Creative Development Solutions v Chorus New Zealand Limited - [2020] NZHC 2180

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-318

[2020] NZHC 2180

UNDER section 290 of the Companies Act 1993

BETWEEN

CREATIVE DEVELOPMENT SOLUTIONS

Applicant

AND

CHORUS NEW ZEALAND LIMITED

Respondent

Hearing: 19 August 2020

Appearances:

M Wigley for the applicant

V Heine and H Kerry for the respondent

Judgment:

27 August 2020

Reissued:

22 September 2020

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1] The applicant, Creative Development Solutions Ltd (Creative), applies pursuant to s 290(4)(a) of the Companies Act 1993 for an order setting aside a statutory demand served by the respondent, Chorus New Zealand New Zealand Ltd (Chorus).

[2]The background is not complicated.

[3] In mid-2018 Creative commenced proceedings against Chorus, alleging that Chorus had unlawfully usurped its intellectual property.

[4] The proceeding came on for trial in late 2019. In a judgment dated 13 November 2019 Dobson J dismissed Creative’s claim.

CREATIVE DEVELOPMENT SOLUTIONS v CHORUS NEW ZEALAND LIMITED [2020] NZHC 2180
[27 August 2020]

[5] On behalf of both parties counsel made submissions by memoranda in relation to costs.

[6] In a judgment dated 18 February 2020, Dobson J dealt with costs. For the reasons there stated, his Honour awarded Chorus costs on a 3B basis from 28 June 2019 together with disbursements properly incurred by it in the litigation from that date, but reduced both the costs and the disbursements by half.

[7] Subsequently, the Registrar sealed judgment including as to costs and disbursements totalling $86,704.14.

[8] Chorus served its statutory demand dated 2 June 2020 on 22 June 2020. This demanded payment of an earlier costs award made by Mallon J for $5,575 in connection with an interlocutory step in the proceeding, and the $86,704.14 award.

[9]Creative filed and served this proceeding on 22 June 2020.

[10] I pause at this point to mention that Creative has appealed from Dobson J’s substantive judgment of 13 November 2019. Apparently, the appeal is set down to be heard in the very near future. That, however, is irrelevant to the disposal of the application before me, because Creative is not seeking a stay of Dobson J’s costs judgment pending the disposal of its appeal.

[11]Mr Wigley put Creative’s application on one basis.

[12] His submission was that the sealed order was a nullity ab initio, on which basis he argued that there was no debt owed to Chorus by Creative behind the former’s statutory demand. He argued that if that contention is arguable, then, in terms of s 290(4)(a) of the Companies Act, Creative is entitled to an order setting aside the statutory demand.

[13] On what basis, then, is it contended that the sealed judgment was a nullity from the outset?

[14]Mr Wigley relied on three authorities.

[15] In Bank of Nakhodka v The Fishing Vessel “Abruka”,1 the plaintiff succeeded in its substantive action against the defendant and secured a costs award of $7,000 plus such disbursements as might be allowed by the Registrar. Although the…

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: [2020] NZHC 2180
Decision Date: 27 August 2020

CaseChat Overview and Summary

In this case, Creative Development Solutions Ltd (Creative) sought to have a statutory demand set aside, which had been served by Chorus New Zealand Limited (Chorus). The statutory demand sought payment of costs and disbursements awarded in previous judgments. Creative argued that the sealed judgment was a nullity and therefore there was no debt owed to Chorus. The High Court considered the principles governing sealed judgments and whether there had been a failure to ensure a fair opportunity for Creative to have its say. The Court found that the statutory demand was not set aside as the challenges to the judgment did not undermine the demand in its entirety, Chorus had provided Creative with an opportunity to comment on the costs and disbursements, and any potential error would not have changed the outcome. The Court dismissed the application and extended the time for compliance with the statutory demand. Costs were reserved pending agreement between the parties.

Orders