Oakley v New Zealand Livestock Holdings Limited

[2022] NZHC 1323

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2022-412-000020

[2022] NZHC 1323

UNDER

the Companies Act 1993

IN THE MATTER

of an application to put NEW ZEALAND LIVESTOCK HOLDINGS LIMITED into

liquidation

BETWEEN

JOHN ROBERT OAKLEY

Plaintiff

AND

NEW ZEALAND LIVESTOCK HOLDINGS LIMITED

Defendant

Hearing:	2 June 2022 (List Court)
Appearances:	A L Clark-Tahana (as agent) for Plaintiff G A Paine for Defendant
Judgment:	7 June 2022

COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 7 June 2022 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

OAKLEY v NEW ZEALAND LIVESTOCK HOLDINGS LTD [2022] NZHC 1323 [7 June 2022]

[1]                  The plaintiff applies to liquidate the defendant company. This ruling concerns an application by the defendant company for leave to file a statement of defence out of time.1

[2]                  The proceeding first came before the Court for hearing on 5 May 2022. The defendant company had not filed a statement of defence. Mr Paine appeared on behalf of the defendant company and advised the debt claimed by the plaintiff was disputed and that the defendant company wished to file a statement of defence. To do so the defendant company required the leave of the Court and the plaintiff opposed the granting of leave. I made timetabling orders for the filing of an application for leave and adjourned the proceeding to 2 June 2022.

[3]                  The defendant company filed an application for leave to file a statement of defence on 18 May 2022. The application was made on one ground only, that is:

That the amount claimed in the statutory demand was paid and paid prior to the matter being called on the 5th of May in this Honourable court.

[4]                  The defendant company’s application was not supported by an affidavit. None has been filed since. I note, however, that on 6 May 2022 the defendant company had purported to file a statement of defence without leave. In it the defendant company denied it was indebted to the plaintiff. It asserted that a statutory demand dated 5 April 2022 for $43,915.63 had been served by the plaintiff which had been paid in full within the statutory timeframe. This was a curious pleading as in this proceeding the plaintiff relies upon a statutory demand for $146,210.77 served on 3 March 2022. The statutory demand the defendant company referred to is another statutory demand issued by the plaintiff in respect of a further amount owed to it by the defendant company. The amount claimed in that further demand was for rent that fell due for payment on 1 April 2022 and is not the subject of this proceeding.

[5]                  The plaintiff filed a notice of opposition to the defendant company’s application on 31 May 2022. The notice of opposition was supported by an affidavit along with helpful written submissions.

1      High Court Rules 2016, rr 31.22 and 31.22.

[6]                  When the matter was called before the Court on 2 June 2022, Mr Paine advised that his client had, late on 1 June 2022, made a payment to the plaintiff which cleared all of the defendant company’s indebtedness to the plaintiff save in respect of an amount for rent that fell due on 1 June 2022. Ms Clark-Tahana, who appeared for the plaintiff, advised me the amount owed is a balance of $39,760.35 but it has not been the subject of any demand.

[7]                  Notwithstanding the payment made on 1 June 2022, the plaintiff continued to seek an order for liquidation. Mr Paine opposed the making of such an order. It appears, having heard from Ms Clark-Tahana, the plaintiff continues to seek a liquidation order because the defendant company remains indebted to it and because there are issues between the parties concerning a lease of land which the plaintiff feels would be resolved by the appointment of a liquidator. Mr Paine submitted that the Court has no jurisdiction to make a liquidation order. He submits the defendant company has proven, by the payments it has made, that it is not insolvent.

[8]                  Having heard from counsel, I advised them that I would require further evidence to consider the plaintiff’s position and adjourned the hearing to 30 June 2022 to allow that further evidence to be filed and responded to by the defendant company, if the plaintiff wished to pursue the matter.

[9]                  I also advised counsel that I intended to dismiss the defendant company’s application for leave to file its statement of defence out of time and award costs on that application to the plaintiff. Mr Paine objected to that course. He referred to the fact the defendant had made three large payments to the plaintiff since the proceeding was filed. I understood him also, initially, to maintain the position that the defendant company had paid the debt that was the subject of the proceeding before the last hearing. He referred to there being confusion about the actual amount owing which has now been cleared up and all debt, apart from the $39,760.35 due 1 June, has been paid.

[10]The evidence satisfies me that the following are the facts of this case:

(a)On 3 March 2022, the plaintiff served upon the defendant company a statutory demand for an amount of $146,210.77 which was made up as follows:

(i)Rent for lease of land under deed of lease dated 19 December 2019 being $131,746.89 ($43,915.63 payable on 1 January 2022, 1 February 2022 and 1 March 2022);

(ii)Interest payable on rent due 1 January and 1 February under the lease being $1,024.68 and $512.34 respectively; and

(iii)Invoice 74951 dated 30 November 2021 for $12,926.86 in respect of use of equipment.

(b)The statutory demand expired 15 working days later on 24 March 2022.

(c)On 30 March 2022, the plaintiff commenced this proceeding for the liquidation of the defendant company.

(d)On 11 April 2022, the defendant company made a payment to the plaintiff of $95,975.

(e)On 12 April 2022, the defendant company made a further payment to the plaintiff of $35,771.89.

(f)The effect of the two payments was that a balance was left owing under the statutory demand of $14,463.88.

(g)On 12 April 2022, the plaintiff served a further statutory demand in respect of rent due on 1 April 2022 amounting to $43,915.63.

(h)Also, on 12 April 2022, the defendant company was served with these proceedings.

(i)The defendant company had 10 working days from service to file a statement of defence but did not do so.

(j)On 22 April 2022, the plaintiff’s application was advertised in the Gazette.

(k)On 25 April 2022, the plaintiff’s application was advertised in the Otago Daily Times.

(l)On 1 May 2022 and 1 June 2022 further rent fell due for payment by the defendant company amounting to $87,831.26.

(m)On 5 May 2022, the matter came before the Court for the first time.

(n)On 1 June 2022, the defendant company made a further payment to the plaintiff which cleared the balance owing under the statutory demand (served on 3 March 2022) and all other sums owing by the defendant company to the plaintiff other than the rent of $39,760.35, being a balance of rent due 1 June 2022.

[11]              I understand the defendant company’s application relies upon r 31.20, although the notice of application does not refer to any High Court Rule or legal principles. Rule 31.20 provides:

31.20   Effect of failure to file statement of defence or appearance

If a person who is entitled to file a statement of defence or an appearance in a proceeding commenced by the filing of a statement of claim under rule 31.3 fails to file a statement of defence or an appearance within the time prescribed, that person must not, without an order for extension of time granted on application made under rule

31.22 or the special leave of the court, be allowed to appear at the hearing of the proceeding.

[12]The relevant principles are as follows:

(a)Liquidation proceedings should not be protracted for procedural reasons as the rules of the Court are designed to assist the speedy resolution of such proceedings.

(b)An applicant seeking an extension of time under r 31.20 must produce material of substance to justify the Court exercising its discretion or, in other words, that there is a proper foundation for the application.

(c)To obtain an extension of time under r 31.20 the applicant must establish that it has a genuine argument or defence to the claim. If the applicant can establish the threshold requirement, the Court may also consider whether the applicant is solvent, whether the applicant’s failure to file a statement of defence is reasonably explained and whether there is any prejudice to the plaintiff in granting the extension.

(d)The ultimate consideration that informs the exercise of the Court’s discretion is the overall justice of the case.2

[13]              Here, the defendant company had no grounds to seek an extension of time to file a defence. It had no defence. The only matter it raised was an assertion the plaintiff’s statutory demand had been satisfied in full prior to the hearing on 5 May 2022 when that was not the case. It advanced no other grounds of defence. Further, the defendant company filed no affidavit/s in support of its application and there was no evidence as to its solvency and no explanation for its failure to file a statement of defence within the time prescribed by r 31.17 of the High Court Rules 2016.

[14]              The plaintiff has been put to the cost and delay associated with opposing the application. It was inevitable, in the circumstances as I have described, that the defendant company’s application would be dismissed and that costs would follow the event and be payable to the plaintiff. It is appropriate that such costs be awarded on a 2B basis with any reasonable and necessary disbursements.

Result.

[15]              The defendant company’s application for leave to file a defence out of time is dismissed. The plaintiff is entitled to costs on a 2B basis and disbursements to be fixed by the Registrar.

2      Body Corporate 62870 v Health Distributors (Holdings) Ltd [2018] NZHC 1717 at [8].

[16]              This proceeding is adjourned to be called before the Court again at 10.00 am on 30 June 2022. If the plaintiff intends to maintain its position and seek to persuade the Court that an order for liquidation of the defendant company should be made (notwithstanding the defendant company’s payments) then it must have filed any further evidence by 16 June 2022. The defendant company shall have leave to be heard on that matter and file any evidence in reply by 23 June 2022.

O G Paulsen Associate Judge

Solicitors:

Argyle Welsh Finnigan, Ashburton G A Paine, Barrister, Dunedin