Chevin Drainage Limited v TLW Trustee Limited
[2017] NZHC 1446
•26 June 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2017-404-000026 [2017] NZHC 1446
UNDER THE Companies Act 1993 BETWEEN
CHEVIN DRAINAGE LIMITED Plaintiff
AND
TLW TRUSTEE LIMITED Defendant
CIV-2017-404-000027
UNDER THE Companies Act 1993
BETWEEN CHEVIN DRAINAGE LIMITED Plaintiff
ANDWELLSPRING FOUNDATION LIMITED
Defendant
Hearing: 26 June 2017 Appearances:
J Belthazar for Plaintiff
J A Wickes for DefendantJudgment:
26 June 2017
JUDGMENT OF ASSOCIATE JUDGE OSBORNE [on liquidation applications]
Introduction
[1] The Court is dealing with two liquidation proceedings in relation to one invoice dated 12 August 2016. The defendants have taken a number of issues in defending the liquidation applications. Upon hearing the submissions for the plaintiff this morning in relation to whether the plaintiff has a status of creditor, my
judgment will focus only on that issue as it is dispositive.
CHEVIN DRAINAGE LIMITED v TLW TRUSTEE LIMITED [2017] NZHC 1446 [26 June 2017]
Contractual relationship
[2] The plaintiff appears to be one of a number of entities controlled by Antony and Lorna Chevin.
[3] The entities referred to in their own documents are Chevin Drainage Ltd (the plaintiff in this proceeding); Chevin Civil Ltd; and Chevin Civil 2015 Ltd. A certificate of the plaintiff’s incorporation has been produced but none for entities bearing the other names. I infer that there are likely to be such entities given that those various names appear in their documentation.
[4] The defendants own an Auckland property as tenants-in-common. The plaintiff had previous dealings with the defendants in relation to the property. In particular, in 2014, the plaintiff undertook some significant drainage and related work for the defendants’ project manager.
[5] The contract to which the present invoice relates was entered into on 26 July
2016. The evidence for the defendants has been given by Tao Sun. He deposes that he contacted James Fairgray who had been involved as a quantity surveyor for one of the plaintiff companies on previous occasions. His evidence as to his dealings with Mr Fairgray was undisputed on these points. Mr Sun deposed that Mr Fairgray was aware of the requirements and difficulties of the 2016 job. Mr Fairgray indicated that it was a job which would take between half and a full day. The discussions were oral. On 26 July 2016, Mr Fairgray sent an email to Mr Sun. Under Mr Fairgray’s typed name, there appear the words “Chevin Civil”. There is then a reference to a web address ( The email then concludes with a statement which reads:
Welcome to Chevin Civil Ltd. Chevin Civil operates as a specialist civil contracting base with diverse capabilities from specialist technical advice through to consent …
[6] On the same day, Mr Sun emailed a reply which reads:
Hi James
I accept the quote. Please email me or call me to confirm which date your staff will be (sic) come …
[7] The work which the defendants required was performed, although the defendants dispute the invoiced sum. The invoice was issued on 12 August 2016. It was issued under a heading “CHEVIN CIVIL”. It was expressly stated to be in the name of Chevin Civil 2015 Ltd. It is an invoice for $10,111.95, including GST. The due date stated for payment was 19 August 2016. The invoice recorded a GST number and a bank account number for the purposes of the transaction and payment.
[8] Some email correspondence ensued between the representatives of the parties in which Mr Sun raised issues as to the invoiced sum. When the issues were not resolved, Mrs Chevin caused the plaintiff to issue further demands on the defendants. A demand of 7 September 2016 had a heading on the covering letter “Chevin Drainage” (sic) but its content contained a statement “Chevin Civil had carried out work as per your instructions and acceptance of our quote on 26/7/16”. The letter again demanded payment of the sum invoiced. On 14 September 2016, Mrs Chevin issued what she titled “formal demands”. She demanded payment of the sum invoiced but on this occasion the single reference to a trading name in the letter was “Chevin Drainage”.
The statutory demands
[9] On 3 November 2016, the plaintiff caused two statutory demands to be served, one on each defendant, for the amount of the invoice, together with claims for interest and legal fees and disbursements. The total claim was $11,606.78. Further discussions ensued, this time between lawyers. The period for the defendants to satisfy or apply to set aside the statutory demand expired on 24
November 2016.
[10] On 25 November 2016, the defendants filed in the Disputes Tribunal a claim in relation to the issues between the parties. They named Chevin Civil 2015 Ltd as the other party to the contract. In April 2017, the Tribunal upheld an objection by Chevin Civil 2015 Ltd to the Disputes Tribunal application. The Tribunal struck out the defendants’ claim, leaving it to this Court to determine the issues between the parties.
A presumption as to the identity of the creditor?
[11] The synopsis of submissions filed by the plaintiff emphasised the fact that neither defendant had taken steps to have the statutory demands set aside. It might have been taken from those submissions that the matters which the plaintiff was contending should be presumed in this hearing extended beyond the presumption of insolvency which Ms Wickes accepted had arisen. Ms Wickes, in her synopsis, referred me to the judgment of Associate Judge Bell in Heron’s Flight Ltd v NZ
Properties International Ltd.1 I respectfully adopt the Associate Judge’s
observations in that judgment as to the avenues of argument which remain open to a defendant on a liquidation application, notwithstanding the defendant’s failure to apply to set aside an underlying statutory demand. In particular, as Ms Belthazar appropriately accepted, it remains for the plaintiff on a liquidation application to satisfy this Court on the balance of probabilities that it is indeed a creditor of the defendant.
Discussion
[12] On the face of the unambiguous exchange of emails on 26 July 2016, there is a difficulty in arguing, in the absence of any other correspondence or related history, that this was a contract other than between the defendants and either Chevin Civil Ltd (or if evidence were adduced that such a company did not exist and that its correct name was Chevin Civil 2015 Ltd) or Chevin Civil 2015 Ltd.
[13] For the plaintiff, Ms Belthazar has identified in the evidence a number of matters both before and after 26 July 2016. She submits that these point to what one of the plaintiff’s deponents refers to as a “clerical mistake”. She says first there was a mistake by identifying Chevin Civil Ltd rather than Chevin Drainage Ltd in the email exchange on 26 July 2016. She says, secondly, that there was a mistake in the identification of Chevin Civil 2015 Ltd as the party issuing the invoice. The statutory demands were subsequently issued by the plaintiff in reliance on that invoice, notwithstanding that the invoice was and remains in the name of Chevin
Civil 2015 Ltd.
1 Heron’s Flight Ltd v NZ Properties International Ltd [2012] 1 NZLR 424.
[14] I turn to those matters which Ms Belthazar suggested cut across the name of the parties in the documentation of 26 July 2016 and which establishes, on a balance of probabilities (in her submission), that Chevin Drainage Ltd is the true creditor and therefore the correct plaintiff in this case.
The bank account number
[15] The invoice issued by Chevin Civil 2015 Ltd bears a bank account number for the defendants’ payment. Mrs Chevin states that that is a bank account number of the plaintiff. I make two observations:
(a) identification of a bank account of Chevin Drainage Ltd, as the account to which payment is to be made, cannot, after the work was done, change the correct identity of the parties to the contract; and
(b)the plaintiff’s evidence does not contain any statement that the bank account in question was not shared by other entities in the group.
The GST number
[16] The invoice similarly identified a GST number. By implication, the invoice states that that is the correct GST number for Chevin Civil 2015 Ltd. Mrs Chevin’s evidence contains the assertion that the GST number in question is the GST number of Chevin Drainage Ltd. She did not produce documentary evidence as to the GST number of the various entities in the Chevin Civil group.
[17] I make two observations:
(a) the adoption of a GST number which is that of Chevin Drainage Ltd alone, after entry into the contract and after the work had been done, does not alter the identity of the parties to the contract; and
(b)I am not satisfied on the balance of probabilities, in the absence of production of a relevant certificate or similar, that Mrs Chevin’s narrative assertion as to the ownership of the GST number is correct.
Prior dealings between the entities
[18] Mr Chevin produced a trail of documents from 28 January 2014 to May 2014 which evidence work being undertaken by Chevin Drainage Ltd for the defendants’ project manager, who dealt with matters relating to the defendants’ land. There is also a Producer Certificate exhibited from a later date certifying the completion of that work.
[19] That evidence does not affect the right of the parties within the Chevin Civil group to decide, when a new job became available in July 2016, which entity would offer to undertake the work. Mr Fairgray identified the offer as being that of Chevin Civil Ltd. On the same day, Mr Sun accepted that offer. The way in which the parties and their related entities had previously conducted themselves in earlier work cannot alter the objective evidence of the parties’ contractual intentions as expressed in their 26 July 2016 documentation.
Later correspondence between the solicitors
[20] Ms Belthazar also relied upon aspects of the defendants’ correspondence after the dispute had arisen. In particular, she noted that the defendants’ solicitors had in the correspondence described the other entity as “Chevin Drainage Ltd”.
[21] Again, such references in solicitors’ correspondence after the event do not establish on the balance of probabilities that the party who issued the statutory demands was the entity which had entered into the contract and had the contractual entitlement to recover payment. The defendants’ solicitors in their correspondence were dealing with statutory demands made by Chevin Drainage Ltd – the use of that name in correspondence is understandable and, in relation to the issues of contractual entitlement, neutral.
A clerical error?
[22] Finally, there is the narrative evidence of Mr and Mrs Chevin which suggests that there was a “clerical error” in issuing the invoice. Some aspects of that evidence
were inappropriate in that they went beyond evidence and contained submission. For instance, Mr Chevin records at a point in his affidavit:
15. It is obvious that my staff in error inserted the incorrect header when issuing Invoice 14020.
[23] By reason of the matters I have earlier referred to, it is not obvious to this Court that the plaintiff’s staff (accidentally) inserted the wrong name in the invoice. The invoice, being in the name of Chevin Civil 2015 Ltd, is closer to the entity stated in the 26 July 2016 exchange (Chevin Civil Ltd) than it is to “Chevin Drainage Ltd”. The unattributed hearsay element in paragraph 15 of Mr Chevin’s affidavit does not qualify to be admitted as evidence.
[24] Mr Chevin, later in his affidavit, also referred to “this innocent clerical mistake”. There is no further explanation at that point of who made the mistake or how it was made. The reference appears to be simply a repetition of what Mr Chevin had suggested earlier was “obvious”.
[25] I accordingly attach no weight to these passages in the affidavit evidence.
[26] Even had the evidence been admissible, any “clerical error” in an invoice issued on 12 August 2016 could not have altered the identity of parties to a contract entered into on 26 July 2017.
Outcome
[27] For the reasons I have given, I am not satisfied on the balance of probabilities that the plaintiff is a creditor of the defendant.
[28] The application for adjudication of each defendant will therefore be dismissed.
[29] I will shortly hear from counsel in relation to costs but I make this observation. The Disputes Tribunal referee considered that the only appropriate course was to respect the jurisdiction of this Court to determine the issues between the parties. Unfortunately, because the issue as to who is the creditor is fundamental
to the determination of the application in this Court, the course the parties had to follow will have visited disproportionate costs upon them. This Court cannot do anything to ameliorate that. The plaintiffs made their decision as to how to proceed. In this jurisdiction, unless counsel are about to suggest otherwise, costs should follow the event.
Costs
[30] I have now heard from counsel as to costs. Both accept that the outcome of the proceeding makes it appropriate that the defendants have costs on a 2B basis together with disbursements.2 As counsel sensibly prepared on the basis of a single set of submissions and a single hearing for both proceedings, the items allowed for each defendant are not to be duplicated in that regard.
Orders
[31] I order:
(a) The plaintiff’s claim in each proceeding is dismissed; and
(b)The plaintiff is to pay to each defendant the costs of the proceeding on a 2B basis (but with a single item jointly in relation to preparation and attendance at the hearing) together with disbursements to be fixed by the Registrar.
Associate Judge Osborne
Addendum (1)
Jurisdiction of Disputes Tribunal
[32] Having delivered the above judgment, I enquired of counsel whether they had any submissions to make as to jurisdiction to refer matters between these parties
(and/or Chevin Civil 2015 Ltd) to the Disputes Tribunal. Ms Wickes had earlier in
2 High Court Rules, Category 2 under r 14.3(1) and band B under r 14.5(2).
the proceeding requested (unsuccessfully) that the Court consider making an order under s 37(2) Disputes Tribunal Act 1988. Counsel indicated that their respective clients would not object to a transfer now. I have since considered the statutory provisions. I am not satisfied that the Court has jurisdiction to transfer to the Disputes Tribunal any matters which arose in this case. This Court has determined that the liquidation claims fail because the plaintiff is not a creditor of the defendants. That finding is a res judicata. There are no other issues which remain to be transferred by this Court. On the other hand, in relation to an invoice sum of
$10,111.95, the parties will be aware that any economic resolution of issues between them will have to occur in another jurisdiction.
Addendum (2)
A matter for correction?
[33] After I had orally delivered the above judgment, Ms Belthazar later in the day filed a Memorandum in which she sought to correct that part of my oral judgment in which I had dealt with the exchange between Mr Sun and Mr Fairgray (above at [5]). In particular, I referred at [5] to Mr Sun’s evidence as to his dealings with Mr Fairgray. I there stated that Mr Sun’s evidence was “undisputed”. Ms Belthazar, in her Memorandum, records that this is incorrect. Ms Belthazar states, by reference to Mr Fairgray’s affidavit, that:
Mr Fairgray disputes that he had a telephone discussion with Mr Sun Tao …
[34] It would be inappropriate that I, having delivered my judgment, amend a substantive finding.
[35] That said, I would not in any event be satisfied that there was an error in paragraph [5] of this judgment. Contrary to Ms Belthazar’s statement in her Memorandum, Mr Fairgray did not dispute that he had had a telephone discussion with Mr Sun. Rather, he stated that he had not had a telephone conversation in
which the two discussed a “definitive time period to carry out the necessary works”. The issue thereby taken by Mr Fairgray was as to the content, not the actual occurrence, of the discussion.
Associate Judge Osborne
Solicitors:
Gibbs Mills Livingstone, Auckland
Loo & Koo, Auckland
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