KiwiRail Ltd v Oceanic Palms Ltd - [2018] NZHC 1164

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-3042 [2018] NZHC 1164

BETWEEN
KIWIRAIL LIMITED

Plaintiff

AND

OCEANIC PALMS LIMITED

Defendant

Hearing: 15 May 2018

Appearances:

M L Campbell and S J Thomson for the Plaintiff No appearance for the Defendant

H Haynes and P B H Hubbard, directors of the Defendant, in Person

Judgment:

22 May 2018

JUDGMENT OF ASSOCIATE JUDGE SMITH

[1]Mr Haynes and Mr Hubbard are directors of the defendant (Oceanic Palms).

[2] On 19 December 2017, the plaintiff (KiwiRail) applied for an order putting Oceanic Palms into liquidation. Mr Haynes and Mr Hubbard filed a notice of opposition to the liquidation claim. They contended that Oceanic Palms is solvent, and they disputed KiwiRail’s claim for the back rent on which its liquidation claim is substantially based.

[3] The liquidation claim came before Associate Judge Bell on 22 February 2018. His Honour directed that Mr Haynes and Mr Hubbard could defend the liquidation claim in their capacity as directors, and he ordered them to file a statement of defence.

KIWIRAIL LIMITED v OCEANIC PALMS LIMITED [2018] NZHC 1164 [22 May 2018]

[4] Mr Haynes and Mr Hubbard filed their statement of defence on 15 March 2018, essentially pleading the same defence they had set out in their notice of opposition.

[5] On 3 May 2018, Mr Haynes and Mr Hubbard also filed an application to stay the liquidation claim, pending the hearing and determination of an application they have filed in February 2018 for judicial review of certain decisions allegedly made by KiwiRail (the judicial review proceeding). KiwiRail filed a memorandum opposing the stay application, on 3 May 2018.

[6] On 4 May 2018 Associate Judge Bell directed that the stay application was to be called on 15 May 2018 with KiwiRail’s liquidation claim.

[7] I heard argument on the stay application and the judicial review claim on 15 May 2018. I now give judgment on those proceedings.

Preliminary issue – do Mr Haynes and Mr Hubbard have standing to oppose the liquidation claim?

[8] In a previous proceeding between the parties, in which Oceanic sought relief against forfeiture of the relevant lease between KiwiRail and itself, Messrs Haynes and Hubbard were permitted to represent Oceanic Palms, notwithstanding that neither is a qualified lawyer. That was originally also the position in the judicial review proceeding, although in a judgment given on 18 April 2018 on an application for interim relief in the judicial review proceeding Jagose J referred to the well-established rule that a company has no right to be represented in Court by other than a practising lawyer.1 While the Court does retain a residual discretion to permit non-lawyers to appear on behalf of companies in emergency or exceptional circumstances, Jagose J did not consider the judicial review proceeding fell into either of those categories.2 He directed that if Oceanic Palms wished to continue to be represented by its directors it would need to make formal…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] NZHC 1164
Decision Date: 22 May 2018

CaseChat Overview and Summary

The case of KiwiRail Limited v Oceanic Palms Limited [2018] NZHC 1164 involved a dispute between KiwiRail, a state-owned enterprise, and Oceanic Palms, a company leasing premises from KiwiRail. The primary issue was whether Oceanic Palms was insolvent and, if so, whether the liquidation claim should be stayed pending the resolution of an associated judicial review proceeding. The court found that Oceanic Palms was insolvent as it was unable to pay the amount owed to KiwiRail, which included unpaid rent and costs. The directors of Oceanic Palms argued that KiwiRail had acted unreasonably and in bad faith, breaching obligations under the State-Owned Enterprises Act 1986. However, the court determined that the Court of Appeal had already dismissed similar claims and that there was no evidence to support a genuine and substantial dispute over the debt. Consequently, the court dismissed the stay application and ordered Oceanic Palms into liquidation, appointing liquidators and awarding costs to KiwiRail.

Orders