Wells v Verisure Investigations Limited

[2012] NZHC 1386

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-00660 [2012] NZHC 1386

UNDER  the Companies Act 1993

BETWEEN  NEIL EDWARD WELLS Plaintiff

ANDVERISURE INVESTIGATIONS LIMITED

Defendant

Hearing:         15 June 2012

Appearances: Mr B Atkins for Plaintiff

Mr P McCutcheon for Defendant

Judgment:      15 June 2012

ORAL JUDGMENT OF ASSOCIATE JUDGE DOOGUE

Solicitors:

Brookfields, P O Box 240, Auckland - [email protected]

Mr Peter McCutcheon , Auckland – [email protected]

WELLS V VERISURE INVESTIGATIONS LIMITED HC AK CIV-2012-404-00660 [15 June 2012]

[1]    An application was filed in March 2012 for an order restraining publication of an  advertisement  of liquidation  application.    There are several  grounds  set  out. These  include  that  the  liquidation  is  being  used  in  an  oppressive  and  bullying manner, that the objective of the proceedings is to destroy the livelihood of the director.  The fact that bankruptcy proceedings are being brought against the director is also referred to.   Another ground is that it is said that the background matter “involves corruption on a national scale” and it needs to be investigated.  Further it is said the publication of a notice in itself would be detrimental to the company’s ability to  trade and  the  confidence that  clients  should  have in  a security based company.  Further matters were advanced by Mr McCutcheon at the hearing today. He said that the director, Ms Haden has paid into his trust account the $125,000. This  is  apparently  referable  to  an  order  made  in  bankruptcy  proceedings  by Sargisson AJ.

[2]    Objection is taken to Mr Wells claiming the costs order that was made by District Court Judge Joyce.  It is said that Ms Haden and/or the company did respond appropriately when the statutory demand was served.  This is taken to mean that the company said there was a bona fide dispute.  It is said that Mr Wells has a personal animus against Ms Haden and or the company and further pursuing the proceeding is outside the objectives of the trust constituted by the first plaintiffs.  I was also told that application is now going to be made to the District Court to set aside the judgment of Judge Joyce on the grounds that it was obtained by fraud.

[3]    The applicable principles to stay applications were set out in the judgment of

Wallace J in Nemisis Holdings Ltd v North Harbour Industrial Holdings Ltd.[1]

[1] Nemisis Holdings Ltd v North Harbour Industrial Holdings Ltd (1989) 1 PRNZ 379.

[4]    (Mr McCutcheon confirms that the application has already been filed).   The principles are summarised in McGechan’s commentary at paragraph 31.11.02:

31.11   Power to stay liquidation proceedings

(1)       If an application for putting a company into liquidation is made under rule 31.3, the defendant company, or, with the leave of the court, any creditor or shareholder of that company or the Registrar of Companies, may, within 5 working days after the date of the service of the statement of claim on the defendant company, apply to the court—

(a)       for  an  order  restraining  publication  of  an  advertisement required by   rule 31.9 or any other information relating to that statement of claim; and

(b)       for an order staying any further proceedings in relation to the liquidation.

(2)       The court must treat an application under subclause (1) as if it were an  application for an interim injunction and, if it makes the order sought, it may do so on whatever terms the court thinks just.

(3)      The inherent jurisdiction of the court is not limited by this rule.

[5]      In general, applications of this kind are typically made in cases where there is a genuine dispute about the existence of the debt.  It is noted that the jurisdiction to stay is an inherent one to prevent abuse of process and that the governing consideration is whether the proceedings suggest unfairness or undue pressure.  It is also a requirement that the defendant should establish a strong prima facie case of the existence of a genuine dispute on substantial grounds.

[6]      Judge Joyce’s judgment was entered on 13 March 2008.  Mr Wells recovered

$50,000 by way of general damages and as well $7,500 exemplary damages.  This last order, though, was against Ms Haden and not the company.

[7]      The judgment has not been disturbed by an Appeal Court.  It would appear from the grounds contained in the application to the District Court that a substantial part of the defendant’s claim is that the proceeding was characterised by misleading evidence and  the withholding of vital  evidence  by the defendants  who  are two barristers and a Justice of the Peace.   It is also said the first defendant swore the statement of claim in circumstances which established perjury.

[8]      There is no dispute in this case that a statutory demand has been served or that the judgment is still in effect.   The power to grant a stay is discretionary.   I consider briefly the grounds that have been advanced.

[9]      There is no doubt that bad blood has arisen between Mr Wells and Ms Haden who is the principal of the defendant company.  That on its own is not uncommon.  It is not a ground to stay a liquidation application.  Likewise assertions that a creditor is motivated by punitive and malicious motives is one that is commonly made.   It tends to distract though from the central issue which is whether the company is solvent.   The company is presumptively insolvent in this case because it did not comply with the statutory demand.  There has been no attempt to set the statutory demand aside.

[10]     While reference is made to the $125,000 being paid into Mr McCutcheon’s trust account that sum relates to the insolvency proceedings and not to these.  There is no pending attempt to be made to satisfy the terms of the District Court judgment. That judgment even allowing for a deduction of the punitive damages would still leave a claim which is within the Court’s liquidation jurisdiction being an amount in excess of $1,000.   Overall, I do not consider that a strong prima facie case of the existence of a genuine dispute on substantial grounds can be made out.  Ms Haden no doubt regards it as bullying and oppressive for the plaintiffs to continue with their liquidation proceedings but the fact is that this is really a case where a plaintiff is seeking to enforce an undisturbed judgment which goes back, as I have said, to March 2008.  In my view there are no grounds for ordering a stay and the application

will be dismissed.

J P Doogue

Associate Judge