Sovereign Station Trustee Limited v BR Satherley Transport Limited

[2013] NZHC 3364

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-004981 [2013] NZHC 3364

BETWEEN  SOVEREIGN STATION TRUSTEE LIMITED

Applicant

ANDBR SATHERLEY TRANSPORT LIMITED

Respondent

Hearing:                   13 December 2013

Appearances:           E Lord for applicant (on agency instructions) S Greer for respondent

Judgment:                13 December 2013

(ORAL) JUDGMENT OF ASSOCIATE JUDGE ABBOTT

Solicitors:

Craig Griffin Lord, Auckland

WRMK Lawyers, Whangarei

Solv Law Limited, Auckland

SOVEREIGN STATION TRUSTEE LIMITED v BR SATHERLEY TRANSPORT LIMITED [2013] NZHC

3364 [13 December 2013]

[1]      Sovereign Station Trustee Limited (Sovereign) has applied to set aside a statutory demand served on it by BR Satherley Transport Limited (Satherley).  The demand sought payment of the sum of $15,000, which the Disputes Tribunal ordered Sovereign to pay to Satherley on 12 November 2013.

[2]      Sovereign says that the demand should be set aside as there is a substantial dispute as to whether or not the debt demanded is due or owing.  It also contends that it has a counterclaim and set-off.

[3]      Satherley has opposed the application.  It says first that the application was made out of time.   Secondly, it says that there is no substantial dispute, and that Satherley has not established any basis for a counterclaim or set-off.

[4]      The alleged counterclaim or set-off can be dealt with quickly at the outset. The only evidence in support of the application is an affidavit by a legal secretary employed by the solicitors for Sovereign, which attaches a copy of the underlying decision of the Disputes Tribunal, a copy of an appeal against that decision, and an application  for  re-hearing.     There  was  no  evidence  to  support  the  alleged counterclaim or set-off.   Accordingly, the issues that have to be determined are whether the application to set aside was brought within time and, if so, whether Sovereign has established that there is a genuine dispute over the debt.

Whether the application is within time

[5]      Satherley served its demand on 12 November 2013.   Sovereign filed its application to set aside the demand on 26 November 2013, but it appears to be common ground that the completed application (bearing the Court allocated file number  and  date  of  hearing),  and  the  complete  affidavit,  were  not  served  on Satherley until 28 November 2013.  On those facts the application is out of time and a nullity.

[6]      The issue on this point arises out of the fact that on 26 November 2013, Sovereign’s solicitors sent to Satherley’s solicitor and to the agent that had issued the demand on Satherley’s behalf, by email, an incomplete copy of the application (it did

not have the Court file number or the hearing date endorsed) and a copy of the text only of the supporting affidavit.   The covering  advice expressly stated  that  the affidavit was being sent without exhibits as they were too large to email, and would follow by way of post.

[7]      Those documents were emailed late on the afternoon of 26 November 2013. Satherley’s solicitor received them the following day, and wrote back to Sovereign’s solicitors, after taking instructions, to say that the documents should be served on Satherley in accordance with the Companies Act 1993, and it did not agree to accept service via email.  Sovereign’s solicitors responded stating that the documents had been sent “out of courtesy” and would be served on Satherley as requested.

[8]      Counsel  appearing  for  Sovereign  today  has  limited  instructions  (he  is appearing as agent for Sovereign’s solicitors), but had to acknowledge that if these events could not be construed as service on 26 November 2013, the application was out of time.   He submitted that the Court should treat service by way of email as equivalent  to  service  by  way of  fax  (which  the  agent  serving  the  demand  had stipulated as a means for service of any documents served in relation to the demand).

[9]      Service in terms of an agreement reached between the parties (or their agents) would be acceptable service, but in my view it must accord strictly with the terms of the agreement.  Service on an agent, such as a solicitor for a party, will not be good service if there is no agreement to that effect.1

[10]     There are three factors, in my view, which count against the emailing of documents either to Satherley’s solicitor or its debt recovery agent being accepted as valid service:

(a)       There  is  simply  no  agreement  at  all  with  Sovereign’s  solicitor.

Further, even if the agent’s statement in the demand that documents for service on Satherley could be served in the stipulated manner amounted to an agreement, service must be affected strictly in accordance with those terms.  In the present case, the demand stated

that documents could be “left at the office of the creditor’s agent”, and then added after the agent’s name a telephone number and a facsimile number.  In my view it is stretching matters to say that this extends to transmitting the documents by facsimile (the demand is explicit in terms of saying that the documents are to be left at the office of the agent).  Further, there is no reference to the documents being sent by way of email.

(b)      The documents “for service” were not sent that day in any event.

Sending of the text of the affidavit only is insufficient.   The full affidavit needs to be served.

(c)      The documents  were not sent  to  Satherley’s  solicitor (and  I infer similarly to the agent) by way of service, but rather as a matter of courtesy.     This  is  clear  from  the  email  correspondence  on  the following day.

[11]     Taking  all  of these matters  into  account,  I find  that  the application  was brought out of time.  It is a nullity.

Is there a genuine dispute?

[12]     Although I do not need to address this point given the finding I have made on the validity of the application, I will address it briefly for the sake of completeness.

[13]     There can be no question that the sum demanded is the subject of a binding order of the Disputes Tribunal.  Although Sovereign has both appealed that decision and applied for a re-hearing, it has not sought or obtained a stay of the Tribunal’s order. The Court does not go behind the judgment of another Court.2

Discretion

[14]     Counsel for Sovereign submitted that the Court can and should take into account that the underlying order of the Disputes Tribunal has been appealed, and an

application made for re-hearing.  In my view this is not a point for this application. It could be a matter for the Court’s discretion under any application for liquidation that follows.   However,  even if  I am wrong in that view, and the Court has a discretion even if there is no genuine dispute (perhaps under s 290(4)(c), I am not prepared to exercise any discretion in Sovereign’s favour for the following reasons:

(a)      This matter has a lengthy history (set out in the affidavit in support of Satherley’s notice of opposition), from which it is apparent that Sovereign has been attempting, unsuccessfully, to resist Satherley’s claim for a considerable period of time.  The points raised include an allegation that the debt  was properly incurred  by another, related, company.  On that basis Sovereign had the dispute transferred to the District Court at one point in the history (notwithstanding an initial acknowledgement of the debt shortly after the debt was first demanded), for hearing with a claim brought against Satherley, but then did not proceed in that Court, resulting in Satherley’s claim being referred back to the Disputes Tribunal.

(b)Sovereign has rejected an offer by Satherley to withdraw the statutory demand  if  the  sum  in  the  demand  is  paid  into  a  solicitor’s  trust account.

(c)      Sovereign is currently also facing another liquidation proceeding, in which Satherley is a creditor in support, and Satherley wishes to retain its position under the present statutory demand as support for possible substitution in that proceeding (due to be heard early next year).

(d)This will not be the last opportunity for Sovereign to attempt to raise these matters (should there be some underlying merit).  If the demand is not set aside, Sovereign still has rights (although perhaps more limited) to advance opposition to any application for liquidation that may   follow   (whether   by   way   of   substitution   in   the   existing proceedings or in a separate proceeding brought on the basis of this demand).

Decision

[15]     For all of the reasons given above, Sovereign’s application to set aside the

statutory demand is dismissed.

[16]     The time for compliance with the demand is extended for a further five working days.

[17]     As the successful party, Satherley is entitled to costs on a scale 2B basis, together with disbursements as fixed by the Registrar.

Associate Judge Abbott