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Principle Developments Limited v Slotemaker

Principle Developments Limited v Slotemaker

Case [2022] NZHC 2283 8 September 2022

Statutory Interpretation

Commercial Law

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IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2022-442-000018

[2022] NZHC 2283

UNDER the Companies Act 1993

IN THE MATTER

of an application to set aside a Statutory Demand

BETWEEN

PRINCIPLE DEVELOPMENTS LIMITED

Plaintiff

AND

DYLAN SLOTEMAKER

Defendant

Hearing: 4 July 2022

Appearances:

A G Stallard for Applicant R J D Fitchett for Defendant

Judgment:

8 September 2022

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 8 September 2022 at 10.30 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

PRINCIPLE DEVELOPMENTS LTD v SLOTEMAKER [2022] NZHC 2283 [8 September 2022]

Table of Contents

Para No

Introduction [1]

Background

[5]

Setting aside statutory demands – the principles

[24]

Principles of interpretation

[26]

The evolution of cl 25.1

[30]

Issue 1 – Has PDL shown it is fairly arguable that it did not breach cl 25.1 in either of the respects alleged?

Size of the building platform

[37]

The earthworks [56]

Issue 2 – If PDL did breach the agreement as alleged, did that entitle Mr Slotemaker to cancel the agreement?

[71]

Issue 3 – If Mr Slotemaker cancelled the agreement did the deposit become a debt due and owing by PDL for the purposes of s 289 Companies Act

[72]

Issue 4 – Is PDL entitled to an order setting aside statutory demand because it is solvent?

[76]

Issue 5 – The residual discretion

[79]

A final matter

[81]

Result

[84]

Introduction

[1] Principle Developments Ltd (PDL) entered into a written agreement to sell to the defendant, Dylan Slotemaker (Mr Slotemaker), a property in the Skylark Rise subdivision at Atawhai, Nelson. It is an elevated sloping property and offers rural and sea views from a building platform PDL created on the site.

[2] Mr Slotemaker has purported to cancel the agreement. He says that in breach of an essential term of the agreement PDL undertook earthworks in the vicinity of the building platform, and the building platform is not 800m² as approved, certified and defined by PDL’s resource consent.

[3] Mr Slotemaker served a statutory demand upon PDL requiring repayment of his deposit of $100,000. PDL does not accept that it breached the agreement, that Mr Slotemaker has validly cancelled the agreement, or that Mr Slotemaker is entitled to repayment of the deposit. It applies to set aside Mr Slotemaker’s statutory demand under s 290(4)(a) of the Companies Act 1993 on the ground there is a substantial dispute whether or not there is a debt owing or due to Mr Slotemaker.

[4]The issues that arise are the following:

(a)Has PDL shown it is fairly arguable that it did not breach the agreement in either of the respects alleged?

(b)If PDL did breach the agreement, did that entitle Mr Slotemaker to cancel the agreement?

(c)If Mr Slotemaker cancelled the agreement, did the deposit become a debt due and owing by PDL to Mr Slotemaker?

(d)Is PDL entitled to an order setting aside the statutory…

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 Principle Developments Limited v Slotemaker

Details

AGLC: Principle Developments Limited v Slotemaker [2022] NZHC 2283
Case: [2022] NZHC 2283
Decision Date: 8 September 2022

CaseChat Overview and Summary

Principle Developments Limited (PDL) applied to set aside a statutory demand issued by Dylan Slotemaker (Mr Slotemaker), pursuant to section 290(4)(a) of the Companies Act 1993, on the basis that there is a substantial dispute as to the existence of the debt. The parties had entered into an agreement for the sale of part of Lot 55 in the Skylark Rise subdivision at Atawhai, Nelson. The agreement included a clause prohibiting PDL from repositioning or altering the existing building platform or carrying out any earthworks in the vicinity of the building platform. Mr Slotemaker cancelled the agreement and served a statutory demand on PDL for repayment of the deposit, claiming that PDL had breached the agreement by altering the building platform and carrying out earthworks in the vicinity of the building platform.

The court found that there was a substantial dispute as to the existence of the debt, and therefore the statutory demand was set aside. The court found that it was fairly arguable that PDL had not breached the agreement in either of the respects alleged by Mr Slotemaker. The court found that the term "existing building platform" referred to the building platform that was created and inspected by Mr Slotemaker, and not the building platform shown on the plan in RM145151V2. The court also found that it was fairly arguable that PDL did not breach the agreement by carrying out earthworks in the vicinity of the building platform, as the purpose of the clause was to ensure the building platform was not repositioned or altered and to preserve the outlook from it. The court found that if PDL had breached the agreement, it would have entitled Mr Slotemaker to cancel the agreement. However, the court did not need to determine this issue as it had already found that there was a substantial dispute as to the existence of the debt.

The court also found that the solvency of PDL was unlikely to be a stand-alone ground for setting aside the statutory demand. The court found that even if PDL had provided satisfactory evidence of its solvency, it would not have been a sufficient basis to set aside the statutory demand. The court further found that it was not appropriate to exercise its residual discretion to refuse to set aside the statutory demand, as PDL had raised a dispute prior to filing its submissions. The court did not have regard to a memorandum filed by Mr Slotemaker after the hearing, as it was new information and irrelevant to the application.

Orders