Rentranz Limited v S.M.S Diesel Limited

[2013] NZHC 993

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-6754 [2013] NZHC 993

IN THE MATTER OF     the Companies Act 1993

BETWEEN  RENTRANZ LIMITED Applicant

ANDS.M.S DIESEL LIMITED Respondent

Hearing:         7 May 2013

(Heard at Auckland)

Counsel:         R.R. Renata - Director of the Applicant (and on behalf of the

Applicant)
S. Davies - Counsel for the Respondent

Judgment:      7 May 2013

ORAL JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

Solicitors:           Davies Law, Solicitors, PO Box 15547, Auckland

RENTRANZ LIMITED V S.M.S DIESEL LIMITED HC AK CIV-2012-404-6754 [7 May 2013]

Introduction

[1]      Before the Court is an opposed application by the applicant to set-aside a statutory demand issued against it by the respondent.  The statutory demand in question is dated 23 October 2012 and claims a total sum of $50,428.20.   This amount is said to represent an amount of $47,372.10 for outstanding vehicle repair invoices issued by the respondent from May 2012 to July 2012, together with the sum of $3,056.10 being interest on the outstanding invoices.

[2]      That  statutory demand  was  served  on  the  applicant  I  understand  on  30

October 2012.

[3]      Subsequently, on 13 November 2012 an application was filed in this Court by the applicant to set-aside the statutory demand.

[4]      There is  no  evidence before  me  from  the  applicant  to  confirm that  the application to set-aside the statutory demand and any supporting material was served upon the respondent. More on this aspect later.

[5]      The application to set-aside the statutory demand, however, was supported by an affidavit of Rodney Rangimoana Renata (Mr Renata), a director of the applicant, sworn 13 November 2012.

[6]      The present application is opposed by the respondent.  It has filed a Notice of

Opposition to the application together with a range of supporting affidavits.

Preliminary Matter

[7]      Before me today, Mr Renata a director of the applicant, sought leave to appear on behalf of the applicant. He is not legally qualified.

[8]      Mr Davies for the respondent essentially did not oppose the granting of leave for that to occur. Leave was accordingly granted.

[9]      Both Mr Renata and Mr Davies who appeared before me then indicated that the hearing of the application to set-aside the statutory demand should proceed today.

[10]     Prior  to  that  happening,  certain  discussions  had  taken  place  regarding possible offers in partial settlement of the debt claimed by the respondent here, but those discussions did not come to fruition.  As a result, both parties requested that I hear the formal opposed application and provide a decision which I now do.

Background Facts

[11]     The applicant, as  I understand it, is  a commercial transporting company which for some time has operated a fleet of vehicles.

[12]     The indications before me today, however, are that the applicant is no longer carrying on business itself and that it has ceased to operate its business for some little time.

[13]     The respondent, as I understand it, provides mechanical servicing to diesel and other vehicles and over the years has undertaken a range of repair jobs for the applicant.

[14]    Material before me seems to indicate that over a period of some time the applicant periodically was in arrears with respect to its repair accounts with the respondent. This I am told culminated in 2012 in the respondent ceasing to carry out repair work for the applicant on its trucks for a period of a month or two awaiting settlement of outstanding accounts.  Those accounts had been incurred prior to the time the matters now before the Court arose.

[15]     As noted above, the present statutory demand was issued for a number of outstanding accounts totalling some $47,000.00 incurred by the applicant between May and July 2012.  It does seem that no payment of any major kind has been made towards these outstanding accounts by the applicant.  As will appear later in this judgment, the position of the applicant in its present application is simply that there

is claimed to be a substantial and genuine dispute concerning the accounts which form the basis of the statutory demand.

The Parties’ Arguments and my Decision.

[16]      The present application is brought pursuant to s 290(4) of the Companies Act

1993.  This provides essentially that the Court may grant an application to set-aside a statutory demand if it is satisfied first, that there is a substantial dispute whether or not the debt in question is owing or is due or secondly, that the company appears to have a counterclaim, set-off or cross-demand that exceeds the debt in question.

[17]     The principles relating to s 290(4) Companies Act 1993 are well settled.  The authors of Brookers Insolvency Law & Practice provide the following succinct summary at para CA290.02.

CA290.02          Setting aside a statutory demand

(1)        General principles

The general principles applicable to applications under s 290(4) are now well established. These principles, which can be discerned from cases such as United Homes (1988) Ltd v Workman [2001] 3 NZLR 447; (2001) 9

NZCLC 262,605 (CA); Fletcher Homes Ltd v Ellis 23/7/99, Master Faire, HC Auckland M471IM99; Forge Holdings Ltd v Kearney Finance (NZ) Ltd 20/6/95, Tipping J, HC Christchurch M149/95; Queen City Residential Ltd  v  Patterson  Co-Partners  Architects  Ltd  (No  2)  (1995)  7  NZCLC

260,936; Rennie v Prospect Resources Ltd 3/11/95, Tipping J, HC Greymouth  M14/95;  Crown  Transport  Services  Ltd  v  Waipa  District

Council 2/7/08, Associate Judge Faire, HC Hamilton CIV-2007-419-1711;

and Taxi Trucks Ltd v Nicholson [1989] 2 NZLR 297; (1989) 1 PRNZ 390 (CA), are as follows:

(a)       The applicant must show that there is arguably a genuine and substantial dispute as to the existence of the debt. The task for the Court is not to resolve the dispute but to determine whether there is a substantial dispute that the debt is due. The mere assertion that there is a genuine substantial dispute is not sufficient: Queen City Residential Ltd v Patterson Co-Partners Architects Ltd (No 2) (1995) 7 NZCLC 260,936 (HC).

(b)       The mere assertion that a dispute exists is not sufficient. Material, short of proof, is required to support the claim that the debt is disputed.

(c)       If  such  material  is  available,  the  dispute  should  normally  be resolved other than by means of proceedings in the Companies Court.

(d)       An  applicant  must  establish  that  any  counterclaim  or  cross demand is reasonably arguable in all the circumstances. The obligation is not to prove the actual claim. Such an obligation would amount to the dispute itself being tried on the application.

(e)       It is not usually possible to resolve disputed questions of fact on affidavit evidence alone, particularly when issues of credibility arise.

[18]     A further preliminary issue does arise here, however, which I now turn to address.

[19]     This relates to what the respondent has suggested is deficient service on the part of the applicant with respect to the application and supporting affidavit in this matter.

[20]     On this, s  290(2) Companies Act 1993  provides that a company has 10 working days following the date of service on it of a statutory demand to both make an application to the Court to set-aside the demand and to serve that application on the creditor who issued the statutory demand.

[21]     Section 290(3) Companies Act 1993 makes it clear that no extension of time may be given for either the making of such an application or the service of the application on the creditor.

[22]     In  this case, it  is  accepted that the application to  set-aside the statutory demand was filed by the applicant in time when it was filed on 13 November 2012.

[23]     There is no evidence from the applicant before me, however, as to service of the application itself on the respondent. This is a significant omission.

[24]     Notwithstanding this, the respondent itself has put before the Court certain evidence regarding that aspect.  That evidence appears to confirm that a copy of the application and supporting affidavit were in fact delivered to the offices of the respondent  on  the  date  the  application  was  itself  filed  in  this  Court  being  13

November 2012.  A complaint from the respondent, however, is that the application and supporting affidavit were in a sealed envelope which was simply, as I understand

was provided as to what was contained in the envelope itself.

[25]     As a result, the respondent contended before me that the service requirements contained in s 387 Companies Act 1993 have not been complied with here.  This is because the  documents in  question it  is  said  were  not  properly brought  to  the attention or the personal knowledge of officers or employees of the respondent company.

[26]     Although I accept that there may be something in this argument, for present purposes and given that it seems the entire proceeding here including the present application to set-aside the statutory demand has been initiated by Mr Renata as a lay litigant on behalf of the applicant company, I am prepared to assume for present purposes that service of the application was properly effected within the 10 working day period required under s 290(2) Companies Act 1993.

[27]     As will appear later in this judgment and for the reasons provided there, as I see  it  this  will  make  little  difference  to  the  overall  outcome  of  the  present application.

[28]     I now turn to the substantive and principal issue which is before me.  This is the question whether the applicant has satisfied the Court in this case that:

(a)       There is a genuine and substantial dispute whether or not the debt claimed is owing or is due; or

(b)The company appears to have a counterclaim, set-off or cross-demand which exceeds the amount of the debt claimed; or

(c)       The statutory demand itself ought to be set-aside on other grounds.

[29]     On these aspects, as I have noted above, the only sworn evidence which is before the Court in support of the present application is the affidavit by Mr Renata sworn 13 November 2012.  This affidavit occupies approximately 1 ½ pages and as I read it essentially makes the following claims:

disputed a number of items which have been invoiced by the respondent which make up a portion of the amount claimed in the statutory demand.

(b)Some of that information has been provided but certain information even to this date remains outstanding.

(c)      Essentially, the information sought from the respondent related to workshop job sheets verifying hours worked on the applicant’s vehicles, “outwork” for which the applicant had been charged, and details of the charges for parts supplied and fitted to the applicant’s vehicles.

[30]     In addition, in his affidavit Mr Renata made a specific and serious claim that:

I have good reason to suspect that Rentranz Limited has been grossly overcharged by S.M.S. Diesel Limited for labour hours (sic) subject of invoices subject of this Statutory Claim, and other invoices issued and paid for by Rentranz Limited prior to the period to which the current claims relate to, and I have good reason to suspect that certain vehicle parts as were charged for as having been supplied and fitted to Rentranz Limited vehicles by S.M.S. Diesel Limited may not have been fitted, and which Rentranz Limited did not receive.

[31]     These are serious allegations.  They and the other claims made by Mr Renata in his affidavit are entirely unsubstantiated in any respect.  There is no independent evidence of any kind to support these claims made by Mr Renata.

[32]     Instead, the 13 November 2012 affidavit from Mr Renata simply makes bald claims first, that his requests for further information from the respondent on the accounts in question have not been fully met and secondly, that he believes there was overcharging  in  particular  for  “other  invoices  issued  and  paid  for  by  Rentranz Limited prior to the period to which the current claims relate.” (emphasis added)

[33]     No further elaboration of this last contention is provided. And, again I repeat there is simply no independent or verified evidence before the Court to bear out the range of claims made by Mr Renata.

case, no such material has been placed before the Court.

[35]     In addition with respect to any counterclaim or cross-demand which might exist, the only reference to this made by Mr Renata on behalf of the applicant here is the claim in his affidavit noted at para [30] above.

[36]    An applicant such as Rentranz Limited is required to establish that any counterclaim or cross-demand is reasonably arguable in all the circumstances, and I am quite satisfied here that the applicant has simply failed to do this.

[37]     I repeat that the applicant here has failed to provide any material short of proof to justify the claims which have been made by Mr Renata on its behalf.

Conclusion

[38]     For all these reasons, the application to set-aside the statutory demand must fail. That application is dismissed.

[39]     In addition, I now order that the time for the applicant, Rentranz Limited, to make payment upon the statutory demand is extended to Tuesday, 21 May 2013. Failing payment by that date, the respondent will be entitled to file an application for an order for liquidation of the applicant.

are awarded on this application to the respondent against the applicant on a category

2B basis together with disbursements as fixed by the Registrar.

‘Associate Judge D.I. Gendall’