Mansfield v Pram Enterprises Limited HC Wellington CIV-2011-485-1892

[2011] NZHC 2089

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2011-485-1892

IN THE MATTER OF     PRAM ENTERPRISES LIMITED

BETWEEN  ALEXANDER WALTER MANSFIELD Plaintiff

ANDPRAM ENTERPRISES LIMITED Defendant

Hearing:         Memorandum of Plaintiff as to Costs dated 22 November 2011

Submissions for Defendant dated 23 November 2011

Judgment:      9 December 2011 at 3:30 PM

JUDGMENT AS TO COSTS OF ASSOCIATE JUDGE D.I. GENDALL

This judgment of Associate Judge Gendall is delivered on 9 December 2011 at 3.30 pm under r 11.5 of the High Court Rules.

Solicitors:           P C Gilbert, Solicitor, PO Box 2420, Wellington

Guy & Toby Manktelow, Solicitors, PO Box 31-265, Lower Hutt

AW MANSFIELD V PRAM ENTERPRISES LIMITED HC WN CIV-2011-485-1892 9 December 2011

Introduction

[1]      This is a judgment as to costs with respect to first, a withdrawn application to stay liquidation proceedings and restrain publication of advertising, and secondly, a discontinued liquidation application.

[2]      On 23 September 2011, Pram Enterprises Limited, filed in this Court an application to stay liquidation proceedings which had been brought against it by the plaintiff Alexander Walter Mansfield (Mr Mansfield) and to restrain advertising.  An affidavit in support was filed.

[3]      This followed the filing on 16 September 2011 of a statement of claim by Mr Mansfield  seeking  an  order  to  place  the  defendant  company,  Pram  Enterprises Limited into liquidation.  The proceeding was based upon a debt of $10,331.76 said in the statement of claim to be for “outstanding rent and expenditures made on behalf” of the applicant.  It followed the issue of a statutory demand served on the applicant on 8 August 2011 which went unanswered.  It is rather curious to note that this statutory demand had made demand for payment of the $10,331.76 but stated this was:

(a)        The sum which remains outstanding for holiday pay and annual leave as acknowledged by Invoice dated 26 July 2011.

[4]      A statement of defence to Mr Mansfield’s claim seeking liquidation of the

applicant was also filed on 18 October 2011.

[5]      The liquidation application and the application by Pram Enterprises Limited for a stay and to restrain advertising were called in this Court on 10 October 2011 and 7 November 2011.  On that latter call, counsel advised the Court that the matter was settled and leave was granted to withdraw the liquidation proceeding and the application for a stay.  In doing so, costs were reserved with leave granted to either party to file memoranda on costs if they were unable to decide that issue.

[6]      Costs do not appear to be resolved between the parties.  Instead, Mr Smith counsel for Mr Mansfield filed a memorandum on costs dated 22 November 2011. This seeks an order for costs on his application in favour of Mr Mansfield on a 2B

basis  together  with  disbursements.     And  Mr  Manktelow,  counsel  for  Pram Enterprises  Limited  filed his  memorandum  costs  dated 23  November 2011  also seeking costs on a 2B basis plus disbursements, but in this case in favour of Pram Enterprises Limited.

[7]      Before setting out the essence of the claims to costs on both applications, it is useful to mention certain background facts here.

[8]      During the time period in question, Mr Mansfield owned and ran a well- known local dry-cleaning business known as Mansfield Dry-Cleaners.

[9]      Pram Enterprises Limited rented premises from a company known as Bowe

Commercial Properties Limited of which Mr Mansfield is one of the shareholders.

[10]     Mr Mansfield was formerly an employee of Pram Enterprises Limited until his employment was terminated for reasons set out in an affidavit filed in this Court.

[11]     As I have noted above, the statutory demand that Mr Mansfield relies on in this proceeding required payment of the sum of $10,331.76 which was specified as a sum outstanding for holiday pay and annual leave due to Mr Mansfield.

[12]     Counsel for Pram Enterprises Limited explains that no application to set- aside that statutory demand was brought for the simple reason that it had not come to the company’s attention prior to the substantive liquidation proceedings being filed and served.

[13]     In  addition,  he notes  that  in  the meantime  Mr  Mansfield  had  been  paid separately his holiday and annual leave pay but only in the reduced sum of $5,021.43 which he had accepted.

[14]   Nevertheless, Mr Mansfield still chose to bring the present liquidation proceedings and as I have noted above, it claimed that Pram Enterprises Limited owed Mr Mansfield the sum of $10,331.76 but this time “for outstanding rent and expenditures made on its behalf”.  This claim it seems was quite wrong.  The only

debt which had been outstanding appeared to relate to holiday pay and this was settled.

[15]     It is the contention of the applicant Pram Enterprises Limited that costs here should follow the event in the usual way and that it should be the recipient of a costs order because:

(a)      The statement of claim issued in the liquidation proceeding was for a debt clearly differentiated by description from that contained in the statutory demand and no such rent or other debt was owing.

(b)It is said to be undisputed that, in any event, the statutory demand issued for holiday and annual leave pay should have been for the lesser sum of $5,021.43 which was paid and not the $10,331.76 claimed.

(c)      The  actions  of  Mr  Mansfield  here  have  caused  Pram  Enterprises Limited considerable expense and trouble by the need to urgently apply for interim relief to prevent advertising and to stay the liquidation.   The stay application only became redundant when Mr Mansfield withdrew his liquidation proceeding.

[16]     In response, counsel for Mr Mansfield contends that these proceedings were entirely necessary to recover the outstanding holiday pay from Pram Enterprises Limited and that this was ultimately paid. As such, Mr Mansfield contends that he is entitled to costs here.

[17]     Mr Smith, counsel for Mr Mansfield, also contends here that the deficiencies in his pleading in the liquidation proceeding could have been dealt with by the filing of an amended statement of claim.  A question must arise, as I see it, however, as to how one alleged debt can be substituted by amendment for another alleged debt in the same liquidation proceeding, rather than requiring the plaintiff to commence a fresh proceeding.

[18]     A discontinuance of Mr Mansfield’s liquidation application has occurred hre. A starting point in consideration of costs must therefore be r 15.23 High Court Rules which provides:

15.23    Costs

Unless the defendant otherwise agrees or the Court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.

[19]     In  this  case  the  important  factor  as  I  see  it  is  that  Mr  Mansfield  has discontinued  his  substantive  liquidation  proceeding  against  Pram  Enterprises Limited.   He maintains that he did this only following payment of the $5,021.43 holiday pay which he has received.

[20]     His substantive proceeding, however, claimed a little over twice this amount and it appears quite wrongly stated that it was for “outstanding rent and expenditures made on behalf of the applicant company”.

[21]     Issues also arise as I understand it here as to whether there was in any event a need for Mr Mansfield to issue the liquidation proceeding in the first place.

[22]     It is clear that a Court cannot speculate on the merits of a case it has never heard.  Notwithstanding this, in my view, on the material before the Court there do not appear to be any circumstances here which would make it just and equitable for the presumption in r 15.23 to be displaced – see Small v A Judicial Committee HC, Christchurch, CIV-2009-409-2622, 20 April 2010.  Also, failure on the part of Mr Mansfield to plead properly in his statement of claim in my view is fatal here – see Landbase Nominees Co Ltd v Board Market Services (1989) 3BCR 404.

[23]     Under all the circumstances, I am satisfied that Mr Mansfield as the party who has discontinued the substantive liquidation proceeding should pay costs to Pram  Enterprises  Limited  both  on  its  defence  to  that  proceeding  and  on  its application for a stay and to restrain advertising which necessarily did not proceed once the substantive proceeding was discontinued.

[24]     Costs are therefore awarded to Pram Enterprises Limited on this proceeding on a category 2B basis together with disbursements as fixed by the Registrar.

‘Associate Judge D.I. Gendall’