Skyhorse Transport Limited v Greenhill Home Limited

[2021] NZHC 2182

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-000887

[2021] NZHC 2182

BETWEEN

SKYHORSE TRANSPORT LIMITED

Plaintiff

AND

GREENHILL HOME LIMITED

Defendant

Hearing:	17 August 2021
Appearances:	H McDermott for Plaintiff J Wickes for Defendant
Judgment:	17 August 2021

ORAL JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

SKYHORSE TRANSPORT LTD v GREENHILL HOME LTD [2021] NZHC 2182 [17 August 2021]

Introduction

[1]                 These are liquidation proceedings brought after the defendant, Greenhill Home Ltd,1 failed to comply with a statutory demand.

[2]                 In the present interlocutory application, Greenhill seeks an order restraining advertising and staying the proceedings.2

[3]                 The critical issue I must determine is whether Greenhill has established that the debt upon which the liquidation proceedings are founded is the subject of a genuine dispute. The governing consideration in proceedings of this kind is whether they suggest unfairness or undue pressure.3

[4]                 Greenhill has paid the disputed sum into its solicitor’s trust account, and has proposed that an engineer be involved in a dispute resolution process.

Background facts

[5]The plaintiff, Skyhorse Transport Ltd,4 is a cartage company.

[6]Greenhill is a residential property developer.

[7]                 In 2020, the parties entered into a contract whereby Skyhorse would transport soil excavated by Greenhill’s employees from properties owned by Greenhill, to a landfill. There are approximately three sites or properties owned by Greenhill at issue.

[8]                 Skyhorse says that its drivers made contemporaneous records of each load they took, the date, the licence plate, the load time and the type.

[9]Skyhorse issued invoices to Greenhill based on those records.

1      Greenhill.

2      High Court Rules 2016, r 31.11.

3      Nemisis Holdings Ltd v North Harbour Industrial Holdings Ltd (1989) 1 PRNZ 379 at 385.

4      Skyhorse.

[10]              There was a meeting between the parties in January 2021, after Greenhill had raised issues about discrepancies in Skyhorse’s invoices. Skyhorse says that the parties then reached agreement and that there is therefore no dispute.

[11]              Greenhill says that the quantity of earthworks recorded in the invoices as transported was overstated and that it showed Skyhorse its consented excavation plans demonstrating excavated earth quantities.

[12]              On 18 March 2021, Skyhorse served a statutory demand on Greenhill, demanding payment of the sum of $43,737.79. That demand was based on three invoices. Greenhill has not paid any of that amount and has not sought to set aside the statutory demand.

[13]              Greenhill says that it took legal advice about the dispute for the first time on 12 April 2021.

[14]              Greenhill further says that from that time there has been correspondence between the parties’ respective solicitors addressing what it says is a genuine dispute about the amounts in the invoices.

[15]              In a letter from Greenhill’s solicitors to Skyhorse’s solicitors dated 28 April 2021, Greenhill proposed that the parties agree a procedure for dispute resolution in a cost-effective manner. It was proposed that the parties engage a civil engineer to resolve the issue. At the same time, Greenhill provided Skyhorse the excavation plans and landfill dockets (those are also known as tip dockets).

[16]On 7 May 2021, Skyhorse filed the application for liquidation.

Relevant legal principles

[17]              The principles governing application for stay of liquidation proceedings are well settled:5

5      AC Beck and others McGechan on Procedure (online ed, Thomson Reuters) at [HR31.11];

Nemisis Holdings Ltd v North Harbour Industrial Holdings Ltd, above n 3, per Wallace J.

(a)The Court has an inherent jurisdiction to stay winding-up proceedings where the debt upon which such proceedings are founded is a subject of genuine dispute. In those circumstances the plaintiff cannot show it has the status of a creditor or that there has been neglect by the company to pay.

(b)The jurisdiction is an inherent one to prevent abuse of process. There is no inflexible rule.

(c)The governing consideration is whether the proceedings suggest unfairness or undue pressure.

(d)It is a serious matter to stay winding-up proceedings, so that a decision to do so is never made lightly. The onus is on the applicant and it is normally necessary to demonstrate something more than the balance of convenience considerations which are usually considered on an application for interim injunction. If the defendant company has had an opportunity to file appropriate affidavits, such defendant is required to establish a strong prima facie case of the existence of a genuine dispute on substantial grounds or show that there are clear and persuasive grounds for a stay.

[18]              The learned authors of McGechan on Procedure comment that where the full amount of the debt has been paid over as security it is difficult to imagine a situation where a liquidation order would be justified.6

Analysis and decision

[19]              Greenhill’s evidence establishes that a dispute was raised shortly after its receipt of the invoices. Greenhill has produced in evidence the consented excavation plans for the sites from which the earth was carted away by Skyhorse. Both plans, Greenhill says, show a total amount to be excavated as 245 cubic metres, of which Greenhill it says it retained 60 cubic metres for landscaping. Greenhill also says that

6      McGechan on Procedure, above n 5, at [HR31.11.04] citing Airborne Freight Ltd v Fastway Express Parcels (NZ) Ltd (1994) 7 PRNZ 372.

those plans were shown to Skyhorse before the statutory demand was issued and sent to Skyhorse’s solicitors before these proceedings were issued.

[20]              In the evidence for Greenhill, an explanation is provided as to how this amount of earth equates to 31 truckloads. That is based on undisputed evidence that an average truckload contains six cubic metres of material. Greenhill says that 31 truckloads equates to a total charge of somewhere between $4,960 and $6,820 depending on the tip site used. Greenhill says that it is due a credit of $4,749.50, being the amount it was overcharged in the prior invoice it has already paid. By contrast, Skyhorse has invoiced Greenhill for 167 truckloads (so Greenhill says) and in the total sum of

$43,737.79.

[21]              Greenhill further points in support of its position to the anomalies between Skyhorse’s copies of the tip documents and the tip operator’s copies which Greenhill obtained after it became suspicious of the invoiced amounts. Greenhill says that those documents show extra loads on Skyhorse’s copies only.

[22]              Skyhorse’s explanation is that Greenhill brought earth from other sites onto the collection sites. Skyhorse also says that there was never any agreement that the invoices would be based on the landfill or tip documents or on engineers’ reports.

[23]              In evaluating all this evidence, I conclude that Greenhill has established that there is a genuine dispute; the requisite standard, namely a prima facie case of the existence of a genuine dispute on substantial grounds, has been met. Its position is supported by contemporaneous documentation that includes both the landfill dockets and the excavation plans, albeit that those are disputed by Skyhorse. There are, as  Ms McDermott responsibly acknowledged, significant issues of credibility and I obviously cannot resolve those.

[24]              I also agree with the submission of Ms Wickes, for Greenhill, that in the circumstances here, a failure to set aside the statutory demand is not fatal to Greenhill’s application. There is not an obligation to set aside a demand where the dispute has been made clear in other ways.7

7      Delta Installations Ltd v Hamilton Joinery Ltd (2003) 16 PRNZ 820 at [15].

[25]              There are further factors which support the making of an order restraining advertising and staying the proceedings. Here, Greenhill has deposited the disputed sum with its solicitors and agreed to an undertaking that those funds will be held in the solicitor’s trust account pending resolution of the underlying dispute. Where a company shows it is able to pay by putting its solicitor in funds to do so pending resolution, it is unlikely that a winding-up order is justifiable.8

[26]              The proposal by Greenhill that an engineer resolve the dispute seems a sensible suggestion. I note that Skyhorse is opposed to that approach. It may be that another expert is a more appropriate candidate, but in any event, this is a relatively uncomplicated matter that the parties ought to be able to reach agreement on.

[27]              I also note that while Skyhorse relies on the presumption in s 287 of the Companies Act 1993, it has not sought to challenge the evidence from Greenhill that Greenhill is not insolvent.9

[28]              For all these reasons, I find that the grounds for the application have been made out.

Result

[29]I grant the application.

[30]              I make an order restraining advertising and staying the proceedings, and that will be on the condition that the funds in Greenhill’s solicitor’s trust account remain there pending resolution of the dispute and also on condition that the parties take prompt steps to have the dispute resolved.

8      Taxi Trucks Ltd v Nicholson [1989] 2 NZLR 297, (1989) 1 PRNZ 390 (CA); see also Transform Minerals Ltd v McLeans Rural Holdings Ltd HC Christchurch CIV-2010-409-260, 13 April 2010.

9      The affidavit of evidence of Mr Qi Zhang, for Greenhill, states that Greenhill has substantial equity in the properties at 14, 16 and 18 Huia Crescent, Papakura (approximately $1.5m equity in those properties).

Costs

[31]              I award costs to the defendant on a 2B basis plus disbursements. There is no basis to reserve costs.

Associate Judge P J Andrew