PMS Construction Limited (in liq) v Mira Sahib Company Limited HC Wellington CIV-2007-485-510

[2007] NZHC 1741

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2007-485-510

IN THE MATTER OF     The Companies Act 1993

BETWEEN  PMS CONSTRUCTION LIMITED (IN LIQUIDATION)

Plaintiff

ANDMIRA SAHIB COMPANY LIMITED Defendant

Hearing:         21 May 2007

Appearances: L. Pratley for Plaintiff

G. Manktelow for Defendant

Judgment:      21 May 2007

ORAL JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

[1]      In this proceeding the plaintiff applies for an order to place the defendant company into  liquidation  on  the basis  of  its  failure to  comply with  a  statutory demand served on the defendant on 24 January 2007 claiming payment of the sum of

$85,968.11.

[2]      On 3 April 2007 the defendant applied to this Court for an order restraining publication of advertising of the winding-up proceedings and sought a stay of those proceedings.  An interim order was made on this application on 3 April 2007.

[3]      As I understand the position, matters between the parties with respect to this proceeding have now been resolved upon some basis which they have agreed to, and

leave is sought for withdrawal of this proceeding.

PMS CONSTRUCTION LIMITED (IN LIQUIDATION) V MIRA SAHIB COMPANY LIMITED HC WN CIV-2007-485-510  21 May 2007

[4]      The withdrawal of the present liquidation proceeding by the plaintiff is made, I understand, on the basis that the plaintiff accepts now that liquidation proceedings were not appropriate against the defendant here.  This of course does not impact in any way upon the question whether other proceedings between the parties may be appropriate.

[5]      Leave to withdraw the proceeding is accordingly granted.

[6]      This leaves outstanding, however, an issue of costs between the parties.

[7]      Although it may seem somewhat surprising, costs are sought with respect to this proceeding by both the discontinuing plaintiff and the defendant.

[8]      The background to the plaintiff’s claim for costs, as I understand it, is broadly this:

a)        When the statutory demand was served upon the defendant on 24

January 2007, it is said  no  action  was  taken  by the  defendant  to oppose or set aside that demand.

b)Subsequently, the plaintiff on 12th  March 2007 filed its liquidation proceedings in this Court based upon the defendant’s non-compliance with the statutory demand.

c)       It is the plaintiff’s position, therefore, that it is entitled to costs at least up to the 12th  of March 2007 when the liquidation proceedings were issued.

[9]      It appears that particularly in response to the affirmations filed in this matter by Mr Sahib on behalf of the defendant, the plaintiff accepts that a continuation of the present liquidation proceeding was not appropriate.

[10]     In particular, in the second affirmation of Mr Sahib filed on 18 May 2007, a range of correspondence between counsel for the defendant and the liquidators of the

plaintiff is attached.  This correspondence appears to run from 16 March 2007 to 2nd

April 2007 and beyond.

[11]     It is the defendant’s position that in response to this correspondence, which sets out the true position from the defendant’s perspective, the plaintiff should have taken no further steps in this proceeding.

[12]     It appears, however, that this did not occur and that up to today, 21 May, the plaintiff was still indicating that it wished to proceed with its liquidation application.

[13]     That said, Mr Manktelow, counsel for the defendant, before me seeks costs against the plaintiff.

[14]     In doing so, he refers particularly to the general principle in r47(a) High Court Rules that the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.  In addition, Mr Manktelow notes the general requirement that a party who discontinues its proceeding should meet the costs of the other party.

[15]     Here Mr Manktelow for the defendant submits that costs should follow the event, and that in the light of the background to this matter, the defendant should be entitled to costs against the plaintiff.

[16]     As to the amounts sought by Mr Pratley on behalf of the plaintiff seeks by way of costs .8 of one day at a category 2B scale rate of $1,600.00, amounting to

$1,280.00 plus the $450.00 filing fee on the liquidation application.  In addition, he seeks costs for the appearance today.   Mr Manktelow has not quantified the defendant’s costs claim.

[17]     As best as I can tell from a cursory consideration of the matters before the Court in this proceeding, the situation between the parties is unfortunate to say the least.  Issues seem to arise over a range of dealings which took place between the parties, and a number of cross-claims and counterclaims have been signalled.

[18]     That said, I accept the plaintiff’s position, however, that when the statutory demand was served upon the defendant on 24 January 2007, no steps were taken, and on 12th March 2007 the plaintiff properly filed liquidation proceedings.

[19]     It has been suggested before me that the statutory demand was in some way not  drawn  to  the  attention  of  Mr  Sahib,  who  presumably  is  a  director  of  the defendant company.  As I understand it, however, no issue is taken as to whether the statutory demand was appropriately served upon the defendant, and I therefore must accept that service was properly effected.

[20]     That said, then clearly it is incumbent upon the defendant to take steps to respond to the statutory demand once served.  It seems that did not occur.

[21]     I find, therefore, that the plaintiff on the face of it is entitled to costs up to the filing of the liquidation proceedings on 12th March 2007.

[22]     What seems clear to me, however, is that subsequent to that time a number of dealings and some correspondence between the parties ensued which, on the face of it, should have satisfied the plaintiff that a continuation of this liquidation proceeding was not appropriate.

[23]     That said, in my view, an award of costs to the defendant for the period from

12th  March 2007 up to the present time may well be favourably considered by the

Court.

[24]     As I noted above, the whole background to this matter is unfortunate to say the least.

[25]     Although this is a rather rough and ready approach to take in this matter, I am of the view that although the plaintiff may well be entitled to costs up to the filing of this proceeding on 12th  March 2007, soon after that date the defendant should not have been required to incur the costs which it did to defend proceedings which should have been discontinued.

[26]     Given this, in my view the interests of justice in this case require that costs here should simply lie where they fall.  Although the plaintiff may be entitled to an award of some costs for the period up to 12th March 2007, as I have mentioned, this in turn as I see it would be met by the defendant’s claim for costs after that date.

[27]     There is therefore to be no award of costs made in this matter.  They are to lie where they fall.

‘Associate Judge D.I. Gendall’

Solicitors:

Lance Pratley Law, Wellington for Plaintiff

GW.D. Manktelow, Lower Hutt for Defendant