Queensland Maintenance Services (NZ) Limited v Queensland Maintenance Services (Pty) Limited (in liquidation)

[2015] NZHC 784

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV2014-404-002828 [2015] NZHC 784

BETWEEN

QUEENSLAND MAINTENANCE

SERVICES (NZ) LIMITED Applicant

AND

QUEENSLAND MAINTENANCE SERVICES (PTY) LIMITED (IN LIQUIDATION)

Respondent

Hearing:	On the papers
Counsel:	R Edwards for the Applicant A W Johnson for the Respondent
Judgment:	21 April 2015

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on

21.04.15 at 4:30pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

QUEENSLAND MAINTENANCE SERVICES (NZ) LIMITED v QUEENSLAND MAINTENANCE SERVICES (PTY) LIMITED (IN LIQUIDATION) [2015] NZHC 784 [21 April 2015]

[1]      On  11  March  2015  I  heard  an  application  to  set  aside  the  respondent’s statutory demand served on 15 October 2014.   Both parties were represented by experienced counsel.  In my conclusion I held the Court was satisfied regarding the integrity of the record maintained by the respondent to support claims of a debt due to it.  I then dismissed the application to set aside the statutory demand.  My decision was dated 13 March 2015.

[2]      On 17 April 2015 counsel for the respondent emailed the Court advising an issue has arisen as a result of my refusal to set aside the statutory demand.  Counsel enquires  whether  the  respondent  can  still  rely  on  the  statutory  demand  for  the purpose of issuing liquidation proceedings.  The respondent creditors concern was that 30 working days had elapsed since the 15 working day period after the statutory demand was served and therefore the statutory demand could not now be relied on.

[3]      Counsel submits it was implicit by my judgment that it was the Court’s intention to extend the time for compliance to after the date of judgment.  Counsel relies upon the decision of Venning J in Pakiri Investments v Adroit People Ltd, CIV

2012-404-004510, 19 November 2012.

[4]      Counsel  advises  my  judgment  has  not  been  sealed  and  therefore  the respondent seeks the recall of my judgment to address the fact that the Court’s attention  was  not  drawn to  a request  to  extend  the time for compliance of the statutory demand.

[5]      The evidence is that the statutory demand was served on 15 October 2014 requiring payment within 15 working days i.e. by 6 November 2014.   The Court made no order extending the time for compliance.   The evidence now is that no application for liquidation in reliance on the failure to comply with that statutory demand was filed by 18 December 2014.

[6]      It is clear from my decision dated 13 March 2015 that there was no evidence before the Court of a request to extend the time for compliance with the statutory demand.   It was not an issue raised upon or in the outcome of the setting aside application.

[7]      Counsel advises my decision is subject to an appeal to the Court of Appeal.

[8]      Apparently  the  respondent  has  filed  an  application  for  liquidation.    The applicant has invited the respondent to withdraw that application on the grounds it cannot succeed in light of the affect of s 288(1) of the Companies Act 1993 because the statutory demand is stale, the application for liquidation not having been filed by

18 December 2014.

[9]      In response the applicant has filed a memorandum opposing the recall of my judgment.  Alternatively, if the recall is granted the applicant could request time for compliance with the statutory demand being extended to 15 working days after the determination of the appeal by the Court of Appeal.

[10]     The applicant has appealed my judgment.  A notice of appeal has been filed and served.  Following service the respondent served liquidation proceedings on the applicant.  In response counsel for the applicant wrote to counsel for the respondent on 16 April 2015 highlighting the affect of s 288 of the Companies Act 1993 and inviting the withdrawal of the liquidation proceedings.

[11]     A restraint of advertising/stay application is being prepared for filing no later than today.

[12]     It is the applicant’s case that:

(a)      Recall of the judgment is not appropriate because extensions of time were  not  sought  by either  party at  the  hearing  and  there  was  no discussion at all about the time for compliance.

(b)Section 288(1) was overlooked by counsel and the hearing proceeded on the basis of a stay of demand.

(c)      If the respondent was going to rely on non compliance of the statutory demand as evidence for insolvency then it was its responsibility to ensure  compliance  with  s   288(1)  i.e.  for  any  application   for

insolvency to be based on the failure to comply with service of the statutory demand.

[13]     It is clear the respondent did not file liquidation proceedings within the s

288(1) 30 day period, nor did it seek an extension of time for compliance pending determination of the setting aside application.  In the latter case most likely a request for an extension of time until a date beyond the determination of the setting aside application would usually have been granted.

[14]     Ms Edwards' submission is that the underlying purpose of s 288 is to ensure that there are no changes in the circumstances between the date of non compliance with the statutory demand and liquidation is correct.  She submits it is a matter of substance and not a mere technicality.   In this case the respondent now wants to proceed to liquidation approximately 6 months after service of the statutory demand. Ms Edwards submits that a recall application and a retrospective granting of an order extending time would be inconsistent with the statutory purpose underpinning s 288; that recall should not be used as a tool to retrospectively patch up evidence of insolvency in a liquidation proceeding or bypass the statutory purpose of s 288.

[15]     If the respondent had to serve a fresh statutory demand it could be expected that the applicant would file a further application to set it aside.  The Court need not necessarily assume the same evidence would be before it upon a setting aside application.

Decision

[16]     It appears the applicant’s appeal is being pursued with appropriate expedition.

Present indications suggest it should be heard before the end of this year.

[17]     In the normal course and upon request an unsuccessful applicant to set aside a statutory demand would have been granted a 10 – 15 working day extension of time within which to make payment in compliance with the statutory demand.  Typically that application is made when the application to set aside the statutory demand is heard by the Court.

[18]     The  application  to  set  aside  a  statutory  demand  does  not  automatically operate to provide such an extension of time affecting the requirement to file an application for liquidation.

[19]     In this case neither counsel directly drew the Court’s attention to the fact that the respondent’s interests were also affected if the time for compliance with the statutory demand was not extended.

[20]     Rule 11.9 enables a Judge to recall a judgment at any time before it is sealed. The Court considers it is appropriate in the circumstances to recall the judgment of

21 April 2015.   The Court focussed upon an application to set aside a statutory demand.   Routinely if such applications are not successful the Court will upon request extend the time for compliance of that demand.

[21]     In this case it was overlooked by both parties (otherwise the applicant’s counsel would likely have mentioned it) that the time had expired for the filing of a liquidation proceeding anyway.

[22]     Had the Court been asked to extend the date for compliance with the statutory demand then that would have alerted the creditor to the requirement for filing a liquidation proceeding within time.

[23]     Had an extension of time been requested then it would certainly have been granted.

[24]     For those reasons the application for recall is granted.

[25]     There will be an order extending time for compliance with the statutory demand until 1 May 2015.

Associate Judge Christiansen