Manawatu-Wanganui Regional Council v The Happy Hog Limited

[2015] NZHC 222

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2014-454-11 [2015] NZHC 222

UNDER

The Companies Act 1993

BETWEEN

MANAWATU-WANGANUI REGIONAL COUNCIL

Plaintiff

AND

THE HAPPY HOG LIMITED Defendant

Hearing:	12 December 2014, and 19 February 2015
Counsel:	N Jessen for the Plaintiff No appearance for the Defendant R E Barber, shareholder of the Defendant, in Person
Judgment:	19 February 2015

ORAL JUDGMENT OF ASSOCIATE JUDGE SMITH

[1]      The  plaintiff  (the  Council)  is  a  regional  council  established  under  the provisions of the Local Government Act 2002.   It applies for an order putting the defendant company (Happy Hog) into liquidation.

[2]      Mr Barber is a shareholder in Happy Hog.  He applies for an order extending

time for him to defend the Council’s application.

[3]      The Council says Happy Hog owes it the sum of $28,327.19 in relation to the receiving, processing, and granting of certain resource consents in respect of which Happy Hog is either applicant or holder.

[4]      A statutory demand claiming the $28,327.19 was served on Happy Hog on

11 August  2014.    Happy Hog  did  not  pay  the  demand.    Nor  did  it  make  an application to set aside the statutory demand under s 290 of the Companies Act 1993

MANAWATU-WANGANUI REGIONAL COUNCIL v THE HAPPY HOG LIMITED [2015] NZHC 222 [19

February 2015]

[5]      Happy Hog’s failure to pay the amount in the demand, or to challenge it in the manner provided for in s 290 of the Companies Act 1993, provided the Council with prima facie evidence that Happy Hog is unable to pay its debts.1   That is one of the grounds on which a creditor may apply to the Court for an order placing a debtor in liquidation.

[6]      The Council filed an application to have Happy Hog placed in liquidation on

15 September 2014.    That application, with the required supporting affidavit and notice of proceeding, was served on Happy Hog on 16 September 2014.

[7]      Happy Hog had ten working days from that date to file a statement of defence if it wished to file one.2   It did not do so.  Instead, Mr Barber filed a document described as a notice of defence and headed “Defence of Liquidation of Happy Hog Limited”, in which the Council’s claim for the $28,327.19 is challenged. The document is dated 5 November 2014.

[8]      When the case was first called before me on 13 November 2014, Happy Hog was not represented by counsel.  Mr Barber appeared in person and sought to oppose the liquidation application.  I advised him that if Happy Hog wished to be heard on the liquidation application it would need to appoint a barrister and solicitor to represent it; Mr Barber, not being a lawyer, did not have the right to represent the company himself.  If Mr Barber wished to oppose the liquidation application in his personal capacity as a shareholder, he would need to file an application for an extension of time to do so (any statement of defence by a shareholder is also required to be filed and served within ten working days after service of the liquidation

claim).3   I made directions for the filing of that application and any affidavits in

support, and I gave directions for the filing of any notice of opposition by the

Council.

[9]      Mr Barber filed an application for extension of time on 19 November 2014. A notice of opposition was subsequently filed by the Council.

1      The Companies Act 1993, s 287(a).

2      High Court Rules, r 31.17.

3      Rule 31.17.

[10]     I heard argument from Mr Barber and Mr Jessen for the Council on

12 December 2014. At the conclusion of that hearing, I directed the Council to provide further affidavit evidence clarifying certain aspects of its claim, and I allowed Mr Barber to file an affidavit strictly in reply.  I adjourned the matter to today’s list.

[11]     The affidavit from the Council was filed on 23 January 2015, and Mr Barber submitted an unsworn reply on 5 February 2015.  I have now considered those documents.

[12]     In his reply document, Mr Barber alleges that he was told by Court staff that he could file documents five days before the hearing, but he provides no detail of exactly what was said to him and when, and in those circumstances I cannot place any weight on that statement, which has not been made on oath.  In any event I think the principal issue on Mr Barber’s application for an extension of time to defend the liquidation application is whether he has shown that there is an arguable defence to

the claim.4   For the reasons which follow, I am not satisfied that Mr Barber has

shown that there is an arguable defence.

[13]     Mr Barber’s notice of defence document, and his unsworn reply to Mr Lord’s

affidavit for the Council sworn on 23 January 2015, are very difficult to follow. Both documents contain extensive material which appears to have no relevance to the question of whether Happy Hog or Mr Barber has an arguable defence to the liquidation claim.  Nowhere does Mr Barber provide details of Happy Hog’s assets or liabilities, or of its ability or otherwise to pay the amount claimed by the Council.

[14]     Doing the best I can with Mr Barber’s notice of defence, it appears that he:

(a)       is challenging the Council’s standing as a regional council with power to levy charges relating to resource management applications and consents.  Specifically, he says that the Local Government Act gives the Council no legal right to make charges for anything other than

rates.

4      See Satuit Properties Ltd v Commissioner of Inland Revenue [2014] NZHC 1300, [21].

(b)suggests that the Council has illegally acquired any powers it has in respect of the land, and that local Maori hold governance.

(c)       claims costs and punitive damages of $689,520,000.

[15]     There are numerous other complaints against the Council (and counsel and the judiciary) in the documents filed by Mr Barber, but I have been unable to discern in them anything that might amount to an arguable defence to the liquidation claim.

[16]     Addressing the three arguments referred to in para [14], I note the following:

(a)      The Council has been formally recognised by Parliament as a regional council – it is expressly listed as such in part 1, sch 2 to the Local Government Act 2002.

(b)Part 1 of sch 2 to that Act describes the Council as having been constituted by the Local Government Manawatu-Wanganui Reorganisation Order 1989, Gazette 1989, pg 2391.

(c)      A Copy of the Gazette notice produced by Mr Lord in his affidavit states at [4]:

There is hereby constituted a region, to be known as the

Manawatu-Wanganui Region”.

(d)The Gazette notice formally delineates the boundaries of the region by reference to a Survey Office plan, and I do not understand there to be any question that the land in question here is within the region – at least Mr Barber has not provided any evidence that it is not.  And of course Happy Hog appears to have been involved in applying for and/or  holding  resource  consents  issued  or  to  be  issued  by  the Council.

(e)      Clause 9 of the Gazette notice formally constituted the Council as the regional council for the Manawatu-Wanganui region.

(f)       The Council’s power to levy charges in respect of resource consent applications and consents within the Manawatu-Wanganui region, derives from s 36 of the Resource Management Act.   That section provides in relevant part:

36       Administrative charges

(1)       A  local  authority  may  from  time  to  time,  subject  to subsection (2), fix charges of all or any of the following kinds:

…

(b)      charges payable by applicants for resource consents, for the carrying out by the local authority of any 1 or more of its functions  in  relation  to  the  receiving,  processing,  and granting of resource consents (including certificates of compliance and existing use certificates):

(c)       charges  payable  by  holders  of  resource  consents,  for  the carrying out by the local authority of its functions in relation to   the   administration,   monitoring,   and   supervision   of resource consents (including certificates of compliance and existing use certificates), and for the carrying out of its resource management functions under section 35.

(g)      The   expression   “local   authority”   as   used   in   s   36   of   the Resource Management  Act  is  defined  in  s  2  of  that Act  as  including  a regional council.

[17]     Having regard to those statutory provisions, I see no basis for argument that the Council is not a duly constituted regional council which is entitled to make charges under, and in accordance with the procedures referred to in, s 36 of the Resource Management Act.  In terms of the procedural requirements of that section, Mr Barber has not identified any relevant non-compliance by the Council.

[18]     Addressing Mr Barber’s second line of argument, that the relevant powers in respect of the land have been illegally acquired by the Council, and that the land should be returned to local Maori, that is not in my view an argument which is available to Happy Hog or Mr Barber in this Court.   First, it is  clear that the Council’s powers derive from Parliament itself, in Parliament’s recognition of the relevant reorganisation order in the Local Government Act 2002, and secondly in the

powers conferred on regional council’s by the Resource Management Act.   This Court’s duty is to apply the law as laid down by Parliament.5     I conclude that Mr Barber has not raised any arguable defence on this basis.

[19]     I conclude that Mr Barber has not raised any arguable defence on this basis.

[20]     Mr Barber’s third possible head of defence (or perhaps, more accurately, claim) is the claim for costs and punitive damages of $689,520,000.  I have not been provided with any particulars of this claim, and in the absence of any sworn supporting evidence for the claim, I put it to one side.

[21]     Mr Barber does not appear to make any significant challenge to the amounts

claimed in the Council’s invoices.  Indeed, he appeared at one point in the hearing on

12 December 2014 to be telling me that he had actually paid the amounts invoiced to some other (unidentified) council.  In his reply document, however, it appears that any payments made (if made at all) were to a charitable trust with which Mr Barber is associated.  There is reference in Mr Barber’s unsworn reply document to “the bill not adding up”, but no details of particular challenged amounts have been provided, and in those circumstances the claim does not meet the arguable defence threshold.

[22]     I conclude that Mr Barber has  not shown that  he or Happy Hog has  an arguable defence to the Council’s liquidation claim.  Mr Barber’s application for an extension of time to defend that claim is accordingly refused.

[23]     The Council asks that the Court make a liquidation order against Happy Hog immediately.   However I think the more appropriate course is to adjourn the liquidation application for further call in the next list day, which is 26 March 2015 at

10am.  I note that Happy Hog apparently runs a pig farm, and it may be that it can make arrangements between now and 26 March 2015 to pay the debt.  I adjourn the application to that time and date accordingly.  I note for the benefit of Happy Hog and Mr Barber that the purpose of the adjournment is solely to allow Happy Hog to

avoid liquidation by paying the amount owing (including costs) if it is able to do so,

5      Refer to The Queen v Tamati Mason [2012] NZHC 1361 at [33] – [34], and the cases cited by

Heath J in those paragraphs.

and  if it  wishes  to  do  so.    The Court  will  not  entertain  further argument  over

Happy Hog’s liability for the amount claimed.

Associate Judge Smith

Solicitors:

Cooper Rapley, Palmerston North for the Plaintiff

R E Barber, Palmerston North in Person