Prosec Group Limited v Rentmax Limited - [2023] NZHC 3612

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-001368

[2023] NZHC 3612

BETWEEN
PROSEC GROUP LIMITED

Plaintiff

AND

RENTMAX LIMITED

Defendant

Hearing: 16 November 2023

Appearances:

R Latton for the Plaintiff

J R Duckworth for the Defendant

Judgment:

11 December 2023

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 11 December 2023 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

Jennifer G Connell And Associates, Auckland NZ Property Law, Auckland

R Latton, Auckland

PROSEC GROUP LTD v RENTMAX LTD [2023] NZHC 3612 [11 December 2023]

Introduction

[1] The plaintiff, Prosec Group Ltd (Prosec) applies to have the defendant, Rentmax Limited (Rentmax) placed into liquidation, based on its failure to comply with a statutory demand served on it. Rentmax applied to set aside the statutory demand but did not properly serve the application within the statutory timeframe. It subsequently withdrew its application.

[2] Prosec claims that Rentmax owes it $200,039.52 (the Debt), being amounts due and owing under four invoices issued pursuant to a Heads of Agreement dated 29 September 2021 (the Heads of Agreement). Under the Heads of Agreement, Rentmax and H & M Remuera Limited (H & M) agreed that H & M would refer rental properties to Rentmax for it to manage. In return, Rentmax would pay H & M a referral fee.

[3] Rentmax opposes the application. In its statement of defence, it set out three grounds: that the Heads of Agreement was with H & M, not the plaintiff, Prosec; that it is solvent and able to pay its debts as they fall due; and that it has a set-off or counterclaim for a sum that exceeds the Debt.

[4] Rentmax’s submissions and evidence focus on the first ground only — that Prosec is unable to bring liquidation proceedings as it is not party to the Heads of Agreement. Consequently, it says, there is a genuine and substantial dispute over whether the Debt is owing and due.

[5] Prosec responds that the Heads of Agreement was novated to it by H & M, it is the correct creditor, and there is no genuine or substantial dispute over the Debt.

[6] The issue can be framed in two potential ways. Either Prosec is not the contracting party and is therefore not a creditor and the Court has no jurisdiction to appoint a liquidator to Rentmax under s 241 of the Companies Act 1993 (the Act); or there is a genuine and substantial dispute about whether Rentmax owes the Debt to Prosec.

[7] Whichever way the issue is framed, the liquidation application turns on whether Rentmax owes the Debt to Prosec, as Prosec claims.

Facts

[8] The facts are set out in affidavits sworn by Martin Talbot for Prosec and Joel Thompson for Rentmax. Mr Talbot and his wife Hang Thi Thu Nguyen (also…

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.

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Details

Case: [2023] NZHC 3612
Decision Date: 11 December 2023

CaseChat Overview and Summary

Prosec Group Limited (Prosec) sought to have Rentmax Limited (Rentmax) placed into liquidation on the basis of Rentmax's failure to comply with a statutory demand. Rentmax applied to set aside the statutory demand, but it did not serve the application within the statutory timeframe and subsequently withdrew it. Prosec claimed that Rentmax owed it $200,039.52, which was due and owing under four invoices issued pursuant to a Heads of Agreement dated 29 September 2021. Rentmax opposed the application, arguing that it was not liable to Prosec and that there was a genuine and substantial dispute over whether the debt was owing and due. The key issue before the court was whether Rentmax owed the debt to Prosec, as Prosec claimed. The court considered whether there was a genuine and substantial dispute over whether Rentmax owed the debt to Prosec. Rentmax argued that it was not liable to Prosec, as Prosec was never a party to the Heads of Agreement. Prosec argued that the Heads of Agreement was novated to it by H & M Remuera Limited (H & M). The court found that the facts did not objectively indicate an intention by H & M to novate the Heads of Agreement to Prosec; and Rentmax’s consent to such a novation. The court concluded that there was a genuine and substantial dispute over whether Rentmax owed the debt to Prosec. The court dismissed Prosec’s application for an order appointing a liquidator to Rentmax, as it was not appropriate for the court to place Rentmax in liquidation where there was a genuine and substantial dispute as to whether the debt was owing and due. The court noted that Rentmax did not dispute that it was liable for the referral fees up until H & M was removed from the Companies Register, and hoped that the parties might be able to resolve at least that part of the dispute without further litigation. The court considered that Rentmax was entitled to costs, and on a 2B basis. If costs could not be agreed, the parties were to file written submissions of not more than three pages within 14 days.

Orders