Mega Project Holding Limited v Orewa Developments Limited - [2019] NZHC 866

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-2815

[2019] NZHC 866

UNDER The Companies Act 1993, section 290

IN THE MATTER OF

an application to set aside a statutory demand

BETWEEN

MEGA PROJECT HOLDING LIMITED

Applicant

AND

OREWA DEVELOPMENTS LIMITED

Respondent

Hearing: 1 April 2019

Appearances:

R O Parmenter for the Applicant W A Endean for the Respondent

Judgment:

18 April 2019

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 18 April 2019 at 11:00am
pursuant to Rule 11.5 of the High Court Rules.

…………………………………
Deputy Registrar

Solicitors:
Winston Wang & Associates, Auckland, for the Applicant
Dawsons Lawyers (W A Endean), Howick, Auckland, for the Respondent
Copy for:
Ray Parmenter, Barrister, Auckland, for the Applicant

MEGA PROJECT HOLDING LIMITED v OREWA DEVELOPMENTS LIMITED [2019] NZHC 866 [18 April 2019]

[1] The applicant and the respondent, both property developers, were each carrying out residential subdivisions at Orewa on adjoining properties. Their subdivision consents required them to upgrade West Hoe Heights Road, which runs between their properties. In December 2016, they made an agreement to share the costs. Orewa Developments Ltd would carry out the roading work and Mega Project Holding Ltd would pay Orewa Developments Ltd half the costs. Orewa Developments Ltd says that it has carried out the roading work and has asked Mega to pay its share, but Mega has paid nothing. Orewa Developments Ltd has served a demand under s 289 of the Companies Act on Mega requiring payment of
$1,452,803.62 “for roading construction costs adjoining the land belonging to you at West Hoe Heights Orewa, pursuant to a written agreement made on or about 5 December 2016 between you and the creditor”. Mega has applied to set aside the statutory demand as it says that there is a substantial dispute as to the alleged debt. It says that Orewa Developments Ltd has not met the conditions for payment. Mega had to be given certain information and it had to give certain approvals before work started, but Orewa Developments Ltd did the work without giving the information or obtaining Mega’s approval.

[2] Orewa Developments Ltd’s director was the late Liangren Li, who died in 2018. For its development, it had a project engineer, Property and Project Consulting Ltd. Mr Marsh, a director of that company has sworn an affidavit for Orewa Developments Ltd. Orewa Developments Ltd used CKL Surveys Ltd as its engineer. Mr Jackman, that company’s engineering manager, swore a late affidavit that was admitted without objection. The contractor who carried out the roading work was Dempsey Wood Civil Ltd. Mega’s director is Mr Jerry Zhu. Its engineering consultant was Mr Greg Richardson of Crang Civil Ltd.

Principles on setting aside applications

[3] There is no dispute as to the principles on applications under s 290 of the Companies Act to set aside statutory demands. Statutory demands under s 289 are used to create a presumption of insolvency under…

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.

Continue reading Mega Project Holding Limited v Orewa Developments Limited

Details

AGLC: Mega Project Holding Limited v Orewa Developments Limited [2019] NZHC 866
Case: [2019] NZHC 866
Decision Date: 18 April 2019

CaseChat Overview and Summary

The case of Mega Project Holding Limited v Orewa Developments Limited involves a dispute between two property developers over the payment for roading work carried out under a shared costs agreement. The respondent, Orewa Developments Limited, served a statutory demand under s 289 of the Companies Act 1993 on the applicant, Mega Project Holding Limited, for the payment of $1,452,803.62. Mega Project Holding Limited applied to set aside the statutory demand, asserting that there was a substantial dispute as to the alleged debt, primarily due to the non-fulfillment of conditions for payment. The court was required to decide whether there was a genuine and substantial dispute about the debt, and if the statutory demand could be set aside under s 290 of the Companies Act.

The court first addressed the principles governing applications under s 290 to set aside statutory demands, emphasizing that the overall purpose of s 290 is to prevent injustice arising from the presumption of insolvency. The court found that Mega Project Holding Limited had shown a genuine and substantial dispute as to contractual liability, as the conditions for payment had not been met. Specifically, Mega Project Holding Limited had not been given the opportunity to approve the costs before work started, as required by the contract. The court also determined that there was a non-contractual debt owed by Mega Project Holding Limited to Orewa Developments Limited under the principle of free acceptance, as Mega Project Holding Limited had acquiesced in the work being carried out on a shared costs basis.

However, the court ruled that Orewa Developments Limited could use a statutory demand to enforce the non-contractual debt, as it was a liquidated demand. The court set aside the statutory demand to the extent that it exceeded $1,284,122.94, which was the total of Orewa Developments Limited's payment claims. The court ordered Mega Project Holding Limited to pay Orewa Developments Limited $1,284,122.94 by 17 May 2019, and if not paid in full, Orewa Developments Limited could begin a liquidation proceeding against Mega Project Holding Limited. Orewa Developments Limited was awarded costs on the application under category 2, with a deduction of 25 per cent.

Orders