Rogers and Rutherford v Solomon Properties Limited HC Auckland CIV 2010-404-815
[2010] NZHC 1520
•14 June 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2010-404-000815
UNDER The Companies Act 1993
BETWEEN ROGERS AND RUTHERFORD Plaintiff
ANDSOLOMON PROPERTIES LIMITED Defendant
Hearing: 14 June 2010
Appearances: M A Karam for Plaintiff
L Herzog for Defendant
Judgment: 14 June 2010
ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN
Solicitors: Knight Coldicutt, Shed 20 Princes Wharf, Auckland
Rogers & Rutherford, PO Box 2330, Symonds St, Auckland
ROGERS AND RUTHERFORD V SOLOMON PROPERTIES LIMITED HC AK CIV 2010-404-000815 14
June 2010
[1] On 15 February 2009 the plaintiff filed its application to place the defendant
(“Solomon”) into liquidation. The plaintiffs are lawyers who claim a debt to
$4,387.50 for legal fees as owing to it.
[2] In his affidavit in support of Solomon’s application for the stay of advertising, Mr Krukziener deposes that the debt is owing by Level 6, Harbourview Trustee Limited (in liquidation)(Level 6). He said previous accounts from the plaintiff were addressed to Level 6. He exhibits a copy of the relevant invoice. It was addressed to Solomon and to level 6. The invoice notes charges for work undertaken between 17 April 2009 and 26 June 2009. It was dated 29 June 2009. The invoice is stamped and appears to bear Mr Krukziener’s signature below the stamped word “AUTHORISED”.
[3] Mr Krukziener asserts that the work undertaken by the plaintiff related to the assessment of the legal position and preparation of a response to an offer for the Level 6 Harbourview Trust.
[4] Mr Krukziener asserts there is no logical explanation why Solomon should be liable to pay the account as it had nothing to do with the subject property in question since October 2007. Besides, he says due to the plaintiff’s neglect Level 6 sustained losses which he calculates as being not less than $97,000.
[5] In reply Mr Rutherford for the plaintiff asserts that Mr Krukziener’s allegation of negligence relates to another matter and it was not, until this proceeding, previously raised. Indeed Mr Krukziener and his company continued to retain the plaintiff well beyond the date of the events he refers to.
[6] Mr Rutherford has exhibited emails between he and Mr Krukziener relating to significant legal fees outstanding for payment by various companies of Mr Krukziener’s. Mr Rutherford notes that there is no allegation of negligence or complaint. Rather there was a clear indication that payment would be made when funds became available, including by a letter from Mr Krukziener sent six weeks after Level 6 was placed into liquidation.
[7] Mr Rutherford deposes that the transaction behind the plaintiff’s invoice relates to a failed attempt by Mr Krukziener through his companies, Solomon and Level 6 to purchase the unit title of a property being level 6 of the Harbourview building, Quay Street, Auckland. Mr Rutherford deposes that there had been a series of defaults by Solomon and Level 6 including:
• Late payments of deposit;
• Failure to complete settlement on the original settlement date;
•Late payment of further sums agreed in consideration of deferrals of the settlement date; and
• Failure to complete settlement by the last date agreed.
[8] He says Mr Krukziener’s problem was that he was unable to arrange finance to complete settlement. Eventually the vendors gave up and cancelled the contract. The deposit was forfeited and the vendor’s claimed damages in respect of which both Solomon and Level 6 are liable.
[9] The plaintiff’s position is that Solomon and Level 6 are jointly and severally liable to pay all invoices rendered for legal work for the reasons:
a) Under the contract Solomon and/or its nominee was the purchaser.
Subsequently Mr Krukziener incorporated Level 6 as the “special purpose vehicle” to take title. Solomon is a company Mr Krukziener commonly uses as purchaser to enter into contracts to purchase property.
b)A provision of the purchase contract provided that notwithstanding the appointment of a nominee Solomon was at all times to remain liable for the purchaser’s obligations.
c) By the Deed of Novation by which Level 6 was substituted as purchaser, Solomon indemnified Level 6 by providing an unconditional and irrevocable guarantee of all purchaser obligations.
d)Long after Level 6 was nominated to the purchase Mr Krukziener often corresponded with the vendors on the letterhead of Solomon and by reference to the purchase of the property by Solomon.
[10] Mr Rutherford states the plaintiff was retained by and acted for both Solomon and Level 6 concurrently and throughout. He said both companies had positions to protect and it is not correct as Mr Krukziener claims that Solomon had nothing to do with the property since October 2007 when the Deed of Novation was entered into. He said Solomon had clear and continuing legal obligations to the vendors and Mr Krukziener regarded Solomon as key to the deal as he was corresponding with the vendors in the name of Solomon.
[11] The plaintiff rendered its invoice on 29 June 2009. Mr Rutherford asserts Mr Krukziener did not dispute Solomon’s liability until after the liquidation proceeding was commenced.
[12] He said although invoices were routinely forwarded to Level 6 that was because it was common commercial practice to invoice the “special purpose vehicle”. That, Mr Rutherford says, does not mean Solomon is not jointly liable for payment of the plaintiff’s invoices.
The Applicant’s Case for Stay
[13] Mr Herzog advises that previously Solomon applied to set aside the statutory demand but was one day late in effecting service of same.
[14] Solomon’s position is that there is a substantial dispute about whether or not the amount of the claim is owed by it. It’s position is that it had nothing to do with the subject property after the Deed of Novation. Invoices issued by the plaintiff between November 2008 and March 2009 were rendered only to Level 6.
[15] The Court has an inherent jurisdiction to stay liquidation proceedings where the debt upon which they are based is subject to a genuine dispute. But, something more than the balance of convenience considerations is required. A strong prima facie case for the existence of a genuine dispute ought to be demonstrated.
Considerations
[16] Although Solomon was forwarded an opportunity to reply to Mr Rutherford’s affidavit no reply was forthcoming.
[17] There can be no doubt that there was a contract of retainer between the plaintiff and Solomon. The question is whether that enured beyond October 2007 to include the period covered by the plaintiff’s invoice i.e. 17 April 2009 – 26 June
2009. Mr Krukziener said Solomon had nothing to do with the property since October 2007 but Solomon guaranteed the Level 6 obligations on an ongoing basis. Also even beyond that period covered by the plaintiff’s invoice Mr Krukziener was conducting correspondence on Solomon’s letterhead and regarding the purchase of the property by Solomon. The vendors clearly dealt with both companies throughout. As Mr Rutherford noted both companies had a position to protect. Solomon was very involved in dealing with the issues raised by the failure to settle the purchase.
[18] The overwhelming inference is that the plaintiff’s retainer was the joint and several responsibility of both companies. Indeed there is a reasonable inference that responsibility for payment of the invoice was not challenged at the time the invoice was received. The over stamp has Mr Krukziener’s signature below the word “AUTHORISED”. Likely there will always be a reasonable inference that, in the absence of an express agreement to the contrary, the original client will continue to be liable for payment of ongoing fee costs.
[19] The application for Stay of advertising is dismissed. The defendant shall pay
the plaintiff’s costs on a 2B basis. I will fix these if counsel cannot agree upon costs.
` Associate Judge Christiansen
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