Watts & Hughes Construction Ltd v Complete Siteworks Company Ltd - [2014] NZHC 2600

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2014-485-5124 [2014] NZHC 2600

IN THE MATTER OF The Companies Act 1993

BETWEEN

WATTS & HUGHES CONSTRUCTION LIMITED

Applicant

AND

COMPLETE SITEWORKS COMPANY LIMITED

Respondent

Hearing: On the papers

Counsel:

R Kettelwell for Applicant
G J Luen for Respondent

Judgment:

22 October 2014

JUDGMENT OF ASSOCIATE JUDGE SMITH ON RESPONDENT'S CLAIMS FOR INTEREST AND COSTS

[1] In a judgment delivered on 31 July 2014, I declined to set aside a statutory demand issued by the respondent (CSC). I ordered the applicant (Watts & Hughes) to pay CSC the sum of $306,077.23 within seven days, and I invited counsel to file memoranda on CSC’s claim for interest on the amount set out in its statutory demand, and costs. Memoranda from counsel have now been received.

The claim for interest

[2] The statutory demand issued by CSC did not include any claim for interest. CSC nevertheless invites the court to award interest on the amount claimed at the rate of 5 per cent per annum from the date the principal sum became due to CSC (27 March 2014) down to the date the principal sum is paid to CSC. CSC relies on
s 87 of the Judicature Act 1908, which provides as follows:

WATTS & HUGHES CONSTRUCTION LIMITED v COMPLETE SITEWORKS COMPANY LIMITED [2014] NZHC 2600 [22 October 2014]

87 Power of Courts to award interest on debts and damages

(1) In any proceedings in the High Court, the Court of Appeal, or the Supreme Court for the recovery of any debt or damages, the Court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate, not exceeding the prescribed rate, as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment:

Provided that nothing in this subsection shall—

(a) Authorise the giving of interest upon interest; or

(b) Apply in relation to any debt upon which interest is payable as of right, whether by virtue of any agreement, enactment, or rule of law, or otherwise; or

(c) Affect the damages recoverable for the dishonour of a bill of exchange.

…

[3] Counsel were unable to point to any case in which interest has been awarded (on the hearing of an unsuccessful application to set aside a statutory demand) on the principal sum claimed in the statutory demand, where the demand did not include any claim for interest. The one case to which counsel referred is against CSC on the point. The case is Fenton Projects Ltd v Carlton Gore Holdings Ltd, in which Associate Judge Sargisson declined to award interest on the amount in the statutory
demand, noting:1

The claim for statutory interest is not a debt that is owing and due and is not the subject matter of the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] NZHC 2600
Decision Date: 22 October 2014

CaseChat Overview and Summary

Watts & Hughes Construction Ltd (the applicant) sought to set aside a statutory demand issued by Complete Siteworks Company Ltd (the respondent). The demand was for the sum of $306,077.23. In a prior judgment, the court declined to set aside the statutory demand and ordered the applicant to pay the respondent the amount claimed. The court was now required to determine the respondent's claims for interest on the debt and for costs. The respondent sought interest on the debt at 5 per cent per annum from 27 March 2014, the date the principal sum became due, down to the date the principal sum is paid to the respondent. The respondent also claimed solicitor/client costs in the sum of $45,357.91 (including GST and disbursements).

The court rejected the respondent's claim for interest. The court concluded that interest could not be awarded because the statutory demand did not include any claim for interest and because the issue of a statutory demand was not a "proceeding in the High Court" within the meaning of s 87 of the Judicature Act 1908. The court also rejected the respondent's claim for costs in part. The court found that the respondent was entitled to reasonable and actual solicitor/client costs for steps reasonably taken in opposing the applicant's application. The court awarded $20,450 in legal costs and $1,400.53 in disbursements, for a total of $21,850.53.

The court dismissed the respondent's application for an award of interest on the debt and ordered the applicant to pay the respondent $21,850.53 for costs and disbursements.

Orders