Lister v Hornby Construction Limited
[2015] NZHC 2127
•3 September 2015
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2015-409-000314 [2015] NZHC 2127
BETWEEN THOMAS NORMAN LISTER
Plaintiff
AND
HORNBY CONSTRUCTION LIMITED Defendant
Hearing: 3 September 2015 Appearances:
M K Prendergast for Plaintiff
Mr W van Beek, self representing defendant companyJudgment:
3 September 2015
JUDGMENT OF DUNNINGHAM J
[1] This is an application to liquidate Hornby Construction Limited (HCL). It is opposed by HCL.
[2] Mr William van Beek, HCL’s director, appeared in Court today. The company has not at any stage appointed a lawyer.
[3] Mr van Beek was made aware, prior to this hearing, that the accepted position is that, unless permitted by the Court to do so, no-one has the right to present a case in Court for another party, including a company, unless that person is a qualified lawyer.1 However, I granted leave for Mr van Beek to speak to the statement of
defence filed, and the hearing proceeded on this basis.
1 Re G J Mannix Ltd [1984] 1 NZLR 309 (CA).
LISTER v HORNBY CONSTRUCTION LIMITED [2015] NZHC 2127 [3 September 2015]
Background
[4] The application has its genesis in a contract HCL had to buy a house located on a farm near Hinds in South Canterbury. The vendor was Rylib Dairies Limited (Rylib), and it was undertaking a dairy conversion on the farm.
[5] HCL agreed to purchase the house via Trade Me on 12 February 2014 for
$1.00. A condition of the contract was that the house had to be removed by
16 March 2014.
[6] On 23 February 2014, HCL on-sold the house to Mr Lister, the plaintiff in these proceedings. Mr Lister paid $25,000 to HCL on 27 February 2014. Mr van Beek says that Mr Lister was told the house had to be removed by
16 March 2014.
[7] However, in the interim, Mr van Beek says Mr Lister colluded with Rylib’s directors to arrange to take the home off later, so Rylib cancelled the contract with HCL. Rylib then sold the house directly to Mr Lister. While Mr Lister claims he paid $20,000 to Rylib to procure the house, Mr van Beek protests that he has never seen any evidence that this payment was made.
[8] Mr Lister then filed a statement of claim on 29 September 2014 suing HCL for the $25,000 he had paid for the house which HCL had not been able to transfer to him.
[9] HCL did not engage lawyers to respond to the claim. Instead it filed a document entitled “Private Written Notice” which responded to the claim, along with an affirmation by Mr van Beek in response. These documents were not accepted for filing by the Timaru District Court on the basis they were non-complying documents.
[10] In the absence of a formal statement of defence being filed, on
4 December 2014 default judgment was entered in Mr Lister’s favour for $25,000 plus costs and disbursements.
[11] HCL then filed an appeal on 15 January 2015 relying on information given by Court staff. However, on 27 January 2015, HCL was advised that the notice of appeal was refused on the grounds that ”the decision by a Registrar for the entering of a Judgment by Default is an administrative task not a Registrar’s Decision and therefore cannot be appealed”. The High Court Deputy Registrar advised HCL that it would have to apply to set aside the judgment pursuant to r 15.10 of the District Court Rules 2014.
[12] HCL was also written to by Mr Lister’s lawyers on 23 January 2015, where they, too, advised that the proper procedure would be an application in the District Court to set aside the judgment. They invited HCL to withdraw the notice of appeal and make an application to set aside the judgment in the District Court, but HCL did not heed this advice.
[13] As no application was made to set aside the District Court judgment, Mr Lister instructed his lawyers to proceed to issue a statutory demand. That was served on HCL on 28 March 2015. No application was made to set this demand aside within the requisite period, nor was payment made. Unsurprisingly, an application to liquidate HCL was filed on 26 May 2015, with a hearing date set down for 9 July 2015.
[14] Mr van Beek arranged to file a statement of defence on 19 June 2015. It referred entirely to the sequence of events I have outlined above and argued “this matter arose from a miscarriage of justice ab anitio [sic]”. It did not challenge the presumption that HCL was insolvent.
[15] When the matter was called on 9 July, timetabling orders were made to progress the matter for a hearing. The plaintiff also advised that, at that point, advertising had not taken place because he was endeavouring to negotiate an outcome that would preclude liquidation. However, there was no satisfactory outcome to those negotiations and the application to liquidate HCL was advertised on 24 and 27 August 2015 in the Christchurch Press and the New Zealand Gazette respectively.
The application
[16] Turning now to the substance of the application before me, s 241(4)(a) of the Companies Act 1993 provides that the Court may appoint a liquidator if it is satisfied that the company in question is unable to pay its debts.
[17] Inability to pay debts by a company is dealt with by s 287 of the Companies Act 1993. This provides that, unless the contrary is proved, a company is presumed to be unable to pay its debts if it has failed to comply with the statutory demand.
[18] In the present case HCL has failed to comply with the plaintiff’s statutory demand served on 28 March 2015 and it is therefore presumed to be unable to pay its debts and the grounds for appointment of a liquidator set out in s 241(4)(a) are met.
[19] A solicitor’s certificate dated 2 September 2015 has been provided to the Court by the plaintiff. This confirms that the debt of $26,268.50 remains owing by HCL to the plaintiff as at that date. Furthermore, Mr van Beek confirmed to me in Court today that the judgment debt is unpaid and the company is not in a position to pay it.
[20] The plaintiff has also filed a consent to act from proposed liquidators, Lynda Jane Smart and Paul Vlasic, and an application for an order from the Court approving remuneration charge-out rates which are higher than the default rates under the Companies Act 1993.
The defence
[21] As already outlined, the defence to the liquidation application which Mr van Beek has advanced on behalf of HCL is essentially that there was a miscarriage of justice when judgment was entered against HCL by default, and HCL has reason to believe that Rylib and Mr Lister colluded to prevent him getting the benefit of the sale contract to Mr Lister. That may well be so, but HCL has failed, at every opportunity, to challenge the entry of judgment, despite assistance from both
the plaintiff’s solicitors and the Court, advising HCL of the correct procedure for doing so.
[22] Mr van Beek candidly admitted to me that his company could not now repay the $25,000 to Mr Lister as it did not have the money. He also acknowledged that his company had debts with the Inland Revenue Department, although it was “getting on top of those”. He had considered voluntary liquidation for the company, but that, too, involved costs that the company was not in a position to meet.
[23] Whatever the merits of the potential defence that HCL may have been able to run to Mr Lister’s claim or, alternatively, the cause of action it may have had against Rylib, there can be no question here that HCL is quite unable to pay its debts as they fall due and there is no evidence to rebut the presumption of insolvency. Thus, in terms of s 241(4)(a) I believe the defendant is unable to pay its debts and, for the reasons outlined above, I conclude that the appointment of liquidators is appropriate here.
[24] The following orders are therefore made:
(a) the defendant company, Hornby Construction Limited, is put into liquidation;
(b) Lynda Jane Smart and Paul Vlasic are appointed liquidators;
(c) the liquidators’ remuneration is approved in accordance with the affidavit of Lynda Jane Smart dated 26 August 2015, subject to s 284 of the Companies Act 1993;
(d)the liquidators are allowed to exercise their powers individually pursuant to s 242 of the Companies Act 1993;
(e) costs are awarded to the plaintiff on a category 2B basis, together with disbursements as fixed by the Registrar; and
(f) this order is timed today, 3 September 2015, at 3.30 pm.
Dunningham J
Solicitors:
Timpany Walton, Timaru
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