Templeton Uq Limited v Watt& Hughes Limited
[2024] NZHC 1072
•3 May 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-311
[2024] NZHC 1072
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: 12 April 2024 Appearances:
D M Hughes and A Williams for Applicant
R J Hollyman KC and A J Peat for Respondent
Judgment:
3 May 2024
JUDGMENT OF ASSOCIATE JUDGE LESTER
This judgment was delivered by me on 3 May 2024 at 2:30 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
…………………………
TEMPLETON UQ LIMITED v WATTS & HUGHES LIMITED [2024] NZHC 1072 [3 May 2024]
[1] On 31 January 2024, Watts & Hughes Limited (WHL) had its solicitors serve a statutory demand at the registered office of the applicant, Templeton UQ Limited (Templeton). The demand concluded as follows:
The address for service of Watts & Hughes Limited and the address to which payment should be made is at the offices of Sharp Tudhope Lawyers, Level 4, 152 Devonport Road, Tauranga. Documents may be:
a.Posted to the solicitor at Sharp Tudhope, Lawyers, Private Bag 12020, Tauranga; or
b.Left for the solicitor at the document exchange for direction to Sharp Tudhope, Lawyers, DX HP40049; or
c.Transmitted to the solicitor by facsimile to Sharp Tudhope, Lawyers, Fax No. (07) 578-5133.
[2] The last day for Templeton to apply to set aside the demand or at least to serve its application on WHL was 15 February 2024, being 10 working days after service, (Waitangi Day not being counted). So much is common ground.
[3] Templeton applied to set aside the demand on 15 February 2024 and purported to serve its application at the offices of Sharp Tudhope Lawyers by email on the same day.
[4] WHL submits as service by email is not referred to in the demand as a permitted means of service that service by email was invalid and this proceeding is therefore a nullity and should be dismissed. Whether this proceeding was properly served is the subject of this judgment — that question being determined as a preliminary issue.
What Rules govern service on a company?
[5] The only methods of service on a company in New Zealand of a document in legal proceedings are those set out in s 387(1) of the Companies Act 1993 (the Act).1 That section provides:
387 Service of documents on companies in legal proceedings
1 Companies Act 1993, s 387(2).
(1)A document, including a writ, summons, notice, or order, in any legal proceedings may be served on a company as follows:
(a)by delivery to a person named as a director of the company on the New Zealand register; or
(b)by delivery to an employee of the company at the company’s head office or principal place of business; or
(c)by leaving it at the company’s registered office or address for service; or
(d)by serving it in accordance with any directions as to service given by the court having jurisdiction in the proceedings; or
(e)in accordance with an agreement made with the company; or
(f)by serving it at an address for service given in accordance with the rules of the court having jurisdiction in the proceedings or by such means as a solicitor has, in accordance with those rules, stated that the solicitor will accept service.
[6]Rule 6.12(1) of the High Court Rules 2016 (the Rules) provides:
(1) A document may be served on a company incorporated under the Companies Act 1993 in accordance with section 387 of that Act.
[7]In relation to statutory demands, r 19.12A(2) of the Rules provides:
(2)An originating application under section 290 of the Companies Act 1993 to set aside a statutory demand may be served, in accordance with rule 6.5, at the address shown in the statutory demand as the creditor’s address or the address for payment.
[8]Rule 6.5 of the Rules provides:
6.5 Service at address for service
A document may be served at an address for service by leaving the document at that address at any time between 9 am and 5 pm.
[9] Section 290(2) of the Act requires an application to set aside a statutory demand to be filed and served on the creditor within 10 working days of the date of service of the statutory demand. Section 290(3) of the Act provides:
No extension of time may be given for making or serving an application to have a statutory demand set aside, but, at the hearing of the application, the court may extend the time for compliance of the statutory demand.
[10] WHL’s argument can be briefly summarised. It submits s 387(1) of the Act is an exclusive code as to the service of legal proceedings. It is not in dispute that the application to set aside a statutory demand is a legal proceeding. As s 387 of the Act was not complied with, the demand was not properly served. Rule 19.12A(2) of the Rules does not assist as in effect all that rule does is clarify that if an address for service or payment is provided on a statutory demand then r 6.5 permits service at that address. Neither r 19.12A(2) or r 6.5 expand the means of service.
[11] Even if it was assumed that r 19.12A(2) meant all the means of service referred to in r 6.1 were available, email could only be used if a party or their solicitor have specified that an email address may be used for service.2 An email address was not specified as a permitted means of service in the demand so it was not open for Templeton to serve the proceedings by email. Therefore, WHL submits email was not adequate service.
Templeton’s response
[12] Templeton submits r 19.12A represents “a significant change to the High Court Rules”, as it has the effect of meaning if there is a defect in service that can be cured by r 1.5. Here, it is accepted the email of the proceedings was received by WHL’s solicitors in time. Therefore, if the means of service was validated, then service was good.
[13] Mr Hughes, counsel for Templeton, in his written submissions adopted the reasoning of Associate Judge Bell in Golden Land Civil Ltd v Baseline Survey Ltd.3 That case is very similar to the circumstances of this case. An application to set aside a statutory demand had been served by email to the respondent’s solicitors when the address for service in the statutory demand nominated a physical address for service. Mr Hughes adopted Associate Judge Bell’s reasoning at [17]—[21] which states as follows:
[17] In Livi Investments Ltd,4 Master Kennedy-Grant distinguished earlier decisions by saying that the legislation had changed. A rule (now r 6.12 of the
2 High Court Rules 2016, r 6.1(1)(d).
3 Golden Land Civil Ltd v Baseline Survey Ltd [2021] NZHC 1373.
4 Livi Investments Ltd v Butler Gilpat Ltd (1998) 11 PRNZ 680 (HC).
High Court Rules) directed that documents in proceedings in this court to be served on New Zealand companies were to be served in accordance with s 387 of the Companies Act. By virtue of that provision the court no longer had a discretion to regularise irregular service.
[18] There has, however, been a change since Livi Investments Ltd. Rule 19.12A(2) has been inserted the High Court rules. Under that rule, an originating application under s 290 of the Companies Act may be served in accordance with r 6.5 at the address shown in the statutory demand as the creditor’s address for service and the address for payment. That rule is relevant here because the statutory demand specified an address for service and the rule allows for service by leaving a document at that address. In this case the statutory demand specified an address for service. Its purpose was to state where an application under s 290 could be served.
[19] Rule 19.12A has provided an alternative mode of service outside r 6.12 of the High Court Rules and s 387 of the Companies Act. Master Kennedy-Grant’s reasoning in Livi Investments Ltd does not apply when the High Court Rules have a separate rule, allowing for an alternative method of service. Because r 19.12A stands on its own as a method of service, it is subject to other general rules, including the power to give relief for irregularities under r 1.5 of the High Court Rules.
[20] There is an appropriate case to give relief under r 1.5, notwithstanding non-compliance with r 19.12A because the documents were not physically left at the address for service in the demand:
(a)The time for filing and serving applications under s 290 is tight. Timing is critical. If the application is not served in time, it will be invalid.
(b)Against that, the mode of service is not so critical to validity. So long as the application comes to the notice of the creditor, there can be little injustice or prejudice in any irregularity in service.
(c)Email is commonly used as communication between lawyers. Indeed, Golden Land Civil and Baseline Survey has communicated by email in this case.
(d)There was the inconvenience of having to physically leave documents at Baseline Survey’s lawyers’ office. Golden Land Civil’s lawyers are in Ellerslie; Baseline Survey’s lawyers were in Albany. Anyone taking documents from Ellerslie to Albany would have to deal with Auckland’s congested motorway system.
[21] The documents did not specify the date when the case would be called in court. That is also an irregularity. It is not always possible to obtain a call date as soon as the application is filed in court. If Golden Land Civil’s lawyers had waited to obtain a first call date, they risked not being able to serve on time. Baseline Survey was informed of the date when the case was to be called and was able to protect its position. Accordingly, I waive any irregularities in the mode of service or in the application being incomplete. Accordingly, the
application was properly served within 10 working days under s 290(2) of the Companies Act.
[14] I regret I am unable to agree with all of the learned Judge’s conclusions. As a preliminary point I note that his Honour’s decision was delivered orally. With respect, I agree with his Honour’s comment at [18] that r 19.12A(2) removes any doubt as to the ability to serve an application to set aside a demand at the address for service given in the demand. While not put this way in the rule, its effect is to deem the address for service in a demand as having the same status as the address for service given by a party in their first document filed in a proceeding (see r 5.44(1)(d)).
[15] However, his Honour’s statement at [19] of Golden Land Civil Ltd that r 19.12A(2) provides an alternative mode of service outside r 6.12 of the Rules and s 387 of the Act is again, with respect, incorrect. This is because nothing in r 19.12A(2) purports to expand the modes of service under the rules or the Act. The only way r 19.12A can expand a mode of service under s 387 of the Act is by confirming for the purposes of s 387(1)(f) that a method of service stated in the demand is treated as an address for service given in accordance with the Rules. His Honour’s statement that r 19.12A “…stands on its own as a method of service …” (emphasis added), is to treat r 19.12A as expanding the methods of service in s 387 of the Act when the rule is silent as to methods of service. No words in r 19.12A refer to methods of service. All the rule does is to clarify that service at the address given in the statutory demand is good service.
[16] If a permitted method of service in a statutory demand is wider than those in s 387 of the Act then, and only then, are the permitted means of service expanded. The rule avoids arguments about the status of the address for service in the demand. For example, without the rule and absent agreement, physical delivery to a solicitor who gave their address for service in a demand would not fall within s 387 of the Act. This is because prior to r 19.12A, it could be said that the solicitor’s address had been given in accord with “the rules of the Court having jurisdiction” which would have forced an applicant to rely on estoppel type arguments.
[17] Absent service by email being included in the address for service in the demand, r 19.12A does not authorise service by email. Nor does the rule open the
door to permit the court to validate invalid service pursuant to r 1.5 where service has been attempted by a means not stated in the demand or specified in s 387 of the Act. On this point I adopt the careful analysis of Associate Judge Sussock in Aotearoa Forests Ltd v Land Haul Contractors Ltd, another case concerning service on a solicitor by email.5 Her Honour also had to deal with an argument that Golden Land Civil Ltd permitted the court to regularise service. While a lengthy extract, I adopt her Honour’s reasoning which I set out below.
[37] I do not consider the discretions in the High Court Rules can be relied on to cure the defects in mode and timing of service. Section 387(2) of the Companies Act states that the methods of service in s 398(1) are “the only methods by which a document in legal proceedings may be served on a company in New Zealand”. Section 387 expressly provides that a document in any legal proceeding may be served on a company, including:
(f)by serving it at an address for service given in accordance with the rules of the court having jurisdiction in the proceedings or by such means as a solicitor has, in accordance with those rules, stated that the solicitor will accept service.
[38] Where a document is served at an address set out on a statutory demand as provided for in r 19.12A, service is still in accordance with s 387 of the Companies Act because such service falls within s 387(f) as it is service at an address given in accordance with the relevant rules of the court having jurisdiction.
[39] The fact that r 6.12 states that a document “may” be served on a company pursuant to s 387, rather than “shall” as the previous rule stated, does not in my view assist Aotearoa Forests as r 1.4(3)(c) of the High Court Rules expressly provides that the Rules are subject to “any statute prescribing the practice and procedure of the court in a proceeding”. Section 387(2) of the Companies Act expressly states that the methods in s 387(1) are the only methods by which a document in legal proceedings may be served on a company in New Zealand.
[40] The Companies Act distinguishes between the methods of service for documents in proceedings and documents otherwise. To treat service by email here as if it was service at the physical address for service set out in the statutory demand, as provided for by r 19.12A of the High Court rules, would make service by email essentially an acceptable method of service pursuant to s 387 when it is clearly not.
[41] In any event, s 392(1) of the Companies Act provides that for the purposes of ss 387 to 391 of the Companies Act:6
5 Aotearoa Forests Ltd v Land Haul Contractors Ltd [2023] NZHC 1256.
6 Companies Act 1993, s 392(1)(ca) (although this deeming provision does not apply if the person receiving the document proves, through no fault of their own, the document was not received within the time specified (s 392(2)).
(ca)a document sent by email is deemed to have been received on the working day following the day on which it was sent.
[42] Section 392 applies to service at an email address set out in a statutory demand in accordance with r 19.12A of the High Court Rules because such an address falls within s 387(f), and s 392 applies to all methods prescribed by s 387.
[43] This means that even if the statutory demand had specified the solicitors’ email address as the address at which Land Haul was to be served, service would not have been in time because s 392 expressly deems service to have occurred on the day following the email. Therefore, even if rr 1.5 of the High Court Rules were able to be relied on to cure service by email, rather than physically to the solicitors’ offices, an extension of time would still be necessary. Section 290(3) of the Companies Act prohibits an extension of time being granted for the filing of service of applications to set aside statutory demands. If the application to set aside was not served within time, there is therefore no ability to cure that defect through the application of rr 1.5 or 1.9 of the High Court Rules. Unfortunately, this means the application is not able to proceed.
[18] Mr Hughes submitted that the use of email for communication between solicitors has become so ubiquitous (and I paraphrase) that there was effectively implicit agreement between solicitors to treat service by email as good service. Mr Hughes points to the subject matter of the demand being the subject of email correspondence between the solicitors before it was issued.
[19] I do not accept that submission. A party who agrees to accept service by a stated method cannot subsequently assert that they did not see or receive the document served in accordance with that method. It cannot be assumed that because a particular person in a legal office has corresponded about a debt claimed in a demand that their email address is the appropriate one at which to serve an application to set aside the demand. That person may not necessarily remain with the firm of solicitors, may be on leave, or ill. Prescribed means of service provide certainty to both parties.
Other authorities that have applied Golden Land Civil Ltd
[20] Mr Hughes refers to two cases that have applied Golden Land Civil Ltd. The first is Burgered Restaurants Auckland Ltd v Chunilal.7 In Burgered Restaurants Auckland Ltd, service of an application to set aside a statutory demand occurred when a process server handed the application to an employee of the solicitor’s firm whose
7 Burgered Restaurants Auckland Ltd v Chunilal [2022] NZHC 1903.
address had been given as the address for service in the demand. It seems this occurred at 5:03pm that day.8 Rule 6.5 of the Rules provides that a document may be served at an address for service by leaving the document at that address at any time between 9am and 5pm. It seems the process server got to the solicitor’s office before 5:00pm but there was no one available to receive the document.
[21] There was a subsidiary issue in that case because the statutory demand itself had been served by email. His Honour noted that under s 392(1)(ca) of the Act, a document that is sent by email is deemed to have been received on the working day following the day on which it was sent. On that basis, the 10 working day period for the purposes of s 290(2)(a) of the Act would have expired on 24 February 2022 whereas the service at 5:03pm was on 23 February 2022. Justice Gendall noted:9
… the respondent’s present argument that service of the application to set aside the statutory demand did not occur in time as it occurred at 5:03pm on 23 February I find is without foundation.
[22] The effect of s 392(1)(ca) appears to be the basis of the Court not accepting that the application had been served late. His Honour then went on to say that “In any event I am satisfied here an alternative argument also exists to dismiss this contention.”10
[23] His Honour then referred to r 19.12A and Golden Land Civil Ltd. His Honour applied [19] from that case, set out at [13] above, to cure any irregularity in the document being served three minutes late. That, however, is not the basis of his Honour’s decision. He says “In all these circumstances, if it was required I would have no issue in granting relief under 1.5 of the High Court Rules ….” (emphasis added)11
[24] It is clear that his Honour applied Golden Land Civil Ltd without any contrary submissions being made in respect of that authority. It also appears that the approach in Golden Land Civil Ltd was not the basis of his Honour’s decision and so his
8 Burgered Restaurants Auckland Ltd v Chunilal, above n 7 at [15].
9 At [25].
10 At [25].
11 At [33].
Honour’s comments are obiter. Given the absence of contrary authority or submission being put to his Honour, I do not consider these obiter comments cut across the conclusions I have reached.
[25] The second case is Maple Land International Ltd v Ping.12 The basis of the decision in that case was that the statutory demand itself had not been properly served. However, that conclusion required there to be a valid application to set aside the demand being before the Court. The statutory demand had been served by email at the solicitor’s office which was held not to be good service. As to an argument that the application to set aside the statutory demand had not been validly served, his Honour said:
[38] The second matter concerns Ms Ping’s argument that Maple’s application to set aside the statutory demand could not be served at Mr McGuire’s offices. There is some irony in this stance given the position Ms Ping took on the first issue. However, the submission overlooks r 19.12(A)(2) of the High Court Rules which provides:
(2)An originating application under section 290 of the Companies Act 1993 to set aside a statutory demand may be served, in accordance with rule 6.5, at the address shown in the statutory demand as the creditor’s address or the address for payment.
[39] In this instance, the statutory demand provided that Ms Ping’s address for service and the place for payment was Mr McGuire’s offices. In those circumstances, delivery of Maple’s application to Mr McGuire’s offices would have been an effective method of service.
[26] Counsel in Maple Land International Ltd seem to have assumed that email service was good service and the discussion does not refer to Golden Land Civil Ltd.
[27] In short, the Act is the exclusive regime for the service of proceedings on a company and there is no ability for the Court to cure any defects in service through the application of the Rules.13 I find that position has not been changed by r 19.12A(2). All that rule does is make it clear that addresses for service or payment of demand fall within s 387(8).
12 Maple Land International Ltd v Ping [2022] NZHC 248 at [38] and [39].
13 Livi Investments Ltd v Butler Gilpat Ltd, above n 4; and Arzan Investments Ltd v Berrisford Apartments Ltd (2003) 16 PRNZ 825.
[28] Accordingly, Templeton’s application to set aside the statutory demand issued by WHL was out of time. This application is therefore a nullity and is struck out.
Costs
[29] There is no reason why costs should not follow the event on a 2B basis together with disbursements as fixed by the Registrar. In the absence of any cost memoranda being filed within five working days, and not more than three pages, that shall be the order of the Court as to costs without further ruling.
Associate Judge Lester
Solicitors:
Sharp Tudhope Lawyers, Tauranga Anthony Harper, Auckland
Copy to counsel:
R J Hollyman KC and A J Peat, Barristers, Auckland
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