Matapiro Olives (2008) Limited v The Olive Press Limited
[2020] NZHC 2795
•23 October 2020
IN THE HIGH COURT OF NEW ZEALAND MASTERTON REGISTRY
I TE KŌTI MATUA O AOTEAROA WHAKAORIORI ROHE
CIV-2020-435-15
[2020] NZHC 2795
UNDER the Companies Act 1993 BETWEEN
MATAPIRO OLIVES (2008) LIMITED
Applicant
AND
THE OLIVE PRESS LIMITED
Respondent
Hearing: 19 October 2020 Appearances:
T Wano for the Plaintiff
R Gordon and A Leggat for the Defendant
Judgment:
23 October 2020
INTERIM JUDGMENT OF ASSOCIATE JUDGE LESTER
This interim judgment was delivered by me on 23 October 2020 at 2.30pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar 23 October 2020
MATAPIRO OLIVES (2008) LIMITED v THE OLIVE PRESS LIMITED [2020] NZHC 2795
[23 October 2020]
[1]This is an application to set aside a statutory demand dated 30 June 2020.
[2] The full background to the dispute between the parties is set out in two judgments of his Honour Associate Judge Johnston between the same parties; the first dated 4 May 2020 (the May interim judgment)1 and a second dated 19 June 2020 (the June judgment).2
[3] In the May interim judgment, his Honour set out the details of a contract between the parties that was intended to govern the processing of olives by the respondent, The Olive Press Ltd, for the applicant, Matapiro Olives (2008) Ltd (Matapiro), for the 2018, 2019 and 2020 seasons. Associate Judge Johnston identified the issue between the parties as being whether, under the terms of the processing contract, the applicant had an obligation to pay for a minimum amount of processing for each of the three years, whether it supplies olives for processing or not.3 After the first year when the applicant supplied olives for processing, there was a falling out between the parties and no further olives were tendered for processing.
[4] The respondent said the effect of the contract was that it was entitled to charge the contracted processing rate whether or not the applicant supplied the specified minimum quantity of olives. The Judge called for further submissions on whether the nature of the contract was such that the respondent was entitled to issue a statutory demand for a debt due, that is, the amount payable for the minimum specified quantity of olives, or whether its claim was in fact for damages which would not support a statutory demand.
[5] Following the release of the May interim judgment, both parties filed and served further affidavit evidence and submissions. His Honour, in the June judgment, stated the issue as follows:4
[T]he issue is whether this was a take or pay contract, with the result that The Olive Press is entitled to recover as a debt the full amount it would have been entitled to charge had Matapiro consigned the minimum quantity of olives (250 tonnes) at the minimum contractual rate (45c per kg), or whether its
1 Matapiro Olives (2008) Ltd v The Olive Press Ltd [2020] NZHC 876.
2 Matapiro Olives (2008) Ltd v The Olive Press Ltd [2020] NZHC 1394.
3 Matapiro Olives, above n 1, at [2] and [15].
4 Matapiro Olives, above n 2, at [2(c)].
remedy is a claim for damages for breach of contract which would involve an assessment of its net loss.
[6] His Honour went on in the judgment to address the submissions made by the parties in respect of that key issue. His Honour said:
[30] In the end, I am satisfied that the arrangement between The Olive Press and Matapiro in April 2018 in respect of the 2018 and 2019 seasons was intended by the parties to be of a take or pay nature (the position in relation to the 2020 season may well be different because, at the very last moment, the parties left a rate for that season unresolved).
[7] Accordingly, his Honour having concluded that the three year contract was of a take-or-pay basis, he dismissed the application to set aside the statutory demand as The Olive Press Ltd was entitled to claim as a debt due the amount payable by Matapiro, for the minimum amount specified.5
[8] Matapiro has appealed Associate Judge Johnston’s decision and I was informed by counsel that the case on appeal was filed on 19 October 2020.
[9] In respect of the statutory demand for the 2019 season, that is the demand that was subject to the two decisions of Associate Judge Johnston I have referred to, on 14 August 2020 Associate Judge Johnston granted Matapiro an order restraining advertising of the winding up proceeding commenced by The Olive Press Ltd.6 The order was on the condition that either the amount of the demand, along with interest, was to be paid into the trust account of the solicitors for The Olive Press Ltd or an appropriate charge over land sufficient to secure the amount was provided.7 Counsel confirmed that Matapiro has provided security as required by the Judge.
[10] At the time that Associate Judge Johnston was dealing with the application to restrain advertising in respect of the winding-up application arising from the debt owed for the 2019 season, The Olive Press Ltd had also served the statutory demand dated 30 June 2020 for $143,750 being the amount it says is due and owing by Matapiro in respect of the 2020 season.
5 At [31]-[32].
6 The Olive Press Ltd v Matapiro Olives (2008) Ltd [2020] NZHC 2058.
7 At [11(d)].
[11] Matapiro commenced this proceeding to have the 30 June 2020 demand set aside and that application that came on for hearing on 19 October 2020.8
[12] Mr Gordon, counsel for The Olive Press Ltd, in his written submissions was critical of the application being brought. The application to set aside did not seek to develop the possible point referred to Associate by Judge Johnston in the June judgment, referred to at [6] above, that the contract between the parties covering the 2018-2020 seasons did not include a rate for the 2020 season. Even though the applicant did not rely on this point, Mr Gordon in his submissions explained that the apparent gap was filled by the default provisions in The Olive Press Ltd’s Terms of Trade, part of the contract between the parties. Matapiro faced with this submission did not attempt to argue that The Olive Press Ltd’s submission in that regard was incorrect.
[13] Accordingly, there was no challenge to the quantum of the statutory demand on the ground The Olive Press Ltd was not entitled to rely on the default rates in the Terms of Trade.
[14] Matapiro’s challenge to the 2020 statutory demand was effectively a re-run of the challenge to the 2019 demand. Matapiro’s submissions sought to argue afresh that the contract governing the 2018-2020 seasons was not a take-or-pay contract. Not surprisingly, this submission was met with robust submissions from Mr Gordon that that issue was res judicata, that is, Associate Judge Johnston had expressly ruled on the nature of the 2020 contract in the June judgment.
[15] When the application was called on 19 October 2020, I asked Mr Wano, counsel for Matapiro, to respond to the proposition in The Olive Press Ltd’s written submissions that the June judgment meant it was not open to Matapiro to argue in this application that the contract was not a take-or-pay. Mr Wano was not able to point me to any basis upon which the issue of the meaning of the contract was not subject to res judicata.
8 Companies Act 1993, s 290.
[16] I am satisfied that Matapiro seeks to raise in this proceeding the same question that was subject to the dispute resolved by Associate Judge Johnston in the June judgment. While his Honour’s decision is subject to an appeal, it stands until reversed on appeal. Nor was this a case where Matapiro “confesses and avoids”, that is, where Matapiro accepted the contract was take-or-pay but raised a challenge to the statutory demand not previously argued - a challenge independent of Associate Judge Johnston’s findings.9 In short, with Matapiro seeking to, without more, re-run arguments already dismissed, I am satisfied that the application does not disclose a reasonably arguable challenge to the statutory demand.
[17] Accordingly, the application to set aside the statutory demand dated 30 June 2020 will be dismissed when this matter is called again.
[18] The Olive Press Ltd sought, upon the application being dismissed, an order under s 291(1)(a) of the Companies Act 1993 requiring Matapiro to pay the debt that it owes for the 2020 harvest season within 10 working days, or an order under s 291(1)(b) of the Act placing Matapiro into immediate liquidation.
[19] As Matapiro has an appeal underway in respect of the issue at the heart of both the 2019 and 2020 demands, I am not willing to make an order placing Matapiro into liquidation without giving it a chance to address the 2020 debt, hence the deferral of the proposed dismissal of this application.
[20] Equally, the application to set aside the statutory demand for the 2020 year leaves me with the impression, which I raised with counsel, that the application was brought to buy time. In discussions with counsel, it became clear that the real issue was what arrangement should be put in place in respect of the 2020 year debt pending the completion of the appeal. The intent is to allow time for payment or the provisions of security for the debt with the consequence that Matapiro will be placed into liquidation if neither outcome is achieved.
[21] In the interests of avoiding unnecessary costs which would be required if The Olive Press Ltd had to issue a winding-up proceeding and then deal with a separate
9 Colin Campbell Fraser Laws of New Zealand Estoppel (online ed) at [21].
application to restrain advertising or stay, the following arrangement was arrived at with counsel:
(1)The application to set aside the statutory demand is adjourned to Tuesday 17 November 2020 when it will be dismissed for the reasons in this interim judgment.
(2)There is an order under s 291(1)(a) of the Companies Act 1993 that the amount in the statutory demand dated 30 June 2020 is to be paid within 15 working days.
(3)Upon the application to set aside being dismissed on 17 November 2020, there is an order under s 291(1)(b) of the Companies Act 1993 placing Matapiro Olives (2008) Ltd into liquidation unless it has paid the amount in the demand or satisfied order (4) below.
(4)If the amount in the demand dated 30 June 2020, together with interest in the sum of $9,759.25 giving a total of $153,509.25, is secured in either of the ways set out at [11(d)] of Associate Judge Johnston’s decision of 14 August 2020,10 then The Olive Press Ltd is not to take further enforcement action in respect of this amount, provided the appeal in respect of the June judgment is diligently pursued by Matapiro to a hearing.
[22] I have adopted this process as an order under s 291(1) can be made “…on the hearing of an application under s 290 …” but order under s 291(1)(b) placing Matapiro Olives (2008) Limited in liquidation is made forthwith on the dismissal of the application. Again, the intent here is to not visit on The Olive Press Ltd the delay created by the application brought, but allow time for payment or security by Matapiro.
[23] That leaves the question of costs in respect of this application. It was common ground that costs should follow the event.
10 The Olive Press Ltd, above n [6].
[24] The Olive Press Ltd seeks indemnity costs, essentially on the basis that this proceeding was an abuse of process relying on r 14.6(4)(a) of the High Court Rules 2016 - namely that this proceeding was improperly or unnecessarily commenced. Pursuit of a proceeding in wilful disregard of clearly established law can warrant indemnity costs.11
[25] Mr Wano resisted indemnity or increased costs. He denied that the application was vexatious and confirmed his client was adamant that it wished to pursue the appeal. He emphasised that Associate Judge Johnston had, in the judgment of 14 June 2020 dealing with the application to restrain advertising, recorded that he was satisfied that Matapiro was genuine in wishing to challenge his earlier decisions and that there were arguable appellate points.12
[26] While that may be the case, it did not, in my view, warrant bringing a proceeding that was so squarely contrary to the principles of res judicata. I am satisfied that the proceeding was an abuse of process. That Mr Wano was not able to suggest why the proceeding was not barred by res judicata was one of the reasons why I raised with him that the application had the appearance of being brought to buy time. Mr Gordon’s submissions in opposition to the application could not have been clearer as to why the application was inherently flawed.
[27] If costs on an indemnity basis could be agreed then memoranda as to quantum only are to be filed within five working days of the date of this interim judgment.
Associate Judge Lester
Solicitors:
Govett Quilliam, New Plymouth (for the Applicant) MinterEllisonRuddWatts, Wellington (for the Respondent)
11 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [29].
12 The Olive Press Ltd, above n 6 at [5].
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