Soma Group Limited v Uuugamoney Pty Limited

[2019] NZHC 3163

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2019-485-535

[2019] NZHC 3163

UNDER

the Companies Act 1993

IN THE MATTER

of an application under s 290 to set aside a statutory demand

BETWEEN

SOMA GROUP LIMITED

Applicant

AND

UUUGAMONEY PTY LIMITED

Respondent

Counsel:	R Taylor and S Gunatunga for applicant R Coltman for respondent
Judgment:	3 December 2019

COSTS JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[On the papers]

[1]    On 27 August 2019 the respondent, Uuugamoney Pty Ltd, served a statutory demand on the applicant, Soma Group Ltd. The demand was for amounts totalling AUD43,142 said to be payable under a contract between a company by the name of Anchor Private Financial Services Pty Ltd and Soma, Anchor having assigned its rights under the same to Uuugamoney. That amount consisted of AUD10,000 said to be payable as a “mandate fee” and AUD33,142 said to be payable as a “success fee”.

[2]    On 10 September 2019 Soma applied for an order setting aside the statutory demand on the basis that there was a genuine dispute between the parties as to whether the amount claimed was recoverable. Uuugamoney opposed that application.

[3]By 7 November 2019 the parties had resolved how matters were to proceed:

SOMA GROUP LIMITED v UUUGAMONEY PTY LIMITED [2019] NZHC 3163 [3 December 2019]

(a)The mandate fee — AUD10,000 — would be paid into Court pending further direction of the Court;

(b)The claim in respect of the success fee — AUD33,142 — would be the subject of District Court proceedings to be commenced by Uuugamoney;

(c)Costs in relation to Soma’s application in this Court would be dealt with on the papers.

[4]This is the costs judgment foreshadowed in [3](c) above.

[5]The Court now has before it:

(a)Submissions for Soma dated 18 November 2019. These consist of submissions running to 11 pages together with 48 pages of attachments;

(b)Submissions for Uuugamoney dated 18 November 2019. These run to 20 pages and are accompanied by an affidavit sworn by an employee of Uuugamoney’s solicitors as to the company’s actual costs;

(c)Submissions for Soma in reply dated 19 November 2019 (2 pages);

(d)Submissions for Uuugamoney in reply to the reply dated 25 November 2019 (2 pages).

[6]    All this in relation to costs on a proceeding that never advanced beyond the filing and service of an application for an order setting aside a bankruptcy notice and a notice of opposition.

[7]    Both parties seek costs — Soma on the basis that there has always been a genuine dispute in relation to Uuugamoney’s claim and that the service of a statutory demand constituted an abuse of process; Uuugamoney on the basis that it was entitled to take the view that the alleged dispute was merely an attempt to avoid paying the

debt and that it was successful, at least to the extent of ensuring that the amount of the mandate fee was protected.

[8]    The Court’s role at this point is limited to dealing with costs in the setting aside proceeding.

[9]    I am not satisfied that Uuugamoney’s service of a statutory demand in this case was improper or constituted an abuse of process. It is true that when Uuugamoney’s solicitors first wrote to Soma demanding payment in August 2019 Soma asserted in reply that it disputed the existence of any debt to Anchor or Uuugamoney and that Uuugamoney’s solicitors elected not to reply and served the statutory demand. However, it is equally true that Soma’s reply was a very bland assertion of the existence of a dispute. In my judgment, a claimant is not obliged to take such an assertion at face value. Whilst it will invariably be wiser to explore the basis for any claimed dispute, it was in my judgment open to Uuugamoney to proceed in the way it did by serving a statutory demand.

[10]   In any event, the service of a statutory demand is not the commencement of a proceeding and what we are dealing with here is the commencement of a proceeding by Soma to set aside Uuugamoney’s statutory demand. The filing and service of that application was preceded and followed by correspondence between the parties’ solicitors in which, it certainly appears to me, it became clearer by increments that there was a dispute as to whether there was an enforceable contract between Anchor and Soma and if so what, if anything, was payable pursuant to it. Against that background, it is not a matter of surprise that ultimately Uuugamoney accepted that Soma’s application was likely to be successful and the parties resolved matters in the way described earlier.

[11]   I see the resolution reached by the parties as evenly balanced. From Soma’s perspective it has achieved the objective of avoiding the possibility of winding up proceedings. From Uuugamoney’s perspective it has achieved the objective of protecting the mandate fee and has an agreed basis for the resolution of the success fee. Neither party, it appears to me, can claim overall success in the proceeding.

[12]   In those circumstances, the conclusion I have reached is that there should be no costs award in this case — that costs should be left to lie where they have fallen.

[13]   That brings me to the issue relating to the AUD10,000 currently held by the Registrar of this Court. When I issued directions as to how matters were to proceed I did so on the basis of the material then before the Court. It now appears clear to me that it would be inappropriate for me to determine either that those monies should be repaid to Soma or paid to Uuugamoney until the underlying dispute is resolved. In my view, they should be retained on interest bearing deposit and paid out in accordance with the judgment of the District Court or the terms of any settlement which the parties may enter into in relation to this matter.

[14]   I therefore reserve leave to both parties to come back to the Court by memorandum in relation to the AUD10,000 held by the  Registrar  when  the  District Court proceeding is resolved or they have settled the underlying dispute.

Associate Judge Johnston

Solicitors:

DLA Piper, Wellington for applicant

Duncan Cotterill, Auckland for respondent