Hudson (NZ) Developments Limited v Maltby & Partners Limited HC Auckland CIV 2004-404-3490

[2005] NZHC 1288

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2004-404-3490

UNDER  Section 290 of the Companies Act 1993

BETWEENHUDSON (NZ) DEVELOPMENTS LIMITED

Plaintiff

AND  MALTBY & PARTNERS LIMITED

Defendant

Hearing:         23 September 2004 Appearances: A Kistler for Plaintiff

V E Dale for Defendant Judgment:      16 February 2005 at 11.50 am

JUDGMENT OF ASSOCIATE JUDGE SARGISSON

Solicitors:

Chapman Tripp, PO Box 2206, Auckland – Plaintiff

Grove Darlow & Partners, PO Box 2882, Auckland – Defendant

HUDSON (NZ) DEVELOPMENTS LIMITED V MALTBY & PARTNERS LIMITED HC AK CIV 2004-404-

3490 [16 February 2005]

[1]I have before me counsel’s memoranda as to costs.

[2]                 The plaintiff, Hudson (NZ) Developments Limited, seeks costs on its application to set aside the statutory demand, which the defendant Maltby & Partners Limited served on it on 23 June 2004.

[3]                 The application was opposed, but on 23 September 2004 I made an order by consent setting aside the demand without prejudice to a further demand being served by Maltby on Hudson. This was because time for compliance with the statutory demand had expired and an application for liquidation could no longer be based on Hudson's non-compliance. I did so after:

a)Drawing the attention of both counsel to the absence of any interim order extending the time for compliance with the demand; and

b)Drawing their attention to s 288(1) of the Companies Act 1993, which states that evidence of failure to comply with a statutory demand  is not admissible as evidence that a company is unable to pay its debts unless the application for an order for liquidation is made within 30 working days after the last date for compliance with the demand.

[4]                 Both counsel indicated that they accepted, in the circumstances, that the appropriate course would be for Hudson’s application to set aside the demand to be struck out without prejudice to Maltby’s right to serve a fresh demand, should it choose to do so.

[5]                 Accordingly, I made an order to that effect and I reserved the matter of costs and gave directions for the filing of memoranda.

[6]                 Having considered counsel’s memoranda I accept Ms Dale’s submission that costs should lie where they fall. My reasons are as follows:

a)The order I made to set aside the demand was made with the express concurrence of both counsel in circumstances in which they recognised that I was not making any findings on the merits and that the defendant remained free to serve a fresh demand if it wished;

b)Given this, Hudson has not been successful in having the demand set aside except in a purely technical sense. The order was only made because the demand had ceased to have evidential value as a result of the operation of s 288(1);

c)I accept that the usual course is for an applicant to seek an interim order for extension of time for compliance pending determination of its application. However, neither party was strictly under an obligation to seek such an order. Section 290(3) simply provides that "the Court may extend the time for compliance with the statutory demand", but leaves it open as to the circumstances in which this discretion may be exercised; and

d)In any event, it is now too late to revisit whether the matter was  simply overlooked by both counsel and myself, although that seems the most likely explanation. If there was an oversight, neither party should be singled out as culpable.

[7]                 In these circumstances, I accept that there should be no order for costs and that Ms Dale’s proposal to this effect is the fair and reasonable course to adopt.

[8]Accordingly, costs shall lie where they fall.

[9]                 Nothing in this decision affects the costs order I made on 19 August 2004 against the defendant (respondent).

Dated at Auckland on2005 atam/pm.

Associate Judge Sargisson