Spotburn Farms Limited v Stockco Limited HC Auckland CIV-2010-404-3209

[2011] NZHC 280

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-3209

BETWEEN  SPOTBURN FARMS LIMITED Applicant

ANDSTOCKCO LIMITED Respondent

Hearing:         23 March 2011

Counsel:         S McLauchlan for Applicant

M Morrison for Respondent

K Dawson for S Grant (seeking leave to withdraw as counsel) Judgment:     31 March 2011 at 11:00 AM

FINAL JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 31 March 2011 at 11 am pursuant to

Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date ..........................

Solicitors:

Knight Colidcutt, Private Bag 106214, Auckland

Lowndes Jordan, PO Box 5966, Wellesley Street, Auckland

SPOTBURN FARMS LIMITED V STOCKCO LIMITED HC AK CIV-2010-404-3209 31 March 2011

Hearing on 23 March 2011

[1]      In the judgment issued on 22 February 2011 I directed that the application be relisted for further hearing on 23 March 2011.  I indicated that I would hear further from the parties on whether there should now be an order under s 291(1)(a) or an immediate order for liquidation under s 291(1)(b) of the Companies Act 1993.   I indicated that I would also deal with the issue of costs at the same time.

[2]      Having heard from counsel on 23 March I indicated I would issue a minute setting out the orders I said I would make and elaborating on my reasons.  I begin however by referring to two preliminary matters that were dealt with at the hearing.

Application to Withdraw

[3]      Mrs Dawson advised that Ms Grant remains without instructions and sought leave to withdraw as counsel.  I gave leave accordingly.

Adjournment Application

[4]      Ms McLaughlin indicated that she had received belated instructions from Spotburn’s solicitors, and that the solicitors had not had an opportunity to take full instructions.  She sought that the two matters raised for hearing be deferred to a later date.

[5]      Mr Morrison advised that Stockco was anxious to have those matters dealt with.

[6]      As I indicated at the hearing, Spotburn has had ample time to provide its legal advisers with instructions.  I was not prepared therefore to defer the hearing of these matters.  I ruled accordingly.

Decision on the two matters scheduled for hearing

[7]      Stocko seeks an order under s 291(1)(a) that:

a)        Spotburn is to pay the due debt of $232,562.50 within 5 working days, and

b)In default of such payment Stockco may apply immediately to put the company into liquidation.

[8]      Stockco also seeks an order for costs on a solicitor and client basis.

[9]      Having heard from both counsel, I accept Mr Morrison’s submission that the orders sought on behalf of Stockco should be made.

Order under s 291(1)(a)

[10]     I do not accept the submission that any order allowing Stockco to make application for an order for liquidation (failing payment within the short period proposed) would be premature at this stage.  The fact that counsel has only just been instructed does not provide a reason for prolonging the time when such application may be made.   I do not accept the submission counsel for Spotburn makes to the contrary.    Spotburn  can  have been  in  no  doubt  about  its  obligation  to  pay the undisputed amount following the receipt of my judgment.  I agree with counsel for Stockco that there has been ample opportunity to put arrangements in place to pay the debt.  It can only be assumed Spotburn is unable to do so.

[11]     Counsel also submits that Spotburn might soon be in a position to pay the undisputed debt or to satisfy Stockco on terms for payment and to provide proper security.  She says the company’s directors are confident that transactions they are involved in will enable such steps to be taken and that an order allowing Stockco to apply for an order for liquidation would also be premature on that basis.

[12]     If counsel’s submissions are right and the directors’ hopes are well founded, the order sought will not prevent Spotburn making payment.  It can take advantage of the 5 day period for payment that Stocko’s proposed order envisages. Alternatively, it can make arrangements to Stockco’s satisfaction at any time before liquidation occurs.

[13]     The  directors  cannot  expect  however  that  Stocko  be  deprived  of  its entitlement to apply to have Spotburn’s affairs put into the hands of a liquidator. They  have  done  little  or  nothing  to  demonstrate  that  their  confidence  is  well- founded.

[14]     I therefore make an order in the terms set out in [7](a) and (b) above.  The 5 working days is to commence on 31 March 2011.

Orders for Costs on Application

[15]     That brings me to the costs order that Mr Morrison seeks.  I am satisfied that Stockco is contractually entitled to costs on the basis outlined in his memorandum and that there is sufficient evidential basis for the amount that is claimed.  In that respect, I give leave to rely on the uncontroverted evidence as to costs set out in the affidavit that Stockco filed in the successful summary judgment proceeding against Spotburn in CIV2010-404-5668.

[16]     I make an order for costs on a solicitor-client basis in the sum of $18,729.08.

[17]     I also record that on 23 March 2011 I made an order for costs in favour of

Stockco on a 2B basis in respect of the hearing on that day and the preparation of the memorandum filed for that hearing.  That order stands.

Associate Judge Sargisson