Outer Aspects Limited v Oliver Young Limited (in liq) HC Auckland CIV-2011-404-2749

[2011] NZHC 820

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-2749

UNDER  Section 290 and 291 of the Companies Act

1993

BETWEEN  OUTER ASPECTS LIMITED Applicant

ANDOLIVER YOUNG LIMITED (IN LIQUIDATION)

Respondent

Hearing:         29 July 2011

Appearances: Mr D Smyth for applicant

Mr M L Broad for respondent

Judgment:      29 July 2011

ORAL JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

Solicitors:

Mr David Smyth, Barrister, P O Box 105-270, Auckland – by email: [email protected]

Kensington Swan, Private Bag 92101, Auckland – by email: [email protected]

OUTER ASPECTS LIMITED V OLIVER YOUNG LIMITED (IN LIQUIDATION) HC AK CIV-2011-404-2749

29 July 2011

[1]      Unfortunately in this case there have been complications arising from the applicant’s non-compliance with the timetable directions given in this matter.   I regret that it was necessary to take these matters up with counsel and to indicate that the Court intended to take a firm line concerning the breaches.   The breaches in particular were that the applicant who was supposed to have filed and served any affidavit in reply by 16 June 2011 filed an affidavit which was described as “second affidavit” of Mr Moon 19 July 2011.  That is the affidavit was nearly a month out of time.  As well the affidavit according to the respondent was not restricted to matters in reply as the rules require but brought in fresh material.   Mr Broad for the respondent did not consent to any extension of time or any relaxation of the rules regarding the contents of the affidavit.

[2]      The  second  difficulty  was  that  the  synopsis  of  submissions  which  the applicant was required to file eight working days prior to the fixture did not reach the Court file until 28 July 2011.  Mr Smyth sought a direction that the affidavit which had been filed be read in any case.  He apologised for the delays.  As to the affidavit issue he said that because of the haste with  which the original application and supporting affidavit were required to be filed his client did not provide him with all of the documents including what Mr Smyth described as a important document, the printers agreement entered into between the parties.  Mr Smyth further said that the principal of the applicant company travelled frequently overseas and that had contributed to delays in preparing an affidavit raising further matters in opposition including the printers agreement. The purpose of the further affidavit was to use it as the foundation for submissions that were to be made by the applicant that because of breaches of the printers agreement there were counter-claims or set-offs available to the applicant additional to those which had been previously raised in the affidavit evidence.

[3]      As to the late filing of submissions, Mr Smyth, having apologised for that occurrence as well, told me that there was no excuse for it apart from the fact that he was under very considerable pressure with his work.  He said he had now engaged someone to assist him with his work.

[4]      In the end I directed that the matter was to proceed today.  I was prepared to extend time for the second affidavit of Mr Moon to be filed but I indicated that the provisions of the High Court rules would apply and no regard would be had to material contained in the affidavit which was not strictly in reply.  Mr Smyth then indicated to me that if the applicant was not able to refer to the new material then he would have to get instructions on withdrawing the application.

[5]      After I gave that indication I adjourned the Court so that counsel could take instructions.  Mr Smyth on his return to Court indicated that his instructions were to withdraw the application.   Mr Broad then made an application for costs and also sought an order under s 291 of the Companies Act 1993 giving a direction that the applicant pay the amount in the statutory demand within five working days.  Because I had not actually determined the application, which was withdrawn, I was left in some doubt whether I in fact had power to make an order extending time. The parties however make further submissions on that point and I will return to it later.

[6]      I  appreciate  that  filing  affidavits  in  support  of  applications  to  set  aside statutory demands can occur under pressure because of the tight time limits provided by the Companies Act.   It is understandable; too, that even a conscientious and careful effort on the part of the client to locate all relevant documents may still result in important issues not being brought to the attention of counsel.  However in this case I am quite unable to understand why the original affidavit, having been filed on

12 May 2011, it should take until the 19th  July for the applicant to come to the

realisation that a further affidavit was needed to put critical documents before the

Court.

[7]      It  was  open  to  the  applicant,  had  it  become  apparent  that  there  were omissions from the evidence, to seek amendments urgently to the timetable orders. If a proper explanation was given there is little doubt that the Court would have accommodated the difficulty.   Even had the applicant belatedly realised there was additional material (and not just material in reply) which needed to be filed, the timetable could have been re-worked to accommodate filing that evidence.

[8]      I do not except that the delays can be excused because Mr Moon travels frequently overseas.   While one could understand that there might be some brief delay I cannot accept that it is a serious explanation for the applicant taking the time it has to come forward with this second affidavit.

[9]      Mr Smyth made the point that if the further affidavit was not admitted in evidence it could result in an injustice being caused to his client.  I accept that the effect of my ruling would be to deprive the applicant of an evidential basis of arguing for the existence of additional set-offs and counter claims.   However, in order to do justice the Court must take into account the interests of other parties, and not just those of the applicant.

[10]     This is a commercial case it is one involving potential insolvency of the applicant.  Unnecessary delay in disposing of such litigation cannot be contemplated by the Court.  In this case timetable orders were made which were obvious and easy to understand – indeed they were made with the consent of counsel.

[11]     Further, the integrity of the case management system requires that timetables be given effect to.   It would be quite unacceptable if there developed a general practice of ignoring Court orders on the basis that hopefully an extension of time will probably be forthcoming from the Court.

[12]     I next deal with the late filing of the synopsis of submissions by the applicant. I accept that the Court has to show a proper understanding to counsel who find themselves  temporarily  embarrassed  by  an  unexpected  surge  in  their  workloads which makes it difficult for them to comply with their obligations to the Court.  It is of course a serious matter for anyone to fail to comply with a Court order but it is the more so when it is counsel who do not comply.  They have serious responsibilities to the Court and they, of all people, must understand the necessity for strict compliance with Court orders.

[13]     I do not consider that justification based upon counsel’s workload is good

enough.  Counsel has an obligation to control the amount of work that is taken on so

that it does not put them in a position where they cannot comply with the time limits which the Court has set.

[14]     I would hope that there will be no repetitions of this problem with counsel in the present case.

[15]     In  my view  the  balance  of  justice  in  this  case  required  that  this  matter proceed today.

[16]     Mr Smyth having indicated that the applicant would withdraw its application; Mr Broad seeks costs on a 2B basis and an order to that effect is not opposed by Mr Smyth and I order accordingly.   The order which was made by Associate Judge Christiansen 1 June 2011 extending time for compliance with the statutory demand is now discharged. Time for compliance with the statutory demand is extended without

opposition from Mr Smyth to 5 August 2011.

J P Doogue

Associate Judge