory demand issued by Bespoke Systems Limited to Buildfirst Limited for the payment of $7,337.58. The demand related to the installation of underlay heating systems in two apartments. Buildfirst sought to set aside the demand, arguing that it did not contract with Bespoke, that there was a variation of the contract or an estoppel that would prevent Bespoke from claiming against Buildfirst, or that Bespoke had already been paid. The court found that Buildfirst had not established an arguable case that it did not contract with Bespoke, that there was no evidence of a variation of the contract or estoppel, and that Bespoke had not been paid. The application to set aside the statutory demand was dismissed, and Buildfirst was ordered to pay costs to Bespoke on a 2B basis, together with disbursements fixed by the Registrar.

Orders