G K Fyfe & Associates Limited v Parkers Business Solutions Limited

[2016] NZHC 2082

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY

CIV-2015-406-000039 [2016] NZHC 2082

UNDER

the Companies Act 1993

AND

IN THE MATTER

of setting aside a statutory demand

BETWEEN

G K FYFE & ASSOCIATES LIMITED Applicant

AND

PARKERS BUSINESS SOLUTIONS LIMITED

Respondent

Hearing:	2 September 2016 (Determined on the papers)
Counsel:	D J C Russ for Applicant A R Davie for Respondent
Judgment:	2 September 2016

COSTS JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1]      G k Fyfe & Associates Limited (Fyfe) applied successfully to set aside a statutory demand served on it by Parkers Business Solutions Limited (Parkers).1

Fyfe is entitled to an award of costs, and Parkers accepts that position.  However, Fyfe applies for a 30 per cent increase in costs, and Parkers opposes this.

[2]      The two grounds on which increased costs are sought are these.  First, Fyfe says that the position taken by Parkers in relation to service was unreasonable and contributed significantly to the time and expense of the hearing.  Secondly, it says

that there was a substantial dispute which was readily apparent from the papers

1      G K Fyfe & Associates Ltd v Parkers Business Solutions Ltd [2016] NZHC 1858,

11 August 2016.

G K FYFE & ASSOCIATES LTD v PARKERS BUSINESS SOLUTIONS LTD Costs Judgment

[2016] NZHC 2082 [2 September 2016]

before the Court, but notwithstanding this Parkers maintained its opposition to the

application, and in addition challenged every aspect of Fyfe’s accounting evidence.

[3]      The issue relating to service certainly did occupy a good deal of time, and was canvassed at length in the judgment.  On balance, however, I do not think it can fairly be said that the position taken by Parkers was unreasonable.  The issue raised was a point of some complexity which arises very infrequently.  I decline to increase costs on this ground.

[4]      The  second  ground  has  considerable  merit.    At  paragraph  [39]  of  the judgment I observed:

…  It is plain that there is a significant dispute over liability to pay Parkers’ outstanding  invoices.    That  dispute  cannot  be  characterised,  as  Parkers sought to do, as contrived.  I am quite satisfied that there is a real and not a fanciful or insubstantial dispute, indeed many of them.  It is not the role of the Court on this application to determine the right answer to each of the facts put in issue by Mr Dutt and responded to by Mr Scott.

[5]      I canvassed this issue further at paragraph [41] of the judgment.  Further, at paragraph [40] I recorded a question to Mr Davie:

I asked Mr Davie to tell me the basis on which the Court might find that there was no valid dispute, given the manifest conflict on the evidence on virtually every point put in issue.

His response is set out in the judgment.   I quote this sentence to demonstrate the terms which I considered appropriately described the state of the evidence presented to the Court.

[6]      This Court has recorded the principles which apply to the use of statutory demands, and applications to set them aside, on countless occasions.   The use of statutory demands as a means of collecting debts is appropriate, but those who elect to take advantage of this procedure must be alive to the principles of law which apply to it.  This was plainly not the case here.  A clearly focussed and objective mind should have been brought to bear on whether the notice in question in this case should have been issued in the first place, but even if, by a fine margin, it was appropriate to use this process, it most certainly was not appropriate to oppose the application once the evidence for the applicant was filed and served.

[7]      Mr Dutt’s affidavit has all the hallmarks of an unobjective and unfocussed consideration of the principles which apply to the use of statutory demands.  Quite apart from not recognising the plain fact that the evidence for Fyfe raised a dispute on its own, Mr Fyfe compounded the extent of the dispute by taking issue with the majority of the evidence presented for Fyfe.  To make matters worse he did so in a rambling and utterly unfocussed affidavit which, additionally, raised issues which were completely irrelevant.   To take just one example, Mr Dutt went so far as to allege that Fyfe had been engaged in a systemic trend of tax avoidance for some years, which is of no relevance whatsoever to the sole issue before the Court on an application to set aside a statutory demand.  The inescapable irony in this claim is that he was himself the accountant engaged by Fyfe over the period to which this comment apparently applies, and therefore a party to the very activity which he criticises.

[8]      This application to set  aside the statutory demand should not have been required and it should not have been necessary for it to be pursued.   I accept the contention of Mr Russ that an uplift in costs is justified.  I direct that Parkers will pay to Fyfe costs on a 2B basis with a 30 per cent uplift.

[9]      I note that Mr Davie takes issue with two disbursements claimed, which appear to be claimed in very general terms.  Counsel may recover travel expenses, and a disbursement for copying, binding, tolls and courier, but the figures are to be justified to Mr Davie and, in the absence of agreement, to the Registrar who will rule

on the amount to be paid.

J G Matthews

Associate Judge

Solicitors:

Fletcher Vautier Moore, Nelson

Treadwells, Wellington