Strait Freight Limited v Planet Logistics Limited HC Auckland CIV 2011-404-000909

[2011] NZHC 286

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2011-404-000909

IN THE MATTER OF     Section 290 of the Companies Act 1993

BETWEEN  STRAIT FREIGHT LIMITED Applicant

ANDPLANET LOGISTICS LIMITED Respondent

Hearing:         on the papers

Counsel:         C P Brosnahan for applicant

Judgment:      4 April 2011 at 1:00 PM

JUDGMENT OF ASSOCIATE JUDGE ABBOTT

[COSTS]

This judgment was delivered by me on 4 April at 1:00pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

C P Brosnahan, Barrister, PO Box 785, Wanganui for applicant

Copies also to:

Planet Cars Limited trading as Planet Logistics Limited, 215 Great South Road, Otahuhu, Auckland 2102

Planet Logistics Limited, Flat 15, 14 Basssalt Place, East Tamaki, Auckland 2103

STRAIT FREIGHT LIMITED V PLANET LOGISTICS LIMITED HC AK CIV 2011-404-000909 4 April 2011

[1]      This application to set aside a statutory demand was filed on 18 February 2011 and listed for first call on 30 March 2011.   There is no record of the date of service but late on 28 February 2011 the respondent company, Planet Logistics Limited informed the applicant that it withdrew the statutory demand.  The applicant in turn requested that the application be withdrawn, but sought costs.  There is a dispute over the claim for costs which the parties have addressed in memoranda.

[2]      Before addressing the specifics of the dispute over costs, I need to comment on a number of procedural deficiencies which need to be taken into account as background to the claim for costs:

[a]      The  statutory demand  is  not  in  the  evidence  before  the  court.    The application  to  set  aside  names  the  issuer  of  the  demand  as  Planet Logistics Limited, but evidence produced in support of the application shows that the invoices for which payment was demanded were issued by Planet Cars Limited trading as Planet Logistics Limited.

[b]      There is no evidence as to the date of issue of the statutory demand, but the respondent mentions in a memorandum that it was faxed to the applicant on 2 February 2011.  The basis for issue of the demand is not apparent – it appears that Planet Logistics Limited was only registered on

3 February 2011.

[c]      There is no evidence of the date of service and, further sending of a demand by fax is not proper service:   (Delta Installations Limited v Hamilton Joinery Limited HC Hamilton, CIV 2003-419-000210, 20 May

2003).  Accordingly, it cannot be determined whether the application to set aside was made within 10 working days of service (assuming that there was some proper service).

[3]      I turn now to deal with the substance of the claim for costs.   The applicant contends that it should be awarded costs of issuing the application because the demand was premature and issued without any correspondence about the demand.  It contends

that it was served before one of the invoices in question was due for payment.  It says that it had no option but to file the application because of the strict time limit for applying to set aside.

[4]      The respondent says in answer that it was reasonable for it to have issued the demand, as the applicant had failed to respond to the invoices issued to it or offer any reason as to why the accounts (allegedly signed off by the applicant’s manager) had not been settled in full, and that it withdrew the statutory demand promptly after receiving the application and recognising that the matter was in dispute.  It contends that costs on the application should be determined after the substantive dispute has been determined in the Disputes Tribunal.

[5]      There are clearly faults on both sides.  There is no evidence before the court of any dispute being raised over the invoices before the statutory demand was issued.  The invoices  have  been  produced.    They  cover  the  period  from  1  November  2010  to

17 January 2011, but it is not clear which ones are unpaid and were the subject of the demand.   Even if the last invoice was not due, earlier invoices would have been.   It appears that the applicant decided to undertake an investigation but did not advise the respondent (or Planet Cars Limited trading as Planet Logistics if that is the party entitled to be paid) that there was an issue.  It seems that Planet Cars Limited had no knowledge of the dispute when the demand was issued.  As the demand is not before the court, it is not clear whether it was issued by Planet Cars Limited, or by Planet Logistics Limited. If it was the latter, there is nothing to show the basis on which it was able to made demand.

[6]      Finally the applicant chose to incur the cost of filing the application to set aside without first inviting the issuer of the demand to withdraw it on the grounds of a substantial dispute.  It appears to have accepted that the issuer of the demand, whichever company it was, was the party entitled to payment absent that dispute, it appears to have overlooked the manner of service, and the application to set aside may have been out of time even if there was service by means other than the fax.

[7]      Weighing all of the above, I consider on balance that the applicant should be awarded some costs, but on a reduced scale.

Decision

[8]       The respondent is to pay the applicant costs of issuing the demand on a scale 1A

basis, together with disbursements as fixed by the Registrar.

Associate Judge Abbott