HSK Trading Ltd v Carter Building Supplies Ltd
[2021] NZHC 1897
•27 July 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-572
[2021] NZHC 1897
UNDER the Companies Act 1993 BETWEEN
HSK TRADING LIMITED
Applicant
AND
CARTER BUILDING SUPPLIES LIMITED
trading as CARTERS Respondent
Hearing: 21 July 2021 Appearances:
M G Locke for the Applicant
O J Ward/P J Morris for the Respondent
Judgment:
27 July 2021
JUDGMENT OF ASSOCIATE JUDGE R M BELL
This judgment was delivered by me on 27 July 2021 at 11:00am
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
Solicitors:
Gandhi Lala Lawyers Ltd, Auckland, for the Applicant
Stace Hammond (Philip J Morris/Oscar J Ward), Hamilton, for the Respondent
Copy for:
Michael G Locke, Barrister, Auckland, for the Applicant
HSK TRADING LIMITED v CARTER BUILDING SUPPLIES LIMITED trading as CARTERS [2021] NZHC 1897 [27 July 2021]
[1] HSK Trading Ltd applies under s 290 of the Companies Act 1993 to set aside Carters’ statutory demand dated 11 March 2021 for $160,668.37 as the unpaid balance owing for the supply of building materials.
[2] HSK Trading Ltd has shown grounds to dispute parts of the statutory demand, but not the entire demand. It has also alleged cross demands, but those are not plausible and are excluded under Carters’ terms and conditions of sale. After allowing for matters that are subject to substantial dispute, the statutory demand is good for
$124,196.82. The demand is adjusted to that amount to test HSK Trading Ltd’s solvency.
[3] In Confident Trustee Ltd v Garden Trees Ltd,1 the Court of Appeal repeated the principles under which applications under s 290(4) are decided:
(a)The onus is on the applicant seeking to set aside the statutory demand to show that there is arguably a genuine and substantial dispute as to the existence of the debt. The Court’s task is not to resolve the dispute but to determine whether there is a substantial dispute that the debt is due.
(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.
(c)If such material is available, the dispute should normally be resolved first in ordinary civil proceedings before any statutory demand is issued.
(d)If a counter-claim, cross demand or set-off is suggested an applicant must establish that this is reasonably arguable in all the circumstances.
(e)It is not usually possible to resolve disputed questions of fact on affidavit evidence alone, particularly when issues of credibility arise, unless such evidence is contrary to the available documents or earlier statements made by the parties.
Preliminary matters
[4] Under s 290(2) of the Companies Act 1993, an application to set aside a statutory demand must be made within 10 working days of the date of service of the
1 Confident Trustee Ltd v Garden and Trees Ltd [2017] NZCA 578 at [16].
demand and must be served on the creditor within the same 10 working days. Carters objected that this proceeding was served late. I gave a ruling on that in my minute of 14 May 2021. I held that time to file the proceeding ran from when the application came to the knowledge of the director of the applicant. The applicant’s case was that the director found out only later, even though the statutory demand had been fixed to the window of a partly-built apartment at the registered office of the company. My ruling of 14 May 2021 was intended to deal with the application under s 290(2). Carters cannot raise the matter afresh at the substantive hearing.
[5] HSK Trading Ltd’s director, Mr Hargun Singh, filed and served the application to set aside. Under the rule in Re G J Mannix Ltd,2 in proceedings in this court a director may not file proceedings on behalf of his company or appear in court on its behalf. A company can only be represented by those authorised to appear for others in this court, namely lawyers. That was, however, later regularised when HSK Trading Ltd instructed lawyers. While both sides had filed evidence, once HSK Trading Ltd had lawyers, there was a further round of evidence. I have relied more on the evidence filed after the lawyers were instructed.
[6] Both sides relied on inadmissible hearsay evidence. As is usual with applications to set aside statutory demands, evidence was given by affidavit. Under r 9.76(1)(d)(i) of the High Court Rules, an affidavit must be confined to matters that would be admissible if given in evidence at trial by the deponent. That rule applies to interlocutory applications3 and to originating applications.4 However, in the case of affidavits in interlocutory and originating applications, there is the qualification under r 7.30:
7.30 Statements of belief in affidavits
(1)A Judge may accept statements of belief in an affidavit in which the grounds for the belief are given if—
(a)the interests of no other party can be affected by the application; or
(b)the application concerns a routine matter; or
2 Re G J Mannix Ltd [1984] 1 NZLR 309 (CA).
3 High Court Rules 2016, r 7.29.
4 High Court Rules 2016, r 19.10(1)(i).
(c)it is in the interests of justice.
That cannot, however, apply to those matters where deponents rely on hearsay statements of others to assert disputed factual matters. Carters have, for example, incorrectly relied on emails and similar communications from suppliers to refute HSK Trading Ltd’s allegations.
[7] On the applicant’s side, Mr Hargun Singh had few direct dealings with Carters. His evidence refers to matters that “the applicant” dealt with, rather than matters that he dealt with himself. In describing actions of the applicant, he is describing what others in the company did. His evidence contains many such hearsay statements.
[8] I accept as admissible business records of Carters: its accounting records and a print-out recording telephone conversations with HSK Trading Ltd.5
[9] Carters relied on its standard terms and conditions of sale attached to a credit account application signed by HSK Trading Ltd. The copies of the terms and conditions of sale in the bundle of documents were not legible. At the hearing, I was provided with a clearer copy of the terms and conditions of sale. All the same, it is in very small print and hard to read. Carters appears to be taking a risk in relying on standard terms and conditions of sale that are so small that they are hard to read. Some customers might complain that they are not bound by them because no one could read them. HSK Trading Ltd did not, however, raise that objection.
This case
[10] HSK Trading Ltd opened an account with Carters during 2020 for the supply of building materials for its development at 243 Mount Albert Road, Sandringham where it is building seven apartments. Mr Hargun Singh is the company’s sole director. Mr Imran Khan is Carters’ account manager who dealt with HSK Trading Ltd. According to Mr Khan, most of his dealings were with Mr Singh’s father, Mr Jaspal Singh, and the company’s accountant, Mr Patel.
5 Evidence Act 2006, s 19.
[11] Carters’ demand for $160,668.37 is made up of invoices for supplies and deductions for payments and credit notes up to 4 March 2021. A schedule by Carters shows a credit of $733.20 for 12 April 2021, with a resulting balance of $159,935.17. In the hearing, Carters accepts that other credits are due: $2,000 for design fees,
$1,700 for remedying pre-nailed trusses, and $400 for remote controls. With those credits, the amount payable under the statutory demand would be reduced to
$155,835.17. Carters’ credits are exclusive of GST. I assume that that is correct, because they do not involve any taxable supply. HSK Trading Limited did not submit otherwise.
[12] Before going into the matters raised by HSK Trading Ltd, there is another arguable credit. Carters accepts that on 26 January 2021, HSK Trading Ltd made three payments – two of $10,000 and one of $9,000 – totalling $29,000. It says, however, that those payments have been applied against other supplies which are not in issue. Its accounting records do not, however, support that. There is no evidence that these payments have been applied against other supplies to HSK Trading Ltd. It is arguable for HSK Trading Ltd that Carters has not taken the $29,000 into account in its statutory demand.
[13] HSK Trading Ltd’s case is that in some cases Carters delayed in delivery, in others the supplies were defective and in others they were not what had been ordered. It says that it has been delayed in completing its development and it can claim against Carters for the liabilities it faces for the delay in completion. It also says that it had an agreement with Carters that it would pay off the debt at $25,000 a month, but Carters has reneged on that.
[14] HSK Trading Ltd has asserted cross-demands against Carters under s 290(4)(b). Aside from that, it also says that its matters of substantial dispute under s 290(4)(a) of the Companies Act require the entire the statutory demand to be set aside, even though it contests only some of the supplies. Relying on s 290(5) and (6) of the Companies Act, it submitted that there would be a substantial injustice if the statutory demand were not set aside. The subsections say:
(5) A demand must not be set aside by reason only of a defect or irregularity unless the court considers that substantial injustice would be caused if it were not set aside.
(6) In subsection (5), defect includes a material misstatement of the amount due to the creditor and a material misdescription of the debt referred to in the demand.
HSK Trading Ltd relied on Pioneer Insurance Co Ltd v White Heron Motor Lodge Ltd6 where the Court of Appeal held that the company in that case was liable for only 75 per cent of the amount in the statutory demand and that amounted to a material mis- statement of the amount due. It set aside the entire demand.
[15] Notwithstanding that decision, there is an established practice of setting aside a statutory demand only to the extent that it is defective. In United Homes (1988) Ltd v Workman7 the Court of Appeal partially set aside statutory demands. They were upheld only to the extent that they were based on valid debts. In Herbert Construction Co Ltd v Carter Holt Harvey Ltd,8 a statutory demand for $404,317 was set aside, except to the amount of $65,600. Just as in that case, the court may hold that some parts of the debt claimed by Carters may be sound, even if other parts are contestable. There is no injustice to a company in requiring it to pay the uncontested part of a statutory demand to see whether a presumption of insolvency will arise.
[16] HSK Trading Ltd’s claims of dispute need to be assessed in the light of Carters’ terms and conditions of sale. As Carters supplied building materials to HSK Trading Ltd, the sale of goods provisions of the Contract and Commercial Law Act 2017, Part 3, apply. Under s 197 of the Contract and Commercial Law Act 2017, rights, duties and liabilities that would otherwise arise under the contract by implication of law, may be negatived or varied including by express agreement. Carters’ terms and conditions of sale do that.
6 Pioneer Insurance Co Ltd v White Heron Motor Lodge Ltd [2008] NZCA 450, (2008) 19 PRNZ 286.
7 United Homes (1988) Ltd v Workman [2001] 3 NZLR 447 (CA).
8 Herbert Construction Co Ltd v Carter Holt Harvey [2013] NZHC 780.
[17] For HSK Trading Ltd, it was submitted that the terms Carters relied on could arguably be excluded under s 50 of the Contract and Commercial Law Act 2017.9 Section 50 says:
50 Statement, promise, or undertaking during negotiations
(1)This section applies if a contract, or any other document, contains a provision purporting to prevent a court from inquiring into or determining the question of—
(a)whether a statement, promise, or undertaking was made or given, either in words or by conduct, in connection with or in the course of negotiations leading to the making of the contract; or
(b)whether, if it was so made or given, it constituted a representation or a term of the contract; or
(c)whether, if it was a representation, it was relied on.
(2)The court is not, in any proceeding in relation to the contract, prevented by the provision from inquiring into and determining any question referred to in subsection (1) unless the court considers that it is fair and reasonable that the provision should be conclusive between the parties, having regard to the matters specified in subsection (3).
(3)The matters are all the circumstances of the case, including—
(a)the subject matter and value of the transaction; and
(b)the respective bargaining strengths of the parties; and
(c)whether any party was represented or advised by a lawyer at the time of the negotiations or at any other relevant time.
The section may apply to clauses 12.1 and 12.2 of Carters terms of sale. They are an entire agreement clause, and an acknowledgment by the customer that they did not buy goods in reliance on statements or representations or warranties made by Carters.
[18] The section does not, however, apply to the terms which Carters rely on in this proceeding. They are:
2.1 Payment is due by the 20th of the month following the date of Delivery.
…
9 The successor to s 4(1) of the Contractual Remedies Act 1979.
2.3The Customer may not withhold payment or make any deductions from or set off any amount against any Amount Owing10 without CARTERS’ prior written consent.
2.4Any disputes or credit requests by the Customer relating to an invoice issued by CARTERS for Goods supplied must be received in writing within 30 days from the date of invoice.
…
3.2CARTERS may deliver the Goods by instalments. Each instalment shall be treated as a separate contract subject to these Terms. Failure to fully deliver any instalment of the Goods shall not entitle the Customer to cancel any contract relating to any other instalment of the Goods.
3.3Any time stated for delivery is an estimate only. Other than liability that cannot be excluded by law, CARTERS is not liable for any delay in delivery.
…
5.2Except as set out in this clause 5.2, the Customer is not entitled to return the Goods for any reason. The Goods will be deemed accepted unless the Customer notifies CARTERS in writing of any defects, errors or discrepancies within seven days following Delivery, provided CARTERS is able to inspect the Goods to confirm the defect, error or discrepancy. For Goods that the Customer is entitled to reject in accordance with this clause, CARTERS’ liability is limited to either (at CARTERS’ discretion) repairing or replacing the Goods, or refunding the price of the Goods, provided that CARTERS will not be liable for Goods that have been tampered with or modified without the approval of CARTERS or which have not been stored in a proper manner.
…
5.4Notwithstanding any other provision of these Terms, other than clause 5.6, under no circumstances shall CARTERS be liable to the Customer or any other person (whether in contract, tort, including negligence, statute or otherwise) for any:
(a) loss of profits;
(b) consequential loss or damage;
(c) indirect loss or damage; or
(d) special loss or damage of any kind.
…
8.2If an Event of Default occurs:
10“Amount owing” is defined in cl 18.1: “Amount Owing” means the price charged by CARTERS for the Goods, together with any other sums which CARTERS is entitled to charge under these Terms that remain unpaid.
(a)CARTERS may suspend or terminate any contract; and
(b)any Amount Owing shall immediately become due and payable notwithstanding that due date for payment has not arisen; and
(c)CARTERS is entitled to recover from the Customer all costs that CARTERS may reasonably incur in attempting to collect the Amount Owing (including actual legal cost and expenses and costs of collection) and any other moneys owing by the Customer to CARTERS from time to time, in relation to any contract or on any other account whatsoever.
[19] Clause 2.3 is a “pay now, argue later” provision. The no-deduction aspect means that the customer is not entitled under s 195(3)(a) of the Contract and Commercial Law Act 2017 to abate the price for breach of the warranty. Carters accepted, however, that the clause does not operate when there is a total failure of consideration. There could arguably be a total failure of consideration if there is no delivery at all, if what was delivered is not what was ordered or if what was delivered is so defective that it is no use at all to the customer.
[20] As to the no set-off aspect, the set-off applies only to the particular supply to which the claim relates. That is because there is a separate contract for each supply (see cl 1.2).
[21] Where a counterclaim or cross-demand is asserted under s 290(4)(b) of the Companies Act, the court may apply a no set-off provision to uphold the statutory demand.11 That is an exercise of the discretion under s 294. It is not a black letter rule of law because that would fly in the face of the clear wording of s 290(4)(b) under which a counterclaim or cross-demand may be a ground for setting aside a statutory demand, even if the requirements for a set-off are not met.12 There are occasions where the court will not allow a no set-off clause to stand in the way of a company asserting a counterclaim.13
[22] For Carters, it was submitted that HSK Trading Ltd could not dispute the debt, because it was out of time under cl 2.4 to raise any dispute or request a credit. It is, however, arguable for HSK Trading Ltd that cl 2.4 is procedural only. It sets a time
11 Browns Real Estate Ltd v Grand Lakes Properties Ltd [2010] NZCA 425, (2010) 13 NZCPR 349.
12 Simply Logistics Ltd v Real Foods Ltd HC Auckland CIV-2011-404-3497, 14 September 2011;
Bountiful Holdings Ltd v University of Auckland [2012] NZHC 1076 at [17].
13 For example, Herbert Construction Co Ltd v Carter Holt Harvey Ltd [2013] NZHC 780.
within which Carters will consider any disputes or requests for credit. Presumably if the customer does not raise a matter within the 30 working days, Carters will not investigate but will instead leave the customer to their remedies at law. If Carters intended to set a time limit on claims for defects in goods, so that no claim could be made after the period stated in cl 2.4, it would include an express provision that cl 2.4 is to operate as a time bar. In the absence of such an express provision, I decline to read cl 2.4 as having that effect. It needs to be remembered that defects in products may not become apparent until sometime after delivery, as experience in leaky building litigation has clearly shown.
HSK Trading Ltd’s complaints
[23] HSK Trading Ltd has had a proper opportunity to give evidence as to the basis for its disputes. Normally, an applicant has only 10 working days under s 290(2) in which to assemble all its evidence. While the company filed an affidavit on 7 April 2021, on 14 May 2021, I gave the company another two weeks in which to file further evidence in chief.
Exterior windows
[24] Mr Singh says that the exterior windows were supplied on time, but there were problems with many incorrect items being provided. He does not state what those items were, how many there were, in what way they were incorrect, or what they cost. His evidence is so bald that it is no more than an assertion of a dispute rather than showing grounds for disputing payment of the invoice for those components.
Doors
[25] Mr Singh says that doors were ordered in September 2020 but were not supplied until 13 March 2021. Carters can, however, rely on cl 3.3 to say that it is not liable for any delay in delivery.
[26] Mr Singh says that the doors supplied for units 6, 7 and 8 were not what were ordered. He has attached to his affidavit a screen-shot of the text messages which
show a blue door with three panes of dark glass which he says were ordered. He has also put in evidence photographs of doors supplied where the panes of glass are a different configuration. It was submitted that all the exterior doors for the apartments should match, and this was clearly a defect. The doors had been installed, but this was said to be only temporary fix.
[27] It is arguable for HSK Trading that Carters did not supply what was ordered, and that the price should be refunded. The right to the refund may not be caught by cl 2.3 if there has been a total failure of consideration.
[28] To show an arguable claim, HSK Trading Ltd should have provided evidence of the price charged for the doors so that the credit can be calculated. I know nothing about the cost of doors supplied by builders’ merchants to developers. I would be speculating if I were to guess the amount of a credit. It would be simple enough for HSK Trading Ltd to put the invoice for the windows in evidence so as to calculate the appropriate credit, but it has not done that. That part of its case is speculative when it could easily have proved the price of the windows. It has not shown an arguable case for the deduction it would otherwise be entitled to.
Sliding door in unit 6
[29] HSK Trading Ltd says that the sliding door for unit 6 is wrong and cannot be locked. It needs to be replaced. For Carters, Mr Khan says that the supplier was to fix the matter. He does not know the cost of fixing it, but says that the price for the sliding door is approximately $1,000. He also relies on emails from the supplier, but I have ignored them as hearsay. It is arguable for HSK Trading Ltd that it is entitled to a refund for the price of the sliding door – $1,000.
Bay windows
[30] Mr Singh says that the apartments were designed to have bay windows installed. Carters was given the consented building plans showing the bay windows, but instead flush windows were supplied. The flush fitting windows were installed, but Mr Singh says that this is a stop-gap measure only. In response, Carters admits
that bay windows were required but flush windows were delivered. It relies on hearsay evidence to show that HSK Trading Ltd accepted the flush fitting windows. For reasons already given, I do not accept that evidence.
[31] HSK Trading Ltd has not however shown what financial adjustment, if any, it can claim for the wrong windows being supplied. At a minimum, it could have provided the invoice and shown the price charged for the windows. It has not done that. I cannot and should not speculate on what adjustment should be made for those windows. While HSK Trading Ltd has shown an arguable breach of contract, it needs to show some basis for monetary relief for the breach. An adjustment to the demand cannot be calculated without that evidence. It would have been a relatively simple exercise for HSK Trading Ltd to show the price it was allegedly wrongfully charged.
Bathroom windows
[32] Mr Singh says that the bathroom windows for units 6, 7 and 8 are wrong because they are not toughened safety glass and the council failed them when it inspected. For Carters, Mr Khan denies any knowledge of this. He also relies on hearsay statements of the suppliers. I have disregarded that. Again, the problem is that HSK Trading Ltd has not given evidence as to the adjustment for the bathroom windows and in the absence of such evidence I cannot say that there is an arguable case for an adjustment to the statutory demand.
Hinges and latches to joinery
[33] Mr Singh says that the hinges and latches to joinery for units 1 to 5 do not comply with the specifications in the plans and need to be replaced. He has not put those specifications in evidence, and he does not say how the hinges and latches supplied did not comply with the specifications. He has not put in evidence the prices charged for those hinges and latches.
[34] Carters say that there are no problems with hinges and latches, but for that it relies on hearsay statements made by the supplier. I have disregarded that aspect. Again, HSK Trading Ltd asserts a dispute, but falls short on proof of the dispute.
Remote controls for garage doors
[35] Mr Singh says that the remote controls for the garage doors were not supplied. While rejecting that, Carters say that the cost of remote controls is approximately $50.
Return of wooden pallets
[36] Mr Singh says that HSK Trading Ltd returned 35 wooden pallets and it is entitled to a credit for those pallets.
[37] In response, Mr Khan says that credits were given for the pallets, but the credit notes he has put in evidence show that only 16 pallets were returned at $75 each plus GST. It is arguable for HSK Trading Ltd that it is entitled to a credit for a further 19 pallets. That is a credit for $1,638.75.
Pre-nailed trusses
[38] Mr Singh says that pre-nailed trusses for units 2, 3, 4, 6 and 7 were not correct and HSK Trading’s carpenters corrected them on site at a cost of $1,700.
[39] Mr Khan acknowledges that there were issues with the pre-nailed trusses and that it was agreed that they would be corrected on site, but Carters has not so far received any credit request for the remediation costs. It is arguable for HSK Trading Ltd that it is entitled to a credit of $1,700.
Delays
[40] HSK Trading Ltd says that the matters it blames Carters for have delayed completion of the units it was building in Mount Albert Road. It says that the intended completion date was November 2020 and that Carters is responsible for the delay from the beginning of December 2020 until now.
[41] In response, Mr Khan comments that the project started in May/June 2020 and it would not be possible to complete units in five to six months even if all materials were supplied on site the day they were ordered. Mr Khan confirms that everything
that HSK Trading Ltd ordered was supplied (even if late). HSK Trading Ltd is using another merchant for other materials to complete the development.
[42] Under cl 3.3, Carters is not liable for any delay in delivery, unless that liability cannot be excluded by law. HSK Trading Ltd did not suggest that there was any legal basis for bypassing cl 3.3. HSK Trading Ltd has tried to assert a counterclaim for delays.
[43] In an affidavit of 2 June 2021, Mr Singh says that the units were to be transferred to new owners on completion, which was expected to be in November 2020. The new owners would rent the properties out. Because they could not take possession in November 2020, the new owners could sue HSK Trading Ltd for loss of earnings, which Mr Singh calculated at $237,800.
[44] That part of HSK Trading Ltd’s evidence is implausible. Any developer knows from experience that there are delays and would be wary of committing to a completion date. The causes of delay are often beyond the control of the developer – for example, delays in supplies, weather, delays in obtaining regulatory approvals such as code compliance certificates. If, despite that, HSK Trading Ltd had committed itself to a completion date, it should have given evidence of agreements showing the settlement dates. That is missing. Although the evidence for HSK Trading Ltd did not say this, I was told that the “new owners” were in fact a single entity associated with HSK Trading Ltd. That does not help the case for HSK Trading Ltd. It has not shown an arguable basis for a possible liability for delay in completing the units.
[45] Another difficulty is that any claim for damages for liability to a third party is excluded under cl 5.4 of Carters’ terms and conditions of sale. Moreover, this is a case where the “no set-off” clause is applied. Any damages for delay would need to be brought in a separate proceeding and cannot not be used under s 290(4)(b) to set aside the statutory demand.
[46]HSK Trading Ltd also claims prolongation costs, estimated at $15,000–
$20,000 a month, giving a claim of $122,500. Again, that evidence is only assertion and is not supported by any documents. It is hard to take that seriously.
[47] In summary, Carters’ liability for delay in supplies is excluded under its standard terms and conditions of sale. The claim for alleged delay is questionable, given that the expected completion date appears unrealistic. Any claim for consequential losses is excluded under Carters’ terms of contract, and if there were such a claim, it could not be used to adduce the amount of the statutory demand, but would have to be brought in a separate proceeding.
The alleged settlement
[48] HSK Trading Ltd says that there was an oral agreement between its staff and Carters’ representatives on 23 February 2021. It says that its representative was told that Carters would accept payment in monthly instalments of $25,000 each, and that Carters would continue to supply HSK Trading Ltd as its principal supplier. HSK Trading Ltd made one payment of $25,000 by credit card. Mr Hargun Singh’s evidence about the oral agreement is hearsay. He was not the company’s representative at the meeting on 23 February 2021.
[49] Mr Khan says that the meeting was with Mr Jasbel Singh and Mr Patel. He gives a different account of the meeting. On his version, HSK Trading Ltd’s representatives accepted that there was no dispute about 95 per cent of the outstanding accounts, and there was discussion about holding back 5 per cent until two remaining issues were resolved. HSK Trading Ltd did not, however, have enough funds to pay the 95 per cent. There was a proposal for HSK Trading Ltd to pay $25,000 a week until the account was fully paid. The parties agreed that there was one payment of
$25,000. Mr Khan says Mr Jasbel Singh told him that there were not sufficient funds to make any more payments, and Carters began legal action as a result.
[50] HSK Trading Ltd has not shown by admissible relevant evidence that there was a settlement agreement as asserted by Mr Hargun Singh. But even if there had been such an agreement and HSK Trading Ltd were to hold Carters to it, it would have to keep paying Carters the $25,000 a month under the agreement. It has not done so. Given its ongoing failure to pay the $25,000 a month as was allegedly agreed, it can hardly complain when Carters enforces its rights. The alleged settlement does not provide any ground for setting aside the statutory demand.
Outcome
[51] In summary, HSK Trading Ltd has shown an arguable basis for reducing the amounts claimed in the statutory demand as follows:
Statutory demand $160,668.37 LESS: Credits conceded by Carters
$4,833.20
Three payments on 26 January 2021
$29,000.00
Sliding door
$1,000.00
Pallets returned $1,638.35 $36,471.55
Balance: $124,196.82
[52] When allowance is made for those items, I am satisfied that there cannot be any reasonable dispute as to the rest of the matters claimed in the statutory demand. HSK Trading Ltd is liable to Carters for at least $124,196.82. HSK Trading Ltd’s evidence does not show that there are reasonable grounds for disputing that amount.
[53]Accordingly, I make these orders:
(a)the statutory demand is set aside except for the sum of $124,196.82;
(b)under s 291 of the Companies Act 1993 that HSK Trading Ltd is to pay Carters $124,196.82 by 17 August 2021. If it does not pay that sum in full by that date, Carters may apply for HSK Trading Ltd to be put into liquidation.
[54] I have adjusted the statutory demand to fix an indisputable amount to test HSK Trading Ltd’s solvency. Carters may still sue on those matters where I have held for HSK Trading Ltd.
[55] As Carters’ statutory demand has been broadly upheld, its position as creditor has been vindicated. It is entitled to costs. I trust that counsel will confer and agree
on costs. In the absence of agreement, memoranda are to be filed. HSK Trading Ltd should file its submission as to costs within five working days of Carters’ submission.
…………………………………….
Associate Judge R M Bell
27 July 2021
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