Templeton Uq Limited v Watt & Hughes Limited

[2024] NZHC 1366

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-311

[2024] NZHC 1366

UNDER

the Companies Act 1993

IN THE MATTER

of an application to set aside a statutory demand

BETWEEN

TEMPLETON UQ LIMITED

Applicant

AND

WATTS & HUGHES LIMITED

Respondent

Hearing:

(On the papers)

Appearances:

D M Hughes and A Williams for Applicant

R J Hollyman KC and A J Peat for Respondent

Judgment:

28 May 2024

JUDGMENT OF ASSOCIATE JUDGE LESTER

(on recall application)

This judgment was delivered by me on 28 May 2024 at 12:30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

…………………………

TEMPLETON UQ LIMITED v WATTS & HUGHES LIMITED [2024] NZHC 1366 [28 May 2024]

[1]                  Watts & Hughes Limited (WHL) seeks I recall my judgment of 3 May 2024 declining to set aside a statutory  demand  WHL  had  issued  against  Templeton  UQ Limited (Templeton). Recall is sought as neither counsel sought an order under s 291(1)(a) of the Companies Act 1993 (the Act) extending time for compliance with the statutory demand.

[2]                  The significance of no extension of time being sought is that in the absence of an extension, WHL is unable to rely on the statutory demand should it apply to liquidate Templeton — the statutory demand has gone “stale” by virtue of s 288(1) of the Act.

[3]                  I am satisfied recall is appropriate. It cannot have been understood by the parties that if the application to set aside the statutory demand failed, that nonetheless the demand would be worthless because no extension of time to meet the demand was made.

[4]                  Counsel for Templeton (not counsel involved in the application to set aside), submits first that, WHL has failed to adopt the proper process for recall of the judgment and secondly, that no grounds for recall exist as there was no error by the Court.

[5]                  As to matters of process, McGechan on Procedure notes that a formal interlocutory application is not invariably required but as a minimum a formal memorandum should be filed and served.1 That has occurred here. McGechan notes further that it is desirable a party seeking recall should first confer with the opposite party and endeavour to obtain their consent. Templeton’s counsel notes that no consultation occurred here but, as noted, such is described as a desirable step rather than a formal requirement. Templeton’s counsel suggests that WHL should be held to these requirements given the technical nature of WHL’s challenge in relation to the application to set aside its statutory demand.

1      Jessica Gorman and others (ed) McGechan on Procedure (online ed, Thomson Reuters) at [HR11.9.01].

[6]                  However, the process points taken by Templeton’s counsel are not fatal to the recall application, whereas the point WHL took concerning the defective service of the application to set aside, was fatal to that application. Any procedural issue with WHL’s recall request could if needs be, have been corrected. Templeton’s counsel has had the time requested to prepare submissions in response — no prejudice is suggested. I do not consider these process points to be determinative.

[7]                  As to the substance of the recall application, Templeton’s counsel submits there is no error by the Court warranting recall but rather, an extension of time was simply not raised by counsel. Templeton’s counsel refers to BASF New Zealand Ltd v Brian Roberts (1998) Ltd, where it was held there was no basis to recall a judgment to address costs since the issue of costs had not been raised — there was no error that would justify recall.2

[8]                  I do not accept that analysis applies here. Counsel for WHL refers to a recent decision of Associate Judge Sussock in Aotearoa Forests Ltd v Land Haul Contractors Ltd.3 That case involved the same issue as here. An application to set aside a statutory demand was dismissed but time was not extended. Her Honour said:

[19]      Furthermore, I do not consider I am taking a technical view on one matter (the timing of the application to set aside) and not on another (the timing of the application to extend). The High Court Rules allow for the recall of a decision in certain circumstances as summarised in Horowhenua County v Nash (No 2),4 and this situation clearly falls within the second category, as counsel for Land Haul submits, being a failure to refer the Court to a relevant legislative provision. By contrast and as discussed in the judgment, there is no ability to extend time for the filing and service of an application to set aside under the High Court Rules because of the requirements of the Companies Act.

[20]      If Land Haul had requested an extension at the hearing there would have been no basis to decline to extend time given the conclusion I reached in relation to the application to set aside.

[21]      I therefore recall the decision and extend the period for compliance with the statutory demand by 15 working days.

(emphasis added)

2      BASF New Zealand Ltd v Brian Roberts (1998) Ltd [2020] NZCA 662.

3      Aotearoa Forests Ltd v Land Haul Contractors Ltd [2023] NZHC 2803.

4      Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC).

[9]                  It is common ground that here, neither party referred the Court to the provision dealing with the extension of  time,  which  brings  this  case  within  the  same  recall category applied in the same circumstances by Associate Judge Sussock in Aotearoa Forests Ltd. This also occurred in Queensland Maintenance Services (NZ) Ltd v Queensland Maintenance Services (Pty) Ltd (in liq). In Queensland Maintenance Services (NZ) Ltd, Associate Judge Christiansen noted: 5

[18] The application to set aside a statutory demand does not automatically operate to provide such an extension of time affecting the requirement to file an application for liquidation.

[10]Associate Judge Christiansen went on to say:

[19]      In this case neither counsel directly drew the Court’s attention to the fact that the respondent’s interests were also affected if the time for compliance with the statutory demand was not extended.

…

[21]      In this case it was overlooked by both parties (otherwise the applicant’s counsel would likely have mentioned it) that the time had expired for the filing of a liquidation proceeding anyway.

[22]      Had the Court been asked to extend the date for compliance with the statutory demand then that would have alerted the creditor to the requirement for filing a liquidation proceeding within time.

[23]      Had an extension of time been requested then it would certainly have been granted.

[11]              I come back to the comment I made at the outset, that neither party can have envisaged that if WHL successfully knocked out the application to set aside the statutory demand on the service point, that application would have been pointless because the demand had gone stale. WHL’s argument that the application to set aside its demand had not been properly served was determined as a preliminary point which I suspect distracted both counsel from the question of an extension of time for Templeton to meet the demand if the preliminary point was decided in WHL’s favour.

5      Queensland Maintenance Services (NZ) Ltd v Queensland Maintenance Services (Pty) Ltd (in liq)

[2015] NZHC 784.

[12]              Had the issue been raised, I have no doubt that an extension of time would have been granted. Given the sum involved, I recall my judgment of 3 May 2024. The judgment will be re-issued with the following paragraph:

Time for compliance with the demand is extended by 15 working days from the date of this reissued judgment.

Costs

[13]              My instinct is costs on the recall should lie where they fell but memoranda – not more than three pages in length, may be filed. If no memoranda is filed within five working days then a costs order is that costs are to lie where they fell.

Associate Judge Lester

Solicitors:

Sharp Tudhope Lawyers, Tauranga Anthony Harper, Auckland

Copy to counsel:
R J Hollyman KC and A J Peat, Barristers, Auckland