Rexon Limited v Bondor New Zealand Limited HC Auckland CIV 2008-404-570
[2008] NZHC 2472
•1 August 2008
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2008-404-570
IN THE MATTER OF sections 289 and 290 of the Companies Act
1993
BETWEEN REXON LIMITED Applicant
ANDBONDOR NEW ZEALAND LIMITED Respondent
Hearing: 28 July 2008
Appearances: RAA Weir for Applicant
K Quinn for Respondent
Judgment: 1 August 2008 at 3.30 pm
JUDGMENT OF ASSOCIATE JUDGE ROBINSON
This judgment was delivered by me on 1 August 2008 at 4.30 pm, Pursuant to Rule 540(4) of the High Court Rules
Registrar/Deputy Registrar
Date……
Solicitors: Walters Law, PO Box 1972, Auckland
REXON LIMITED V BONDOR NEW ZEALAND LIMITED HC AK CIV 2008-404-570 1 August 2008
[1] Rexon Limited applies for an order under s 290 Companies Act 1993 setting aside a statutory demand by Bondor New Zealand Limited claiming $22,843.66 for unpaid goods. The goods were delivered by Bondor to Rexon on 17 November 2006 and 20 November 2006. Rexon claims that there is a substantial dispute as to whether the debt is owing and have a counter-claim that exceeds the amount which Bondor claims.
[2] Rexon acknowledges: -
a) That on 25 October 2006 in a written application for commercial credit for the supply of goods from Bondor, Rexon accepted Bondor’s terms and conditions set forth in that application.
b)At the same time as Rexon Limited applied for commercial credit from Bondor, Mr Graham Palmer, as director of Rexon, personally guaranteed Rexon’s account by completing and signing the form of guarantee indemnity supplied by Bondor.
c) That Rexon received 110 panels 1200 x 2400 x 50 mm and 30 panels
1200 x 3000 x 50 mm in terms of an order form completed by Rexon and confirmed in its purchase order of 15 November 2006. In that purchase order Rexon estimated the cost of these panels as being
$18,000 plus GST and confirmed that a deposit of $6,000 was to be paid with the balance to be by direct credit on 20 December 2006.
d)That on 17 November 2006 Mr Palmer supplied Bondor with a cheque for $6,000 issued by Equity and Law Limited. That cheque was dishonoured on 22 November 2006 and on 24 November 2006.
e) That in a letter of 4 January 2007 Rexon claimed that the roof panels supplied by Bondor were of incorrect measurement in that they should have been 3.1 metres whereas they are only three metres. In that letter Mr Palmer advises that he reordered the correct length (3.1 metres)
but that order was cancelled by Bondor. Consequently, Mr Palmer complains of being unable to complete ten units and as a result has lost cash income from sales of those incompleted units.
f) In the letter of 4 January 2007 Rexon suggests paying for the panels supplied by Bondor by assigning to Bondor Rexon’s claim to a GST refund which at that time was subject to proceedings in the Manukau District Court.
g) That on 8 January 2007 Bondor repossessed 54 of the 110 2400 metres panels, 24 of the 3000mm panels and 350 linear metres of flashings. On repossessing those panels Bondor issued a credit in favour of Rexon Limited of $15,890.89 leaving a balance due and owing of $12,345.83.
h)Bondor has issued proceedings against Mr Palmer in the Manukau District Court claiming $12,345.83 which it claims is due and owing by Mr Palmer under his guarantee. That sum represents the balance owing for the supply of panels that have been retained by Rexon. In addition Bondor seeks judgment for the sum of $1,651.64 being interest payable in terms of its agreement with Rexon at the rate of
12% per annum from 20 December 2006 until 30 January 2008.
i)Mr Palmer has joined Rexon as a third party to the proceedings issued in the Manukau District Court.
[3] Rexon claims to have a good defence to Bondor’s claim on the basis that the panels supplied were not in accordance with Rexon’s specification. In particular, Rexon claims that expressly or by implication it made known to Bondor the particular purpose for which the goods were required, namely the construction of ten portable buildings. Rexon also claims that it relied upon Bondor’s skill and judgment, as the goods are of a description which is in the course of Bondor’s business to supply and consequently there was an implied condition that the goods
were fit for the particular purpose. In breach of this condition all the roof panels were erroneously cut 100mm short and were therefore unusable.
[4] Rexon also alleges that as a result of Bondor’s failure to supply the ten roof panels to the correct size, Rexon was unable to complete a specific order for ten portable buildings thereby suffering a loss of $156,000. Rexon will be bringing a claim against Bondor for that loss.
[5] In opposing the application to set aside the statutory demand counsel for Bondor submits that Rexon has not established that there is arguably a genuine and substantial dispute as to the existence of the debt. In the absence of material short of proof to support the claim that the debt is disputed, the application to set aside the statutory demand should not be granted. In this respect counsel for Bondor relies upon the summary of general principles relating to applications to set aside a statutory demand referred to by the learned authors of Brookers Companies and Securities Law volume 1, page 1831 at paragraph CA290.02. Counsel also emphasised that a mere assertion that a dispute exists is not sufficient.
[6] If:-
a) Rexon made known to Bondor at the time its order was placed for the panels that the roof panels were required for the construction of ten portable buildings with a width of three metres.
b) That it relied on Bondor’s skill and judgment when placing the order;
and
c) That roof panels of a greater width than three metres would be required to construct the buildings;
d) Then Rexon may have a defence to Bondor’s claim.
[7] Bondor disputes the evidence on behalf of Rexon that it expressly or by implication made known to Bondor the particular purpose for which the goods were required, namely the construction of ten portable buildings is disputed by Bondor. It
is accepted that as a general rule the hearing of an application to set aside a statutory demand is not appropriate to resolve genuine conflicts of evidence or to assess the credibility of the parties statements in their affidavits. However, plainly contrived factual conflicts should not be allowed to set aside a statutory demand. As stated by Lord Diplock in Eng Mee Yong v Letchumanan [1980] AC 331, at 341, E the Judge is not bound:
To accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be.
[8] In the circumstances of this case, the documentary evidence establishes an order by Rexon to Bondor for 30 panels with a measurement including 3000 mm confirmed by a written order form from Rexon of 15 November 2006 including “roof 6 x 3 m x 1200mm panels”. The delivery form signed on behalf of Rexon when the panels were delivered on 17 November 2006 confirmed that the goods were received in good order and condition and an agreement that no claims would be recognised unless received seven days after delivery.
[9] The first written reference to the roofing panels being of incorrect size is in
Rexon’s letter of 4 January 2007.
[10] In his evidence in support of the application to set aside the statutory demand, Mr Palmer states as follows: -
I telephoned the respondent on or about the 7th November, 2006. I explained that I had not been in the industry for 20 years and that I understood that new technology had been introduced. I explained that for transport reasons the applicant wanted to build units with an internal measure of 7.2m long x 3.0m wide and 2.4m high (being minimum ceiling height allowable). I understood from what I was told that the panels would fit together and the join would be unnoticeable and unlike the previous system no allowance for the join needed to be made. The panels would be provided in kitset form so they could be attached to the chassis, which had been constructed and which were being galvanized.
[11] On the basis of that evidence, it is asserted on behalf of Rexon that expressly or by implication Bondor knew of the particular purpose for which the goods were
required namely the construction of ten portable buildings and that Rexon was relying on Bondor’s skill and judgment.
[12] If this assertion is correct then it is strange that reference to the telephone conversation of 7 November 2006 is not contained in the letter of 4 January 2007 from Rexon Limited where there is a complaint as to the width of the roof panels. There is no reference in that letter nor in correspondence which follows to a claim that Rexon Limited is not liable because the panels for the roof are of incorrect size resulting in a significant loss to Rexon. The correspondence seeks more time for payment. At that time a cheque for a deposit of $6,000 had been dishonoured and Rexon was offering an assignment of a GST refund to satisfy the claim. As late as 30
January 2007 Mr Palmer on behalf of Rexon emailed Bondor as follows:
“Thanks for your email. I expect that funds will be available on Thursday to meet the $6,000 cheque. I’ll direct credit the amount to your account. The balance should be available on or before 18 February 2007 (mortgage will be in place by then)”.
[13] Thus the claim by Rexon that roof panels supplied to an incorrect size had resulted in a loss of contracts with a consequential loss of profit justifying a cross claim against Bondor is inconsistent with the correspondence at that time which was to the effect that Rexon would be making arrangements for settlement of the outstanding debt.
[14] In any event, Rexon could very easily have rectified the problem by proceeding with its reorder of roof panels measuring 3.1 metres referred to in its letter of 4 January 2007. However, being in breach of its agreement with Bondor for payment for the remaining panels understandably, Rexon does not suggest Bondor acted illegally in canceling the reorder.
[15] Mr David Hydes, the customer services team leader of Bondor, in his affidavit opposing the application to set aside the statutory demand states: -
On 8 January 2007 Bondor took steps to repossess the products supplied under clause 7.3(c) of the terms and conditions. Bondor repossessed 54 of the 110 2.4 metre panels supplied; 24 of the 30 three metres panels supplied and 350 linear metres of the flashings. Bondor did not repossess all of the goods supplied because Mr Palmer asked if Bondor would leave enough
panels and accessories to complete the current building under construction. Bondor agreed to this
[16] Mr Palmer has sworn an affidavit in reply. He does not dispute this evidence. What he does say is that the error relating to the width of the roof panels was not picked up until six weeks after delivery. He goes on to say that when the error was realised, he immediately approached Bondor and asked for the correct sized roof panels. He says Bondor declined to replace the panels and simply demanded payment in full.
[17] The documentary evidence includes a letter from Rexon of 4 January 2007 where reference is made to the roof panels being three metres long when they should have been 3.1 metres long. This was four days before Bondor repossessed the products. If as Rexon claims, the roof panels were undersized and could not be of any use then it is surprising that Rexon did not insist on Bondor repossessing all roof panels on 8 January 2007. At that time, the evidence of Mr Hydes which is not contradicted establishes that twenty-four of the 3000 mm panels supplied were repossessed. It was at Mr Palmer’s request that Bondor did not repossess all the goods and in particular did not repossess six of the three metre panels. That request was made by Mr Palmer because he wanted to complete the current building under construction. This evidence is clearly inconsistent with any suggestion that the roof panels could not be used.
[18] It is also significant that no documentation has been produced by Rexon in support of its claim to have lost the benefit of profit from contracts from the construction and supply of moveable sheds.
[19] Because of the above reasons I conclude that Rexon does not have a valid defence or counter-claim and that Bondor is entitled to the amount owing in respect of the supply of the panels which have been retained by Rexon. Consequently, Bondor has a claim to the sum of $12,345.83 which is the balance payable for the supply of the panels after deducting the appropriate credit for panels seized by Bondor. In addition, Bondor is also entitled to interest on that sum at the rate of 12% per annum, which to the 31 January 2008 amounted to $1,251.45 would be the amount owing when the statutory demand was served on Rexon on 5 February 2008.
At this stage I am not prepared to include in the amount payable under the statutory demand the costs of collection which includes costs incurred in the Manukau District Court. That is a matter, I am satisfied, for the discretion of the Judge who hears those proceedings and who may be constrained not to order full indemnity costs particularly in view of the fact that an amended statutory demand of claim had to be filed by Bondor.
[20] In summary therefore, I conclude that Bondor has a claim for $13,597.28 which can form the basis for the statutory demand it has issued. Consequently, the application to set aside the statutory demand is dismissed. Pursuant to s 290(3) Companies Act 1993 I extend for ten working days from the date of delivery of this judgment the time for compliance with that statutory demand. I confirm that payment of $13,597.28 will be sufficient to satisfy the statutory demand.
[21] The respondent is entitled to its costs in connection with this application to set aside the statutory demand which I assess on a schedule 2B basis with
disbursements as fixed by the registrar.
Associate Judge Robinson
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