Platinum Direct Limited v Micheel Limited

[2014] NZHC 125

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2013-404-4489 [2014] NZHC 125

UNDER  The Companies Act 1993

BETWEEN  PLATINUM DIRECT LIMITED Plaintiff

ANDMICHEEL LIMITED Defendant

Hearing:                   10 February 2014

Appearances:           Mr Beresford for Plaintiff

Mr R Lewis for Defendant

Judgment:                10 February 2014

ORAL JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

PLATINUM DIRECT LIMITED v MICHEEL LIMITED [2014] NZHC 125 [10 February 2014]

[1]      This liquidation proceeding was called before the Court on 9 December 2013 and adjourned for advertising etc to today.  On 7 February, that is last Friday today being  a  Monday,  the  solicitor  instructed  by  the  defendant  filed  a  statement  of defence.   The statement of defence was well out of time because the proceedings were served on the defendant on 14 November 2014 and accordingly a statement of defence was due on or about 29 November 2014.  No formal application was filed for leave to file a statement of defence and no affidavit was filed either.  It follows therefore from the provisions of r 31.20 that a  defendant in the position of the present one cannot be heard unless leave is granted under r 31.22 or that special leave of the Court is forthcoming.  I was referred to the decision of Patterson J in Fresh Cut Flower Wholesalers Limited and in particular to paragraph [9] of that judgment  where  the  Judge  opined  that  leave  should  not  be  granted  unless  the applicant shows on the papers an arguable basis upon which it is not liable for the amount claimed and further even if there was an arguable defence that leave should not be granted if the applicant is insolvent.  As it happened in the Fresh Cut Flower case an affidavit had been filed setting out the reasons for delay.

[2]      Mr Lewis in statements made from the bar has sought to justify the inaction of the defendant company in filing a statement of defence.   Essentially Mr Lewis told me that the instructions he had received came from an intermediary but for various reasons it was not possible for him to complete a statement of defence until he returned to his office in February this year following the Christmas break from presumably around Christmas until now.   While he had prepared on behalf of the defendant a draft affidavit it had not been possible to have that finalised and sworn.

[3]      In addition to the matters that Patterson J took into account in the Fresh Cut Flower case it is necessary for the Court to remind the parties that the power to extend time for filing of statement of defence is a discretion which can only be exercised in cases where a proper foundation has been laid.  In the commentary to r 19.01 of the Rules McGechan refers to the well known decision of Ratnam v

Cumarasamy which requires before taking some step to have material before it as a basis upon which it can exercise its discretion: 1

The rules of Court must prima facie be obeyed, and in order to justify a Court in extending the time during which some step in procedure requires to be taken there must be material upon which the Court can exercise its discretion.  If  the  law  were  otherwise,  a  party in  breach  would  have  an unqualified right to an extension of time which would defeat the purpose of the rules, which is to provide a timetable for the conduct of litigation.”

[4]        In my view all that I have been told in this case is that the defendants for various reasons delayed going to see a lawyer which was a necessary precursor to getting their documents filed.  There is no substantial material which deals with the reasons for delay and so that is one matter which tells against the application for extension of time.  The second is that there is not, as there was in Fresh Cut Flowers, an affidavit from the company dealing with the substance of any defence which was sought to be relied upon and nor is there anything said in affidavit form about the solvency of the company.  Further there has been a major lapse of time here.  This is not a matter of a minor failure to comply with time limits because as I have said the defendant ought to have its statement of defence in by the end of November 2013 even allowing for the intervention of a period during the Christmas vacation when it might not have been practicable to get legal assistance, the extent of the delay is unexplained.  For all of these reasons in my view the defendant has not made out proper and substantial grounds for an extension of time within which to file the statement of defence in this proceeding and I decline the oral application made on its behalf by counsel for such an extension.  The statement of defence therefore is struck out and the matter will proceed on the basis that the defendant will not be heard on

it.

J.P. Doogue

Associate Judge

1   Ratnam v Cumarasamy [1965] 1 WLR 8, [1964] 3 All ER 933 (PC) at 12 and 935.