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

[2015] NZHC 2668

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2015-404-717 [2015] NZHC 2668

UNDER

the Companies Act 1993

IN THE MATTER

of the liquidation of QUEENSLAND MAINTENANCE SERVICES (NZ) LTD

BETWEEN

QUEENSLAND MAINTENANCE SERVICES (PTY) LIMITED (IN LIQUIDATION)

Plaintiff

AND

QUEENSLAND MAINTENANCE SERVICES (PTY) LTD

Defendant

Hearing:	29 October 2015
Counsel:	M Heard and L Clews for Defendant A W Johnson for Plaintiff
Judgment:	29 October 2015

(ORAL) JUDGMENT OF HEATH J

Solicitors:

Lee Salmon Long, Auckland

Martelli McKegg, Auckland

QUEENSLAND MAINTENANCE SERVICES (PTY) LIMITED (IN LIQUIDATION) v QUEENSLAND MAINTENANCE SERVICES (PTY) LTD [2015] NZHC 2668 [29 October 2015]

The application

[1]      This is a defended liquidation proceeding that has been set down for hearing on 2 and 3 November 2015.   Queensland Maintenance Services (Pty) Ltd (In Liquidation) (QMS Australia) applies to have an associated company, Queensland Maintenance Services (NZ) Ltd (QMS New Zealand) put into liquidation.

[2]      QMS New Zealand seeks an adjournment of the hearing on the grounds that late notice of an intention to cross-examine two witnesses, Mr Zullo and Mr Whimp, has been given and that it is inappropriate for the hearing to proceed in the absence of ready availability on their part.

Background

[3]      QMS Australia was placed in liquidation by order of the Federal Court of Australia on 18 December 2012.1   Mr Zullo was a director of QMS Australia, and is a director of QMS New Zealand.

[4]      In  an  Amended  Statement  of  Claim,  QMS  Australia  seeks  the  sum  of

AUD$607,718.60, together with accrued interest from 6 June 2014 at the rate of

6 percent per annum.  A statutory demand was served.  Application to set aside the statutory demand was made by QMS New Zealand.   That was unsuccessful.2    An appeal against that decision was later abandoned.

[5]      On 23 July 2015, a case management conference was held before Associate Judge Bell.  He made certain directions involving pleading, discovery and evidence. As part of his directions on the hearing, the Judge recorded that there was a “possibility of cross-examination” of witnesses in Queensland.   He directed that arrangements would need to be made for evidence to be given by audio-visual link.3

Subsequently that has occurred.

1      Lucas, In the Matter of Queensland Maintenance Services (Pty) Ltd (in liq) (Receivers and Managers Appointed) v Queensland Maintenance Services (Pty) Ltd (in liq) (Receivers and Managers Appointed) [2012] FCA 1451 at para [162].

2      Queensland Maintenance Services (NZ) Ltd v Queensland Maintenance Services (Pty) Ltd (In

Liquidation) [2015] NZHC 450.

3      Re Queensland Maintenance Services (NZ) Ltd HC Auckland CIV-2015-404-717, 23 July 2015 at para [15].

Should an adjournment be granted?

[6]      Mr Heard, for QMS New Zealand, points to the fact that notice requiring Mr Zullo and Mr Whimp for cross-examination was not given until 16 October 2015.  In fact r 9.74(1) and (2) of the High Court Rules makes it clear not less than three working days notice before the date fixed for trial, must be given if cross- examination of a person who has sworn an affidavit is required.  If the person does not attend for cross-examination, the primary rule is that the affidavit may not be used as evidence unless there are exceptional circumstances and the Court grants

leave to the contrary.4

[7]      The issue is whether the grounds put forward by Messrs Zullo and Whimp are sufficient to justify an adjournment.  Each has filed an affidavit in support of the application.   Each relies on business commitments that prevent attendance for an audio-visual link on 3 November 2015.

[8]      Neither, in my view, provides sufficient specificity in relation to the problems involved with attendance.  If these people were in business in New Zealand and had been served with a subpoena to attend at Court to give evidence, it is highly unlikely that grounds would exist to set aside the subpoena.

[9]      As   audio-visual   link   arrangements   have  been   made  to   facilitate  the attendance of the two witnesses in Queensland, they are not under any obligation to travel to New Zealand.   I am not satisfied that their evidence goes far enough to persuade me that they cannot reorganise their business affairs to attend for cross- examination.  Indeed, given the importance that Mr Zullo appears to have attached to this proceeding (in the steps taken to prevent the proceeding coming to a hearing) to date, it would be surprising if other commitments could not be deferred to enable these issues to be addressed.

[10]     In those circumstances, I decline to grant an adjournment.  The hearing will proceed on 2 and 3 November 2015 as scheduled.

4      High Court Rules, r 9.74(3).   See also, McGechan on Procedure (looseleaf ed) at para HR

9.74.01.

[11]     I make clear, however, the following points which I raised with counsel.

(a)      First, in the event that further information were available it would be open to Mr Heard to renew the application before the Associate Judge who will hear the proceeding next week.

(b)Second, the issue as to the debt appears to be whether QMS Australia can prove a sum of more than $1000 is payable.5   Depending upon the amount that the Judge was persuaded was payable, a question as to whether the discretion to order liquidation should be exercised arises. An important factor in that regard is the appeal being run in Australia by QMS Australia in respect of a tax debt.

[12]     A third issue concerns the way in which the proceeding might be run.  I drew counsel’s attention to Bateman Television Ltd (in liq) v Coleridge Finance Co Ltd,6 in which the Privy Council commented on the circumstances in which a Court may decide to determine the validity of a debt on the hearing of a liquidation application, even though there were a genuine dispute about it.   Delivering the advice of the Privy Council, Lord Upjohn said:

…  It  was  argued  that  as  the  debts  in  question  were  disputed  debts  no winding  up  order  should  have  been  made,  and  for  this  purpose  their Lordships are prepared to assume that the debts were genuinely disputed debts.

In such cases the general rule is, no doubt, that no order will be made on a petition founded on such debts.   But each case must depend upon its own circumstances and it is a question for the discretion of the Judge; a discretion to be exercised judicially, which is not open to review unless it is shown to be exercised on some wrong principle, or that the Judge relied on some fact irrelevant for the purpose, or omitted consideration of a relevant fact or finally that he was wholly wrong.  As their Lordships have already pointed out, the disputed questions of indebtedness were fully investigated in a lengthy  hearing  before  the  learned  Judge  with  oral  and  documentary evidence and he held that both the appellant companies were insolvent. …

[13]     All of those are points that counsel may wish to raise.  Also, it will be open for Mr Heard to apply to the court to have the affidavits read in the event that Mr

5      Companies Act 1993, s 289(2)(a) and Companies Act 1993 Liquidation Regulations 1994, reg 5.

6      Bateman Television Ltd (in liq) v Coleridge Finance Co Ltd [1971] NZLR 929 (PC).

Zullo  and  Mr  Whimp  make  a  deliberate  decision  not  to  attend  for  cross- examination.7

Result

[14]     The application for adjournment is dismissed.

[15]     I reserve the question of costs on today’s application to be determined by the

Associate Judge as part of the substantive proceeding.

P R Heath J

7      High Court Rules, r 9.74(3).