Matapiro Olives (2008) Limited v The Olive Press Limited

[2020] NZHC 2204

IN THE HIGH COURT OF NEW ZEALAND MASTERTON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKAORIORI ROHE

CIV-2020-435-15

[2020] NZHC 2204

UNDER

Section 290 of the Companies Act 1993

BETWEEN

MATAPIRO OLIVES (2008) LIMITED

Applicant

AND

THE OLIVE PRESS LIMITED

Respondent

Hearing:

25 August 2020

Appearances:

T Wano for applicant

A Leggat for respondent

Judgment:

27 August 2020

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1]    This is an application by Matapiro Olives (2008) Ltd for an order setting aside a statutory demand served by The Olive Press Ltd on 7 July 2020. It is the first step in the third round of litigation between these parties. In 2018 they entered into a contract relating to the processing of olives for Matapiro by the Olive Press in the 2018, 2019 and 2020 seasons. There have been disputes resulting in litigation between the parties in respect of their rights and obligations under that contract in each of the three seasons. The 2018 litigation is at an end. Insofar as the 2019 season is concerned, on 19 June 2020 I issued a judgment in which I concluded that the contract was of a take or pay nature entitling The Olive Press to claim the agreed cost for the processing of 250 tonnes of olives at the minimum rate provided for in the contract, notwithstanding that Matapiro did not consign any olives to The Olive Press.

MATAPIRO OLIVES (2008) LIMITED v THE OLIVE PRESS LIMITED [2020] NZHC 2204 [28 August 2020]

[2]    The Olive Press is taking steps to enforce that debt. Matapiro has applied for a stay of that proceeding pending its appeal against my judgment. In a judgment dated 14 August 2020 I made an interim order staying the enforcement proceeding which will expire at 4.00 pm tomorrow unless Matapiro either pays the amount in dispute into escrow or alternatively secures for that amount.

[3]    In the meantime, The Olive Press has served the statutory demand referred to earlier in relation to the debt it says is due to it from Matapiro in respect of the 2020 season and Matapiro has made the current application for an order setting that statutory demand aside.

[4]    Matapiro’s application was listed for call in the Associate Judge’s list on     25 August 2020. Prior to that, counsel both filed and served memoranda for which I thank them. Essentially, The Olive Press wishes to press ahead with recovery of the alleged debt. What Matapiro is seeking is less clear but I think can be characterised as either a halt, stay or adjournment of this proceeding pending resolution of its appeal in the 2019 litigation.

[5]    The question of whether or not this proceeding should be halted was argued by Mr Wano for Matapiro and Ms Leggat for The Olive Press in the list, and I therefore put to one side the absence of any formal interlocutory application by Matapiro.

[6]    Counsel’s arguments were brief and to the point, and I will follow their lead in this judgment.

[7]    Both Mr Wano and Ms Leggat referred me to Associate Judge Andrew’s recent judgment in Mainzeal Property and Construction Ltd (in liq) & Ors v Yan1 and I agree that his Honour’s analysis in that case is an appropriate template for considering Matapiro’s application, albeit that that case dealt with an application under the Insolvency Act 2006.

[8]    At paragraph [13] his Honour identified the five considerations to be taken into account, and I set out the relevant paragraph below:

1      Mainzeal Property and Construction Ltd (in liq) & Ors v Yan [2020] NZHC 1659.

[13]      The Court’s discretion to grant a halt under s 42 is unfettered in the sense that the Act does not prescribe relevant factors or the weight to be accorded to them. In Yeoh v Al Saffaf, this Court held the following factors may be relevant:

(a)the bona fides of the debtor in prosecuting the appeal;

(b)what stage the appeal has reached and whether there has been a delay in prosecuting the appeal;

(c)the merits of the appeal are generally not an appropriate matter for the Court to consider unless the Court is of the view that the appeal has absolutely no prospect of success;

(d)whether the bankruptcy proceeding might render the appeal nugatory; and

(e)whether the halt of the proceeding wold unduly harm the creditors.

[9]    Before addressing those five factors, it should probably be mentioned that whereas Mainzeal was a standard example of applications pursuant to s 42 of the Insolvency Act, where a judgment debtor is appealing against the judgment that the judgment creditor is seeking to enforce, this case is unusual because Matapiro is appealing against a judgment in different proceedings — admittedly between the same parties — in respect of a different debt.

[10]   In saying that, I accept that the earlier proceeding is closely related to this proceeding and raises similar (though not exactly the same) issues, and that there is no reason in logic why Matapiro should be prevented from pursuing its application. Nevertheless, that is not an especially strong starting point for the application.

[11]I turn therefore to the Mainzeal criteria.

[12]   Mr Wano assures the Court that Matapiro is in earnest in its appeal, and of course I accept that.

[13]   The appeal has only just been filed – and had not been served as at 25 August 2020 when I heard this argument — so can be said to be in its infancy. I have no information as to when it may be heard, but my own understanding of the position is that unless the case is regarded as an urgent one it is unlikely that it will be heard and disposed of before the end of the year. That means that if this proceeding were halted

The Olive Press would be prevented from pursuing its recovery action for some considerable time.

[14]   As to the apparent merits, although it would be inappropriate to go into any detail, as I said in my judgment of 19 June 2020, it appears to me that there are certainly genuine appellate points.

[15]   The question of whether this proceeding might render the appeal nugatory is not an easy one to determine for at least two reasons.

[16]   First, at no stage in the litigation arising out of the 2018, 2019 or 2020 seasons has Matapiro disclosed its financial  position.  In  relation  to  the  2019  litigation, Mr Wano tells me that the company is proposing to either pay the amount in question into escrow or provide security for the same, which indicates that the company is not without financial resources. It may or may not be in a position to do the same in relation to the 2020 season if its application to set aside The Olive Press’ statutory demand were to be unsuccessful. The short point, however, is that there is no evidential basis upon which the Court can determine whether or not Matapiro will be in a position to comply with any judgment.

[17]   The second point relates back to the issue referred to earlier that the 2019 proceeding and this proceeding are distinct, and that Matapiro is relying on its appeal in the earlier proceedings as a basis for seeking a halt to this proceeding. Technically, then, there is no sense in which to refuse to make the order sought in this proceeding would render the appeal nugatory.

[18]   In the end, all that can be said is that much will depend on Matapiro’s financial position.

[19]   Standing back from those considerations, one point that is certain is that it will not affect Matapiro’s appeal against my judgment relating to the 2019 season to refuse the order sought at this stage in the 2020 proceeding because it will be recalled that all that is presently before the Court is Matapiro’s application to set aside the statutory demand. If Matapiro were to be unsuccessful in that application, in all probability, the

outcome would be that The Olive Press could proceed with an application to wind the company up and the position could be reconsidered at that stage.

[20]   Against that background, Mr Wano’s fundamental contention — and it is not difficult to see the practical force in this — is that if this proceeding is not halted the parties will inevitably have to commit substantial resources to it, which may be wasted if Matapiro is successful in its appeal.

[21]   As I say, there is some practical force in that. However, as against that, the order Matapiro is seeking would summarily disentitle The Olive Press from pursuing a claim that it says it has.

[22]   On balance, I am not persuaded that it would be appropriate to make the order sought by Matapiro. That does not of course preclude Matapiro, if its application to set aside The Olive Press’ statutory demand were to be declined, and The Olive Press were to commence winding up proceedings, from renewing — perhaps more formally

— its application to stay those proceedings. At that stage, different considerations may apply.

[23]   Matapiro’s informal application for an order staying the proceeding is dismissed.

[24]   In the absence of any opposition, I make the directions for the disposal of Matapiro’s application for an order setting aside The Olive Press’ statutory demand set out in Ms Leggat’s memorandum of 24 August 2020, but adjust the dates as follows:

(a)Paragraph 6(a) — 15 September 2020;

(b)Paragraph 6(b) — 29 September 2020;

(c)Paragraph 6(c) — unchanged.

[25]   I have not heard from counsel on costs, but my preliminary view is that The Olive Press is entitled to its costs on a 2B basis. I am confident counsel will be able

to deal with costs without referring the matter back to the Court, but, if that is not the case, they may do so by memorandum in the usual way.

Associate Judge Johnston

Solicitors:

Govett Quilliam, New Plymouth for applicant

MinterEllisonRuddWatts, Wellington for respondent