Chatham Islands Management Limited v Chatham Hardware Limited

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2023-409-38

[2023] NZHC 562

UNDER Section 241 of the Companies Act 1993 and Part 31 of the High Court Rules 2016

IN THE MATTER

of an application to put a company into liquidation

BETWEEN

CHATHAM ISLANDS MANAGEMENT LIMITED

Plaintiff

AND

CHATHAM HARDWARE LIMITED

Defendant

Hearing: 20 March 2023

Appearances:

P R W Chisnall and M R G van Alphen Fyfe for Plaintiff E J Tait for Defendant

Judgment:

20 March 2023

JUDGMENT OF ASSOCIATE JUDGE LESTER

(stay application)

CHATHAM ISLANDS MANAGEMENT LIMITED v CHATHAM HARDWARE LIMITED [2023] NZHC 562 [20 March 2023]

[1] Chatham Hardware Limited’s application for a stay of this winding up proceeding was scheduled for hearing on the morning of 20 March 2023. Counsel had filed submissions and the matter was ready to proceed.

[2] At the commencement of the hearing, Mr Tait, counsel for the defendant, advised that the amount in issue in this proceeding had been paid by his client into the trust account of an independent solicitor. The intention is that the disputed amount would be held pending the hearing of Chatham Hardware Ltd’s appeal against the decision of Associate Judge Johnston of 13 December 2022, declining Chatham Hardware Ltd’s application to set aside the statutory demand issued by Chatham Islands Management Limited.1

[3]After some discussion the following consent order was made by consent:

Proceeding CIV-2023-409-38 is stayed pending further order of the Court until the outcome of CA33/2023 is known upon the condition that Chatham Hardware Ltd shall forthwith pay into Court $220,000 to be held in the name of Chatham Islands Management Ltd on interest bearing deposit pending further order of the Court or agreement in writing of the parties. Costs of the application to stay the liquidation are reserved.

[4]This proceeding is to be removed from the liquidation list on 23 March 2023.

[5]Leave is reserved for either party to apply further should the need arise.

Associate Judge Lester

Solicitors:
Macalister Mazengarb, Wellington (for Plaintiff) E J Tait, Lawyer, Christchurch (for Defendant)

Copy to counsel:
P R W Chisnall and M R G van Alphen Fyfe, Barristers, Wellington (for Plaintiff)

1 Chatham Hardware Ltd v Chatham Island Management Ltd [2022] NZHC 3227.

CaseChat Overview and Summary

In the High Court of New Zealand, Chatham Islands Management Limited filed an application to wind up Chatham Hardware Limited, a matter that came before Associate Judge Lester on 20 March 2023. The application, filed under section 241 of the Companies Act 1993 and Part 31 of the High Court Rules 2016, was contested by Chatham Hardware Limited. The dispute arose when Chatham Islands Management Limited issued a statutory demand to Chatham Hardware Limited, which the latter sought to set aside. Chatham Hardware Limited applied for a stay of the winding-up proceeding pending the outcome of its appeal against the Associate Judge Johnston's decision of 13 December 2022, which declined Chatham Hardware Limited's application to set aside the statutory demand.

The court had to decide whether to stay the winding-up proceeding pending the outcome of Chatham Hardware Limited's appeal against the earlier decision of Associate Judge Johnston. This decision hinged on whether the conditions for a stay were met, considering the payment of the disputed amount into an independent solicitor's trust account. Counsel for Chatham Hardware Limited, Mr. Tait, informed the court that the contested sum had been paid into the trust account of an independent solicitor and would be held pending the appeal's outcome. The court then needed to consider whether the payment into court of the disputed amount, with interest, would adequately protect Chatham Islands Management Limited's interests during the appeal process.

Associate Judge Lester accepted the consent order proposed by the parties, which included the stay of the winding-up proceeding until the outcome of Chatham Hardware Limited's appeal, provided Chatham Hardware Limited paid $220,000 into court to be held on an interest-bearing deposit. The court also removed the proceeding from the liquidation list, effective 23 March 2023, and reserved leave for either party to apply further if needed. The costs of the application to stay the liquidation were reserved. This decision balanced the interests of both parties, ensuring Chatham Islands Management Limited's interests were protected while Chatham Hardware Limited pursued its appeal.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

UNDER	Section 241 of the Companies Act 1993 and Part 31 of the High Court Rules 2016
IN THE MATTER	of an application to put a company into liquidation
BETWEEN	CHATHAM ISLANDS MANAGEMENT LIMITED Plaintiff
AND	CHATHAM HARDWARE LIMITED Defendant

Hearing:	20 March 2023
Appearances:	P R W Chisnall and M R G van Alphen Fyfe for Plaintiff E J Tait for Defendant
Judgment:	20 March 2023