Ellison Trading Limited v Brookside Contracting Limited HC Hamilton CIV 2004-419-1602

[2005] NZHC 1693

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV 2004-419-1602

UNDER  the Companies Act 1993 (s290)

IN THE MATTER OF     a notice of originating application pursuant

to Part IVA of the High Court Rules (R458D(1)(a)(vi))

BETWEEN  ELLISON TRADING LIMITED

Plaintiff

AND  BROOKSIDE CONTRACTING LIMITED

Defendant

Hearing:         4 May 2005 Appearances: A Foster for applicant

D Forman for respondent Judgment:    4 May 2005 at 11:15

(ORAL) JUDGMENT OF ASSOCIATE JUDGE FAIRE

[on application to set aside a statutory demand]

Solicitors:Gallaway Cook Allan, PO Box 143, Dunedin for applicant Tomkins Wake, PO Box 258, Hamilton for respondent

Ellison Trading Limited V Brookside Contracting Limited HC HAM CIV 2004-419-1602 4 May 2005

[1]    The applicant applies to set aside a statutory demand. The statutory demand provides:

TAKE  NOTICE  that BROOKSIDE  CONTRACTING  LIMITED,  Cnr  Princes and

High Streets, Dunedin, Contractors hereby requires ELLISON TRADING LIMITED, a duly incorporated company under the Companies Act 1993 having its registered office at 401a Cambridge Road, State Highway 1, Hillcrest,  Hamilton  to  pay  to  Brookside Contracting  Limited  the  sum of

$103,833.54

The sum of $103,833.54 is due and payable by Ellison Trading Limited in terms of a Sealed Order of the District Court dated 2 September 2004.

Ellison Trading Limited has failed to pay Brookside Contracting Limited the

sum of	$103,833.54.	The sum owing is made up as follows:
1	$ 60,392.40	being a refund of the purchase price of the Hanix S+B800
2.	$ 16,082.50	being interest on $60,392.40 at 7.5% from 13 February 2001 to 1 September 2004
3.	$ 4,379.03	being the cost of repairs on the Kobelco SK200-3
4.	$    932.19	being interest on $4,379.03 at 7.5% from 31 October 2001 to September 2004
5.	$ 15,713.84	being the diminution in value of the Kobelco
6.	$ 4,184.62	being interest on $17,713.84 at 7.5% from 13 February 2001 to 1 September 2004
7.	$ 1,500.00	costs
8.	$    658.96	disbursements

$103,833.54

========

[2]    The application is made in reliance on s 290(4)(a) of the Companies Act 1993. That provides:

290     Court may set aside statutory demand

…

(4)The Court may grant an application to set aside a statutory demand if it is satisfied that—

(a)There is a substantial dispute whether or not the debt is owing or is due;

[3]    The approach which the Court takes on applications pursuant to s 290(4)(a) of the Companies Act 1993 is to determine if the applicant can show a  fairly arguable basis that it is not liable for the amount of the claim: Forge Holdings Ltd v Kearney Finance (NZ) Limited HC CHCH M 149/95 20 June 1995 at 2 and Queen City Residential Limited v Patterson Co-Partners Architects (No 2) [1995] 3 NZLR 307 (7 NZCLC) 260,936. That formulation was approved by the Court of Appeal in United Homes (1988) Ltd v Workman [2001] 3 NZLR 447 at 451-2.

[4]Two specific issues arise with this application.

a)The demand is expressed in identical terms to a judgment of the District Court at Dunedin sealed on 2 September 2004. The applicant would appear to be estopped from questioning the merits of that order by this application;

b)The respondent alleges that service of the application was outside the time prescribed in s 290 of the Companies Act 1993

[5]    There is some doubt about the facts relating to service. Because the  first  issue in this case is decisive of the matter, I will not deal with the second issue.

[6]    I now examine the first issue. There has been provided to the Court the order of the District Court at Dunedin sealed on 2 September 2004. That order provides:

This Proceeding coming on for hearing on 1 September 2004 BEFORE HIS HONOUR   JUDGE   S   J   O’DRISCOLL   who   UPON   READING   the Amended

Statement of Claim dated 23 September 2003 and the affirmation of EWAN ROBERT CARR dated 10 August 2004 and UPON READING the affidavit of RALPH  MARTIN  DE  CLIFFORD   dated  27  July  2004  AND  UPON HEARING

WARREN DEAN CHARLES ALCOCK on behalf of the Plaintiff ADJUDGED THAT:

The Defendant is to pay to the Plaintiff the following amounts:

1	$ 60,392.40	being a refund of the purchase price of the Hanix S+B800
2.	$ 16,082.50	being interest on $60,392.40 at 7.5% from 13 February 2001 to 1 September 2004
3.	$ 4,379.03	being the cost of repairs on the Kobelco SK200-3
4.	$    932.19	being interest on $4,379.03 at 7.5% from 31 October 2001 to September 2004
5.	$ 15,713.84	being the diminution in value of the Kobelco
6.	$ 4,184.62	being interest on $17,713.84 at 7.5% from 13 February 2001 to 1 September 2004
7.	$ 1,500.00	costs
8.	$    658.96	disbursements

$103,833.54

=========

[7]    The statutory demand is expressed in identical terms to the District Court order. Any attempt by the applicant to dispute it in this jurisdiction  faces  the obvious plea of estoppel per rem judicatum.

[8]In Shiels v Blakeley [1986] 2 NZLR 262 the Court of Appeal held:

where a final judicial decision has been pronounced by a New Zealand judicial tribunal of competent jurisdiction over the parties to, and the subject-matter of, the litigation, any party or privy to such litigation, as against any other party or privy thereto, is estopped in any subsequent litigation from disputing or questioning the decision on the merits.

[9]    The decision of the District Court in Dunedin is a final decision of a Court of competent jurisdiction. The issues raised by the applicant in support of the claim  that there is a substantial dispute are the same issues that have been the subject of the order of the District Court in Dunedin.  The parties are the same as were the parties in the District Court at Dunedin. Accordingly, all elements that must be satisfied for an estoppel per rem judicatum to apply, apply in this case. It is simply not open to  the  respondent  to  challenge  the  statutory  demand  on  the  grounds  set   out   in   s 290(4)(a) of the Companies Act 1993.

[10]   Accordingly, I conclude that the statutory demand must not be set aside. In reaching that conclusion, I simply comment that, if the applicant wishes to challenge the District Court judgment that must be done either by way of an appeal or by way of an application for the rehearing of the matter in the District Court. Whether the applicant wishes to adopt one or other of those courses is for it to decide. It is certainly not an order that this Court, can inquire into for the reasons that I have given.

Orders

[11]I order:

a)The application to set aside the statutory demand is refused;

b)In the event that the amount set out in the statutory demand is not paid within 15 working days of the date of this judgment and no application for stay of the District Court judgment is applied for and obtained, the respondent may apply to this Court to place the  applicant into liquidation.

Costs

[12]   The applicant shall pay the respondent’s costs on this application based on Category 2 Band A for preparation for item (1) of the Third Schedule of the High Court Rules and Band B for the remaining relevant items of the Third Schedule of the High Court Rules together with disbursements as fixed by the Registrar.

JA Faire Associate Judge