ULS Limited t/a Urban Flooring v The Flooring Centre Limited

[2019] NZHC 1303

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-000096

[2019] NZHC 1303

UNDER

the Companies Act 1993

IN THE MATTER OF

a statutory demand served on 15 February 2019

BETWEEN

ULS LIMITED t/a URBAN FLOORING

Applicant

AND

THE FLOORING CENTRE LIMITED

Respondent

Hearing:	(On the papers)
Judgment:	11 June 2019

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 11 June 2019 at 11.45 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

Solicitors:Layburn Hodgkins Lawyers, Christchurch Saunders & Co, Christchurch

Counsel:            B Walker, Christchurch

ULS LIMITED t/a URBAN FLOORING v THE FLOORING CENTRE LIMITED [2019] NZHC 1303 [11 June 2019]

[1]                  The Flooring Centre Limited (Flooring Centre) issued a statutory demand against ULS Limited trading as Urban Flooring (Urban Flooring) claiming

$16,197.17.

[2]                  Urban Flooring applied to set aside the statutory demand. It then made a payment of $9,675.50 on 19 March 2019. Given the quantum left at stake and in issue Flooring Centre withdrew the balance of the statutory demand to pursue the matter in the District Court. Given the statutory demand was withdrawn there was no need to deal with Urban Flooring’s application to have it set aside. The remaining issue is costs.

[3]                  Flooring Centre seeks costs on a 2B basis on the basis it was successful in that Urban Flooring paid over 50 per cent of the sum demanded. Urban Flooring on the other hand seeks costs on the basis it was successful in that its application led to the statutory demand being withdrawn. It says the demand should not have been issued in the first place.

[4]                  Mr Chiu, a director of Urban Flooring, swore an affidavit in support of the application and Ms Scobie swore an affidavit in reply on behalf of Flooring Centre.

[5]                  The parties had a trading relationship. Urban Flooring is a wholesaler. Flooring Centre supplies and installs flooring. It purchases flooring from Urban Flooring. As part of the parties’ relationship, Urban Flooring pays Flooring Centre a cash rebate. The present issue has arisen, or been complicated by the fact Urban Flooring also purchases items from Flooring Centre from time to time.

[6]                  There were email exchanges between the parties regarding the rebate due in September 2018. While Urban Flooring made a payment of $9,675.50 at that time Flooring Centre credited it to the debtor account Urban Flooring had with Flooring Centre. The statement of account issued by Flooring Centre on 6 November 2018 showed the sum of $9,675.50 had been applied to the debtor account, rather than the rebate account.

[7]                  When the balance of the debtor account was paid on 30 November 2018, Ms Scobie emailed Mr Chiu noting the debtor’s account was cleared, but also asking him to send details of the rebate payment. Further requests followed in December and January. When payment was not forthcoming, the demand was issued in February 2019.

[8]                  The demand for the $16,197.17 recorded it as being the sum outstanding from and owing by Urban Flooring to Flooring Centre for the flooring rebate payment.

[9]                  While Urban Flooring accepts it made a payment of $9,675.50 after the demand was served it says that amount was not related to a flooring rebate payment as demanded. Its position is that all amounts pursuant to the rebate scheme had been kept current since November 2018.

[10]              However, it should have been obvious to Urban Flooring that Flooring Centre had incorrectly credited the sum of $9,675.52 to its other account with Flooring Centre. If Urban Flooring had reviewed its own accounts it would have been able to advise Flooring Centre of the correct position. It is clear that Urban Flooring owed Flooring Centre at least $9,675.52 of the amount demanded in the statutory demand, if not for rebates, then on the debit account.

[11]              Had the demand been issued for $9,675.52 Flooring Centre would have been entitled to costs as a successful party to the extent that the object of issuing the statutory demand was to obtain payment and that has been achieved.

[12]              However, the fact the demand claimed more than that, and Flooring Centre has acknowledged the disputed balance will have to be heard in the District Court, counts against it. On the other hand, it cannot be said that in practical terms Urban Flooring has succeeded in the entirety. If the matter had been argued the Court could have, in the exercise of its discretion, directed payment of the lesser sum.

[13]              The appropriate outcome in the present case is for costs to lie where they fall. Order accordingly.

Venning J