Red Jack Resources Limited v Smith Diesel Services Limited - [2019] NZHC 1776

IN THE HIGH COURT OF NEW ZEALAND GREYMOUTH REGISTRY

I TE KŌTI MATUA O AOTEAROA MĀWHERA ROHE

CIV-2019-418-14

[2019] NZHC 1776

BETWEEN
RED JACK RESOURCES LIMITED

Applicant

AND

SMITH DIESEL SERVICES LIMITED

Respondent

Hearing: 16 July 2019

Appearances:

D M Jackson for Applicant

J B Orpin-Dwell for the Respondent

Judgment:

26 July 2019

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 26 July 2019 at 1.00pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 26 July 2019

RED JACK RESOURCES LTD v SMITH DIESEL SERVICES LTD [2019] NZHC 1776 [26 July 2019].

[1] The applicant seeks an order setting aside a statutory demand issued by the respondent demanding payment of $633,890.84. Attached to the statutory demand was a statement of the account between the parties showing all debits and credits. The amount claimed is the balance outstanding under the parties’ trading relationship which commenced in March 2017 and concluded in October 2018.

[2] The respondent is a company based in Hokitika and provides earthmoving services and maintenance and repairs of diesel machinery, mining management and plant hire.

[3] Initially, the applicant, which operates a gold mine in Awatuna on the West Coast, engaged the respondent to carry out work on earthmoving equipment. The amounts charged for this work were relatively modest with no invoice exceeding
$2,000 for the first five months or so of trading.

[4] The applicant completed an Account Opening Form dated 4 July 2018 which records the director of the applicant as being Mr Wei Fang. Mr Jerry Hu is given as the “accounts payable contact name” and an email address is given to which invoices and statements can be sent.

[5] Mr Jackson, appearing for the applicant, advised from the Bar (without objection) that the bank account for the applicant could be operated by Mr Hu and Mr Fang only.

[6] The parties’ trading relationship entered a new phase when they entered what they refer to as the “Stripping Contract” dated 3 October 2017. This Stripping Contract was to remove the overburden at the applicant’s mining site. The Stripping Contract specified the charge for the removing of overburden was $3.30 per m2. The Stripping Contract listed the equipment that the respondent would commit to the work. It also provided for the respondent to hire equipment owned by the applicant for use on the job, set out the hire rates for the applicant’s plant to be used by the respondent, and the division of maintenance obligations in respect of that plant.

[7] Once work under the contract got underway, the level of charges increased significantly. Monthly invoices for the removal of overburden when the project was up and running were not less than $200,000 and up to $425,000.

[8] In addition to the monthly overburden invoices there were further invoices for other services provided by the respondent.

[9] The applicant made irregular, generally round sum payments, against the invoices. For example, in April 2018 there were six round sum payments…

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 Red Jack Resources Limited v Smith Diesel Services Limited

Details

AGLC: Red Jack Resources Limited v Smith Diesel Services Limited [2019] NZHC 1776
Case: [2019] NZHC 1776
Decision Date: 26 July 2019

CaseChat Overview and Summary

Red Jack Resources Limited sought to set aside a statutory demand issued by Smith Diesel Services Limited demanding payment of $633,890.84. The demand was issued under s 290 of the Companies Act 1993 and the legal dispute centred on the validity of the demand and the amount claimed. The High Court had to determine whether Red Jack Resources Limited had established a reasonably arguable basis for disputing the statutory demand and, if so, to what extent.

The Court found that Red Jack Resources Limited had not established a reasonably arguable counterclaim in respect of the Martin invoices, the Category Two invoices, the hire of the dump truck, or the sale of the dump truck. The Court did, however, find that Red Jack Resources Limited had established a reasonably arguable counterclaim in respect of the pump costs and the damage to the access road, site plant, and excavator. The Court set aside the statutory demand to the extent of $185,057.75, leaving $427,178.59 properly claimed by the demand. The Court extended the time for complying with the statutory demand by 10 working days and ordered that Red Jack Resources Limited pay the amount of $427,178.59 within 10 working days of the judgment. In default of payment, the respondent may make an application to put the applicant into liquidation. Costs were reserved.

In summary, the Court found that Red Jack Resources Limited had not established a reasonably arguable basis for disputing most of the statutory demand, but had established a basis for disputing some of the claims. The Court set aside the statutory demand to the extent of the reasonably arguable counterclaims and ordered Red Jack Resources Limited to pay the remaining amount claimed within 10 working days of the judgment.

Orders