The Olive Press Limited v Matapiro Olives (2008) Limited

[2020] NZHC 2058

IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY

I TE KŌTI MATUA O AOTEAROA NGĀMOTU ROHE

CIV-2020-443-023

[2020] NZHC 2058

UNDER

the Companies Act 1993

IN THE MATTER

of an application to put a company into liquidation

BETWEEN

THE OLIVE PRESS LIMITED

Plaintiff

AND

MATAPIRO OLIVES (2008) LIMITED

Defendant

Hearing:	11 August 2020
Counsel:	R Gordon for plaintiff/respondent T Wano for defendant/applicant
Judgment:	14 August 2020

REASONS FOR JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1]    Pursuant to r 31.11 of the High Court Rules 2016, Matapiro Olives (2008) Ltd, the judgment debtor, applies for an order prohibiting The Olive Press Ltd, the judgment creditor, advertising this winding up proceeding, and staying the same, together with a related proceeding (Matapiro Olives (2008) Ltd v The Olive Press Ltd, CIV-2020-435-15) pending its appeal to the Court of Appeal against my judgments of 4 May and 19 June 2020 in which I dismissed the company’s application to set aside a statutory demand. I heard argument at the conclusion of the New Plymouth list on 11 August 2020. Having done so, I delivered judgment in the sense of informing counsel of the orders I proposed to make, and indicated that I would provide brief reasons in writing in due course. I now do so.

THE OLIVE PRESS LIMITED v MATAPIRO OLIVES (2008) LIMITED [2020] NZHC 2058 [14 August 2020]

[2]    The general principles governing such applications were summarised by Wallace J in Nemisis Holdings Ltd v North Harbour Industries Ltd:1

(a)The Court has an inherent jurisdiction to stay winding-up proceedings where the debt upon which such proceedings are founded is the subject of genuine dispute. In those circumstances the plaintiff cannot show it has the status of a creditor or that there has been neglect by the company to pay.

(b)The jurisdiction is an inherent one to prevent abuse of process. There is no inflexible rule.

(c)The governing consideration is whether the proceedings suggest unfairness or undue pressure.

(d)It is a serious matter to stay winding-up proceedings, so the decision to do so is never made lightly. The onus is on the applicant and it is normally necessary to demonstrate “something more” than the balance of convenience considerations which are usually considered on an application for interim injunction. If the defendant company has had an opportunity to file appropriate affidavits, such defendant is required to establish a strong prima facie case of the existence of a genuine dispute on substantial grounds, or show that there are clear and persuasive grounds for a stay.

[3]    One of the circumstances in which the Court has granted such orders is where the judgment upon which the proceeding is founded is the subject of appeal.2

[4]In such cases, it is generally necessary for the applicant to establish:

(a)That the appeal is genuine, and not devoid of merit;

(b)That the order is necessary in the sense that if it were refused the appeal would be rendered nugatory;

(c)That the respondent’s position will not be materially prejudiced by the inevitable delay.

[5]    I am satisfied that Matapiro is genuine in wishing to challenge my earlier judgments, and that there are arguable appellate points.

1      Nemisis Holdings Ltd v North Harbour Industries Ltd (1989) 1PRNZ 379 at 385.

2      Keung v GBR Investments Ltd [2012] NZAR 17 at [12].

[6]    I accept also that if an order is not made the inevitable outcome of this proceeding will be the appointment of liquidators over Matapiro which would be likely to bring an end to the appeal.

[7]    As matters stand, the orders sought would in my view give rise to material prejudice to The Olive Press. The company would be kept out of its judgment at least until the appeal was concluded, increasing its credit risk. However, there have been exchanges between the parties’ solicitors in relation to this, and Mr Wano tells me from the bar that Matapiro is in a position to, and willing to, make arrangements to address those risks by either paying the amount of the judgment debt or otherwise securing for that amount.

[8]    Subject to resolving the issues of the amount that Matapiro should be expected to pay or secure, and the scope of the order, I have reached the view that in the interests of justice such an order should be made, conditional upon Matapiro taking such steps.

[9]    As to quantum, the current position is that the judgment debt on which this proceeding is founded amounts to $129.375. That remains outstanding. There was also a costs award but that has been paid. The Olive Press has now served a statutory demand for $143,750 being the amount it says is due and owing by Matapiro in respect of the 2020 season, and Matapiro has commenced proceedings under CIV-2020-435- 15 referred to earlier for an order setting that statutory demand aside. For The Olive Press Mr Gordon submitted that the amount to be paid or secured should include the amount of its latest statutory demand. In relation to this I accept Mr Wano’s submission that as matters stand that is not a judgment debt and should be excluded. Accordingly, in my judgment, the amount which Matapiro ought to pay into escrow or secure for as a condition precedent to securing the order it seeks is $152,225.01 being the judgment debt together with interest to 4 August 2020 as  calculated by The Olive Press’ solicitors.

[10]   As to the scope of the order, it is not obvious to me that Matapiro is entitled to a stay that applies to anything other than this proceeding. I am not prepared to stay the CIV-2020-435-15 proceeding. That will of course mean that unless the parties

agree otherwise it will be necessary to deal with Matapiro’s application in that proceeding, but that is as it may be.

[11]Against that background, I make the following orders:

(a)I make an interim order pursuant to r 31.11 prohibiting the advertising of this winding up proceeding and staying it until 4.00 pm on 28 August 2020;

(b)That order will continue, pending further court order, if, before that time and date, Matapiro complies with the requirements in (c) and (d) below;

(c)Matapiro is to file and serve a statement of its financial position. This may be in the form of the most recent financial statements or in financial statements prepared by its accountants for this purpose. But, in any event, it must identify any non-current debt;

(d)Matapiro is either:

(i)to pay the amount of $152,225.01 into the trust account of The Olive Press’ solicitors, MinterEllisonRuddWatts, on the basis they will hold those funds on interest bearing deposit on the joint behalves of the parties to this proceeding and not disperse the same other than in accordance with a further court order, or in accordance with a formal written settlement agreement between the parties; or

(ii)provide The Olive Press with a charge over land sufficient to secure for the same amount. I would expect counsel to be able to settle any questions that may arise around this such as the adequacy of any security proposed, but if they cannot do so any such issue may be referred to the Court for determination;

(e)Either party may apply on 24 hours’ notice if the terms of the above orders give rise to particular difficulties.

[12]   As to costs, I accept Mr Gordon’s submission that The Olive Press’ solicitors proposed a compromise more or less on the same terms as set out in this judgment, and, that in those circumstances, The Olive Press should have the costs of and incidental to this application calculated on a 2B basis together with such disbursements as may be fixed by the Registrar.

Associate Judge Johnston

Solicitors:

MinterEllisonRuddWatts, Wellington for plaintiff Govett Quilliam, New Plymouth for defendant