MEKHANE LIMITED AND METALWORK SOLUTIONS (2000) LIMITED - [2024] NZHC 3000

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-1324

[2024] NZHC 3000

UNDER Section 290 of the Companies Act 1993

IN THE MATTER OF

an application for an order to set aside a statutory demand

BETWEEN

MEKHANE LIMITED

Applicant

AND

METALWORK SOLUTIONS (2000) LIMITED

Respondent

Hearing: 10 October 2024

Counsel:

M G P Martin for the Applicant

J Cordeiro / A Cherkashina for the Respondent

Judgment:

15 October 2024

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 15 October 2024 at 12.30 pm.
Pursuant to Rule 11.5 of the High Court Rules.

…………………..
Registrar/Deputy Registrar

Solicitors:
Lane Neave, Auckland Norling Law Ltd, Auckland

MEKHANE LTD v METALWORK SOLUTIONS (2000) LTD [2024] NZHC 3000 [15 October 2024]

Introduction

[1] The applicant, Mekhane Ltd (Mekhane), is part of a group of companies known as NZ Build Group (NZBG). Mekhane’s business includes services related to roofing.

[2] In 2023, NZBG had a business relationship with Remarkable Roofing Ltd (in liquidation) (Remarkable). The legal form of the business relationship is unclear. Remarkable was placed into liquidation on 4 December 2023.

[3] The respondent, Metalwork Solutions (2000) Ltd (MSL), supplies flashings. From 21 September 2023 to 4 December 2023, MSL supplied flashings for projects involving Remarkable and Mekhane. After 4 December 2023, Mekhane continued to work on the projects, and Mekhane placed further orders with MSL.

[4] MSL invoiced Mekhane for the flashings it supplied for all projects. Mekhane paid some of the invoices. There are outstanding invoices with a total value of
$157,657.77.

[5] MSL says that Mekhane is liable for the outstanding invoices, and served a statutory demand. Mekhane has applied to set the statutory demand aside. Mekhane says that it is not liable for the outstanding invoices because:

(a)the underlying supplies were to Remarkable; and

(b)Mekhane has mistakenly paid some invoices and it has a counterclaim or set-off against MSL for the payments made by mistake.

[6] If Mekhane can establish that it is arguable that there is a genuine and substantial dispute as to the existence of the debt then the statutory demand should be set aside. The issue is whether Mekhane is the party that is liable to pay the outstanding invoices.

Setting aside a statutory demand

[7] Section 290(4) of the Companies Act 1993 (the Act) provides that, when a statutory demand is issued under s 289, of the Act, it may be set aside by the Court if:

(a)there is a substantial dispute as to whether or not the debt is owing or is due; or

(b)the company appears to have a counterclaim, set-off or cross demand and the amount specified in the demand less the amount of the counterclaim, set-off or cross-demand is less than the prescribed amount; or

(c)the demand ought to be set aside on other grounds.

[8] For an alleged debtor to succeed in setting aside a statutory demand, some material short of proof is required to support the claim…

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 MEKHANE LIMITED AND METALWORK SOLUTIONS (2000) LIMITED

Details

AGLC: MEKHANE LIMITED AND METALWORK SOLUTIONS (2000) LIMITED [2024] NZHC 3000
Case: [2024] NZHC 3000
Decision Date: 15 October 2024

CaseChat Overview and Summary

Mekhane Limited, an entity within the NZ Build Group, sought to set aside a statutory demand issued by Metalwork Solutions (2000) Limited, which claimed Mekhane owed $157,657.77 for flashings supplied from September to December 2023. The dispute centred on whether Mekhane was liable for the invoices issued by Metalwork Solutions, particularly since some invoices related to projects involving Remarkable Roofing Ltd, which was in liquidation. Mekhane argued it was not liable for the outstanding invoices because the supplies were intended for Remarkable, and Mekhane had mistakenly paid some invoices, asserting a counterclaim for the mistaken payments. The court had to decide whether there was a substantial dispute about the existence of the debt, which would warrant setting aside the statutory demand. The court found that Adrian Donlon, a manager of Platform Projects Ltd, had the authority to commit Mekhane to pay for the orders, and there was no evidence that Donlon's instruction to Metalwork Solutions was limited to a single project. The court also found that Mekhane had not demonstrated a genuine and substantial dispute regarding its liability for the invoices. Consequently, the court dismissed Mekhane's application to set aside the statutory demand and ordered Mekhane to pay the amount within 10 working days, with the possibility of liquidation proceedings if payment was not made. Costs were to be determined based on written submissions from both parties.

Orders