Magsons Hardware Ltd v Concepts 124 Ltd - [2011] NZCA 559

IN THE COURT OF APPEAL OF NEW ZEALAND

CA671/2010
[2011] NZCA 559

BETWEEN MAGSONS HARDWARE LIMITED
Appellant

AND CONCEPTS 124 LIMITED
Respondent

Hearing: 16 August 2011

Court: Arnold, Winkelmann and Andrews JJ

Counsel: L Ponniah for Appellant
G Bogiatto for Respondent

Judgment: 7 November 2011 at 10.30 am

JUDGMENT OF THE COURT

AThe appeal is allowed.
BThe statutory demand served by the respondent on the appellant is set aside.
CThe respondent is to pay the appellant’s costs as for a standard appeal on a band A basis plus usual disbursements.
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REASONS OF THE COURT
(Given by Andrews J)

Introduction

This is an appeal by Magsons Hardware Ltd (Magsons) against the dismissal of its application for an order setting aside a statutory demand made by the respondent, Concepts 124 Ltd (Concepts), in the judgment of Associate Judge Bell delivered on 10 September 2010 (the judgment).[1] $20,000 is at issue. It was paid by Concepts to Magsons by way of four payments of $5,000, for the removal of each of four caveats registered by Magsons against the titles to land owned by Concepts.

Background

[1]Magsons Hardware Ltd v Concepts 124 Ltd HC Auckland CIV-2010-404-3723, 10 September 2010.

There is no dispute as to the background facts. The following summary is taken from the judgment,[2] and the judgment of Associate Judge Abbott on applications by Magsons for orders that the caveats not lapse.[3]
[2] At [5]–[22].
[3]Magsons Hardware Ltd v Concepts 124 Ltd HC Auckland CIV-2009-404-1971, 23 June 2009.
Magsons operates a Mitre 10 franchise. Between May and October 2008 it supplied building materials to Flat Bush Construction Ltd (FBCL) for use in construction projects in Flat Bush, South Auckland. FBCL’s director, Mr Cummins, guaranteed its indebtedness to Magsons for those supplies. Mr Cummins is also a director of Concepts, which owned land at Flat Bush, on which FBCL constructed buildings. Although Magsons had a contract with FBCL, there was no contractual relationship between Magsons and Concepts.
FBCL was put into liquidation on 27 November 2008. Magsons is an unsecured creditor. As at the date of liquidation, Concepts owed Magsons $404,542.96, excluding interest and recovery costs. Magsons obtained summary judgment against Mr Cummins on his guarantee on 15 October 2009,[4] for $555,376.13.
[4] Magsons Hardware Ltd v Cummins HC Auckland CIV-2009-404-1188, 15 October 2009.
On 27 February 2009, Magsons registered caveats against 13 titles to land owned by Concepts at Flat Bush. It claimed that Concepts held part of its interest in the land on trust for it, because Magsons could trace building materials it supplied into buildings erected at Flat Bush.
Between 16 March and 15 June 2009 there were discussions, meetings, and correspondence between the parties and their solicitors (Corban Revell for Magsons and Mr Bogiatto for Concepts) concerning challenges to the validity of the caveats, the removal of caveats from individual titles, payments to be made for removal, and settlement of matters between Magsons, Concepts and Mr Cummins. On 19 March 2009, Magsons withdrew two of…

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

AGLC: Magsons Hardware Ltd v Concepts 124 Ltd [2011] NZCA 559
Case: [2011] NZCA 559
Decision Date: 7 November 2011

CaseChat Overview and Summary

Magsons Hardware Ltd appealed against the dismissal of its application to set aside a statutory demand made by Concepts 124 Ltd in the judgment of Associate Judge Bell delivered on 10 September 2010. The dispute arose from payments of $20,000 made by Concepts to Magsons for the removal of four caveats registered by Magsons against the titles to land owned by Concepts. The primary issue on appeal was whether the Associate Judge was wrong to find that Concepts paid $20,000 to Magsons under economic duress. The court found that the Associate Judge was incorrect to make an affirmative finding of economic duress as the factual issues required to be considered were not suitable for determination on affidavit evidence alone, in the absence of cross-examination of deponents, in a summary procedure such as an application to set aside a statutory demand. The court also commented on the appropriateness of the use of the statutory demand procedure in this case, stating that it was not the type of case in which the use of the statutory demand procedure was appropriate. The appeal was allowed, the statutory demand issued by Concepts on 2 June 2010 against Magsons was set aside, and the respondent was ordered to pay costs to the appellant as for a standard appeal on a band A basis plus usual disbursements.

Orders