Fairway Resolution Limited v Henson
[2015] NZHC 851
•29 April 2015
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2014-419-0353 [2015] NZHC 851
BETWEEN FAIRWAY RESOLUTION LIMITED
Applicant
AND
IAN HENSON Respondent
Hearing: 10 March 2015 Appearances:
Ms D Bennington for Applicant
Mr I Henson - RespondentJudgment:
29 April 2015
JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE
This judgment was delivered by me on
29.04.15 at 4 pm, pursuant to
Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
FAIRWAY RESOLUTION LIMITED v HENSON [2015] NZHC 851 [29 April 2015]
Background
[1] This application is brought under s 290(4)(a) of the Companies Act 1993 (Act), which 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;
[2] The following statement of the background to the present dispute is taken from the submissions for the applicant, Fairway Resolution Ltd (“Fairway”). I have included only such parts of that summary as I believe are contentious.
[3] Fairway is a specialist dispute resolution company that provides services to the Accident Compensation Corporation (ACC) in respect of accident compensation disputes and reviews under the Accident Compensation Act 2001.
[4] Fairway also provides dispute resolution services to the Health and Disability Commission and the Legal Services Agency, and manages the Telecommunication Dispute Resolution Service and the Government’s Financial Dispute Resolution Service for the Finance Industry.
[5] Mr Henson is an advocate who represents ACC claimants at review hearings facilitated by Fairway from time to time. Mr Henson is also an ACC claimant who has filed numerous reviews, which have either been facilitated by Fairway or are due to be facilitated by Fairway in the future. That is the extent of Mr Henson’s relationship with Fairway. In particular, Mr Henson has never been in a contractual relationship with Fairway to provide services to that company.
[6] The statutory demand which Mr Henson has served on Fairway claims the sum of $1096.25; in respect of “invoices December 2012 and January 2013”. The invoices are intended to reimburse Mr Henson for his time wasted when a hearing that he was scheduled to appear in, as an advocate, was cancelled. The hearing was a review of an ACC determination which was scheduled to take place on 19
December 2012 at 3 pm. Fairway, pursuant to an arrangement that it had with ACC, had responsibility for organising the hearing and providing a reviewer to hear the review. Ms Coddington was given the responsibility of conducting the review hearing. She found out on the morning of the review hearing that Mr Henson would be appearing as an advocate. She had what she describes as a confrontational encounter with Mr Henson when he had appeared at reviews that she was conducting on an earlier occasion. It appears that was in regard to a review in which Mr Henson was one of the parties. Ms Coddington says in her affidavit she understands that Mr Henson made a complaint about her. The substance of the evidence is that she concluded that it would be preferable that she did not conduct the review because of the past history between her and Mr Henson. Mr Pollock, the Chief Executive of Fairway, says that Ms Coddington had advised Fairway that the parties were told in advance of the cancelled hearing that it would not be taking place. He says that Fairway, itself, made contact with all the parties by approximately 10.30 am that day to advise that the reviews would not be proceeding later that day and that a new date would be scheduled.
[7] While the facts are not entirely clear, it appears that Mr Henson had made arrangements to travel from Napier to Hamilton, where the hearing was to be conducted on the day in question. I understand that he claims he did not receive notice in time that the hearing was to be adjourned and that he made the trip to Hamilton in ignorance of that fact. As a result, he says, a considerable amount of his time was wasted. In an email that he sent to Fairway, Mr Henson says that he departed from Napier at 7 am on the morning in question and arrived in Hamilton at
10 am. Other aspects are not entirely clear, but in an email he sent to Fairway on the date of the cancelled hearing, he not only confirmed the details of what he claimed was his wasted trip but also asserted that his client had lost the days appointments for which she claimed $690. He claimed six hours travelling time plus three hours “wasted contacting [Fairway] at $175 plus GST. Plus 440 km at $1 km. plus mobile calls to [Fairway] total 16 minutes at $1.50. My loss $2344.85”.
[8] The hearings apparently took place eventually on 7 February 2013.
[9] Fees which Mr Hansen earns through his appearances as an advocate in an ACC review hearing are governed by Schedule 1 of the Injury Prevention, Rehabilitation, and Compensation (Review Costs and Appeals) Regulations 2002 (ACC Costs Regulations) (exhibit A, Pollock January affidavit, Bundle, Tab 6, page
91). Authority to make those regulations is to be found in s 148 Accident
Compensation Act 2001. The section provides:
148 Costs on review
(1) The Corporation is responsible for meeting all the costs incurred by a reviewer in conducting a review.
(2) Whether or not there is a hearing, the reviewer—
(a) Must award the applicant costs and expenses, if the reviewer makes a review decision fully or partly in favour of the applicant:
(b) May award the applicant costs and expenses, if the reviewer does not make a review decision in favour of the applicant but considers that the applicant acted reasonably in applying for the review:
(c) May award any other person costs and expenses, if the reviewer makes a review decision in favour of the person.
(3) If a review application is made and the Corporation revises its decision fully or partly in favour of the applicant for review before a review is heard, whether before or after a reviewer is appointed and whether or not a review hearing has been scheduled, the Corporation must award costs and expenses on the same basis as a reviewer would under subsection (2)(a).
(4) The award of costs and expenses under this section must be in accordance with regulations made for the purpose.
(5) If any costs and expenses are awarded against the Corporation under this section, the Corporation is liable to pay them within 28 days of the decision to award them.
[10] The regulations provided in schedule 1 recognise that the costs which can be awarded include those for representation at the review hearing. Individual items for which claim can be made include, for example:
d. Appearance at hearing on behalf of applicant or another person
[11] Fairway, in due course, paid Mr Henson the sum of $421.43 on terms, it claims, that receipt of such payment would be in full and final settlement of any
claim that Mr Henson would have against the company. Certainly, there is supporting evidence for the proposition that the payment was made on a without prejudice basis and in full and final settlement of Mr Henson’s claim.1
[12] The grounds upon which Fairway brings its application are stated to be the following:
2.3.There is a substantial dispute as to whether or not the “debt” is owing or due, in that:
2.3.1.The sum claimed by the respondent is not a sum due and owing by the applicant;
2.3.2The respondent is claiming compensation for costs allegedly incurred by him which are not accepted by the applicant;
2.4 The applicant is not insolvent;
2.5This is the second time that the respondent has served a statutory demand in relation to the alleged “debt” with the first statutory demand being served on 22 January 2013 for the sum of $2948.60…
2.5.1 Correspondence by the respondent following service of the
2013 statutory demand confirmed his intention to use the statutory demand process and the costs associated with
resisting it as a means to obtain his claimed sum;
2.5.2The respondent was put on notice of the inappropriateness of using the statutory demand procedure in respect of a dispute and was given the opportunity to withdraw his demand but initially failed to do so;
2.5.3The applicant brought an application to set aside the statutory demand, dated 5 February 2013 under proceeding CIV 2013-419-1 to 2.
2.5.4Following service of proceeding CIV 2013-419-122 the respondent withdrew the 2013 statutory demand;
2.5.5The applicant discontinued proceeding C IV 2013-419-122 on 18th of March 2014, with no question as to costs.
2.5.6The document purporting to be a statutory demand served on the applicant on 25 August 2014 is the same document as the first statutory demand and is still dated 21 January 2013. It simply has the sum of $2948.60 crossed out and the sum of
$1096.25 substituted in pen.
2.5.7The respondent is estopped from relying on the purported statutory demand.
1 Email from a Mr Strydom to Mr Henson 16 January 2013.
2.6The applicant has again written to the respondent putting him on notice that in serving the 2014 statutory demand, he has again used the statutory demand procedure inappropriately as there continues to be a dispute in respect of the alleged “debt”.
Legal principles
[13] The general principles which relate to applications to set aside a statutory demand under s 290(4) are well established. They are listed as follows:
(a) The applicant must show that there is arguably a genuine and substantial dispute as to the existence of the debt;2
(b)The mere assertion that a dispute exists is not sufficient. Material short of proof is required to support the claim that the debt is disputed;3
(c) If such material is available, the dispute should normally be resolved other than by proceedings in the Court;4
(d)An applicant must establish that any counterclaim or cross demand is reasonably arguable in all the circumstances. The obligation is not to prove the actual claim. Such an obligation would amount to the dispute itself being tried on the application;
(e) It is not usually possible to resolve the disputed questions of fact on affidavit evidence alone, particularly where issues of credibility arise.5
[14] In summary, if the Court is satisfied that the applicant has demonstrated that a fairly arguable defence exists in relation to the debt upon which the statutory demand
was issued, the Court should exercise its discretion to set aside the statutory demand.
2 Queen City Residential Ltd v Patterson Co-Partners Architects Ltd (No2) (1995) 7 NZCLC
260,936 (HC).
3 Far East Auto Imports Ltd v Nikki International Corporation Ltd 11 PRNZ 602 (HC) at 604.
4 Far East Auto Imports Ltd v Nikki International Corporation Ltd, above n 3, at 604.
5 Androcles Investments Ltd v Highway Publications Ltd HC Christchurch M455/00, 14 February
2001.
The service point
[15] In his notice of opposition, Mr Henson says that he denies service of the notice of application for order to set aside was affected on him, as required by law. His first point is that when the statutory demand was issued, the address for service was noted as 7 Lake Road in Hamilton; the address of Mr Henson’s office. Mr Henson says that the process server did not attempt to serve him at this office, but at the address of his ex-wife whom Mr Henson was visiting on 5 September
2014. He goes on to say in his notice of opposition:
I advised that I was only visiting at this address and he could and should have served me or simply left the documents at my office at 7 Lake Road, Frankton, Hamilton.
[16] So the point is that service was at the wrong address.
[17] Mr Henson told me that the next morning, at around 10 am, he received a text advising that the documents had been left at his ex-wife’s address the previous evening. He says he went to the address around lunchtime and could not find any documents, but notes that it was a very windy evening and that the property was exposed to certain “elements”.
[18] Mr Henson has not provided any sworn evidence of his account of the circumstances in which service took place. The abovementioned contentions to which I have referred come from his submissions.
[19] The only sworn evidence before the Court concerning the circumstances of service is that of Mr Sewell. His evidence includes the annexure to his affidavit of
23 September 2014, in which he states:
At 6.54 pm I drove into the address6 and knocked at the front door. The male occupant came to the door and opened it. I recognised him as Ian Henson, from the picture I took the last time I served him however I could not be 100% sure it was him so as I opened the door I greeted him with “Hello Ian” to which he replied “hello” – I then identified myself and
6 That is, 52 Lee Road in Hamilton.
attempted to hand the documents to him however he refused to accept them stating that I needed to deliver them to him at his work address as this was a work matter. I explained that the documents had nothing to do with his work, and were all in his own personal name, Ian Henson. He insisted that I needed to deliver them to him at work and service would not be effective if I gave them to him at his home address.
After a short discussion, he continued to refuse service, insisting that I deliver them to him on Monday. I did not mention the fact that he had earlier told me he was not even in Hamilton and advised him that I would be leaving them at the address and service was effected once I had brought the documents to his attention. At this point he again stated that I needed to deliver them to him at work and closed the door.
I left the documents on the mat, at the front door, and left the address.
[20] Mr Sewell also produced screen shots of messages from his telephone that he exchanged with Mr Henson. The first of these, at 7 pm, was to the following effect:
Hi Ian, I have left the service documents at your front door. Cheers.
[21] The next day, at 10.22 am, further text messages were exchanged and are exhibited to the affidavit. The first from Mr Henson on Saturday 6 September 2014 at 10.22 am to Mr Sewell.
I have checked all doors at 7 Lake Road no documents here.
[22] Mr Sewell, at 11.05 am, replied:
That’s because I left them at your home address
After you refused to personally accept them from me last night
[23] I add that the Lake Road premise is the business address of Mr Henson’s
company.
[24] Mr Sewell was not cross-examined on this affidavit. Mr Henson stated that
Mr Sewell fabricated his evidence.
Conclusions on service
[25] It is incumbent upon the applicant to establish that the application to set aside the statutory demand was filed and served within 10 working days after the date of service of the demand. In this case, that meant that because service of the demand
occurred on 25 August 2014, then excluding the date of service itself, filing and service of the application to set aside the statutory demand ought to have occurred not later than 8 September 2014.
[26] There is no argument that if service occurred, as Mr Sewell has deposed, it was served in time.
[27] Rule 6.11 of the High Court rules provides:
6.11 Personal Service
A document may be personally served by leaving the document with the person to be served, or, if that person does not accept it, by putting it down and bring it to the notice of that person.
[28] On the basis of that evidence, I conclude that, in terms of rule 6.11, Mr Henson did not accept the documents. I also accept that Mr Sewell told Mr Henson that he would be leaving the documents at the property and that he actually did put the document down, as required by the rule. There is no requirement in the rule that the person to be served should observe the documents actually being put down. If, as it happened here, the person to be served put himself in a position where he would not observe the server putting the documents down, then that is of no consequence. The substance of the rule is to bring the documents to the attention of the person to be served. There can be no doubt that Mr Henson would know that, following his refusal to accept service, Mr Sewell would be leaving the documents. Having regard to the uncontradicted affidavit of Mr Sewell and the annexes to that affidavit, there can be no doubt that had Mr Henson wished to take possession of the documents and read them, he knew where they would be. By turning away and closing the door, Mr Henson put it beyond his own power to observe Mr Sewell putting down the documents. If Mr Henson deliberately chose to blind himself to the presence of the documents on the property then, again, that is neither here nor there when considering whether the rule has been complied with.
[29] I do not consider that the sequence in which the rule speaks of putting down of the documents and the bringing to their attention entails the conclusion that the process server must place the document on the ground and then bring that fact to the
notice of the bankrupt in that strict order. That Mr Sewell drew attention to the fact that he had documents to serve and putting those documents down close to Mr Henson within what was apparently a short period of time during which the parties were in conversation, is sufficient to establish in substance that the requirements of the role had been complied with.
[30] I therefore conclude that the application was served in accordance with the requirements of s 290 of the Companies Act 1993.
The claim that the applicant’s Chief Executive Officer said they had paid the
respondent’s claim in full
[31] In the course of the hearing, Mr Henson told me that he had received a communication from the respondent that it accepted his claim in its entirety. I invited him to point out to me where this document was in the evidence and Mr Henson agreed that he was unable to do so. Mr Henson said that he had the document but it was not in Court with him. I granted leave to forward a copy of such a document to the court not later than 5 pm on 20 March 2015. I told the parties that after I had dealt with that aspect of the proceeding, I would deliver my decision.
[32] Mr Henson did not provide the document concerned but instead sent a memorandum to the Court suggesting why the solicitors acting for Fairway ought to be able to and ought to be compelled to provide the document that he was referring to. The suggestions that Mr Henson made do not comply with the direction that I gave which was to give him a last chance following the hearing to put forward evidence which he told me he did not have at Court but which he could obtain. I do not intend to say anything further about this point.
[33] My conclusion is that Mr Henson may have become confused by the fact that the respondent offered a payment to them “in full and final settlement” of his claim. I regard it as being most unlikely that, at the same time as the respondent was seeking to negotiate some type of ex gratia payment with Mr Henson, in circumstances where the respondent persistently denied that it was under any legal
obligation to Mr Henson, its Chief Executive would have unconditionally accepted that the respondent would pay the full amount that he was claiming. I reject this contention.
The Disputes Tribunal hearing
[34] Mr Henson raised a number of points about a proceeding which he brought against Fairway in the Disputes Tribunal, arising out of his claim against the applicant. The background to this matter was apparently that when the application to set aside the proceeding was called before Judge Sargisson – which, I believe was on
29 September 2014; the first call date – the Judge told him that if he thought he had a claim against the applicant, he should take steps to bring that claim in the Disputes Tribunal. Mr Henson says that the applicant agreed that it would be preferable if the claim was brought in the Disputes Tribunal. No doubt this was because of the applicant's view that the claim which the respondent was making was disputed and was therefore unsuitable to be dealt with by way of a statutory demand.
[35] Mr Henson says that when the proceeding eventually was commenced in the Disputes Tribunal, the applicant took the point that there was no jurisdiction on the part of that tribunal to hear matters arising under the Accident Compensation Act.
[36] It was apparently also his contention that the expression of agreement that I have referred to above, for the matter to be dealt with in the Disputes Tribunal, somehow meant that it was not open to the applicant to later contend before the Disputes Tribunal that it had no jurisdiction in the matter.
[37] I do not accept that this contention is correct. What occurred is something that happens not infrequently in the Court, where the court adjourns winding-up type applications so that the parties can resort to the correct forum to have disputed claims or counterclaims dealt with. The fact that the applicant's lawyers assented to the suitability of bringing this claim in the Disputes Tribunal did not mean that they accepted the defences that might otherwise have been available to it would not be raised. To put it another way, there was no obligation on the applicant at that point to provide any assurance to Mr Henson that, in its view, the claim was one that fell
within the jurisdiction of the Disputes Tribunal or to elect at that point whether or not it would eventually take jurisdictional arguments should the matter go to the Disputes Tribunal. That being so, the determination which the disputes referee made
– that he had no jurisdiction to enquire into the dispute because it concerned matters under the Accident Compensation Act – is not something which affects the outcome of the dispute now before this Court.
Is the dispute suitable for inclusion in a statutory demand?
[38] Brief consideration will now be given to the question of whether the claim which Mr Henson brings is suitable for inclusion in a statutory demand.
[39] The claim which he brings does not, with respect to those who think otherwise, appear to involve the Accident Compensation Act at all. The only connection that the claim that Mr Henson makes to the Accident Compensation Act is that it is against a party who has contracted with the Accident Compensation Corporation to provide dispute resolution services. For Mr Henson to succeed, he would have to show that there had been a breach of a common law or statutory obligation that the applicant owed to him. It is not for the Court to formulate the claim that Mr Henson seeks to bring. It is enough to say that it is most unlikely to be based upon contract because, as counsel for the applicant submitted, there never was any contract between Mr Henson and the applicant. That essentially leaves a claim in negligence and as presently informed, I am not aware of any similar claim having been brought successfully previously. Understandably, Mr Henson, as a lay claimant, did not put forward any detailed analysis of the basis upon which his claim was brought other than to identify it with the Accident Compensation Act. In the circumstances, the proposition which the applicant puts forward – that there is a substantial dispute within the meaning of s 290 (4) of the Act – is a convincing one.
Conclusion
[40] For the reasons that I have given, the application which the applicant has brought is granted and I make the orders sought in paragraphs 1.1 of the notice of application dated 4 September 2014.
[41] The parties are to file and serve any submissions that they wish to make concerning the matter of costs within 15 working days. Such submissions are not to
exceed five pages in length.
J.P. Doogue
Associate Judge
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