CORPORATE FINANCE LTD V VTL GROUP LTD HC AK CIV 2007-404-005898

CORPORATE FINANCE LTD V VTL GROUP LTD HC AK CIV 2007-404-005898 8 November 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-005898UNDER the Companies Act 1993 BETWEEN CORPORATE FINANCE LIMITED Plaintiff AND VTL GROUP LIMITED Defendant Counsel: M J Tingey for creditor in support (Grant Samuel & Associates Ltd) Judgment: 8 November 2007 at 11a.m.JUDGMENT OF ASSOCIATE JUDGE ABBOTTThis judgment was delivered by me on 8 November 2007 at 11a.m. pursuant to Rule 540(4) of the High Court Rules.Registrar/ Deputy RegistrarSolicitors: Bell Gully, PO Box 4199, Auckland for Grant Samuel & Associates Ltd Chapman Tripp (M D Arthur), PO Box 2206, Auckland for plaintiff[1] An application by the plaintiff, Corporate Finance Limited, to put the defendant, VTL Group Limited, into liquidation, came before me on 18 October 2007. The defendant had not filed a statement of defence, and did not appear at the hearing. Grant Samuel & Associates Limited (GSAL) had filed a notice of appearance in support of the application, but was not represented at the hearing. [2] Counsel for the plaintiff appeared and sought leave to withdraw the application on the grounds that the plaintiff and defendant had reached agreement as to payment of the debt on which the application was based. There being no other appearances, the plaintiff was given leave to withdraw its application. [3] GSAL has applied by memorandum for the setting aside of the order granting leave to withdraw the application, or alternatively for recall of that order. It does so on the grounds that its failure to appear was a result of oversight by its counsel. It wishes to have the application reinstated so that it can be substituted as plaintiff. [4] Counsel for GSAL relies on r 486 of the High Court Rules, which gives the Court a discretion to set aside a judgment obtained where a party does not appear, if the Court believes there has or may have been a miscarriage of justice. Counsel referred to Mathieson v Jones (CA 198/92, 11 December 1992) where the Court of Appeal said that the test to be applied was whether "it is just in all the circumstances to set aside the judgment". In the alternative, counsel argued that the Court should exercise its inherent jurisdiction to recall: Lopdell v Deli Holdings Ltd (No. 2) (2002) 16 PRNZ 551. [5] In my view this matter falls to be considered under r 486 rather than the Court's inherent power to recall. This is not a case of new law having emerged or oversight of a statutory provision or case authority. It is also doubtful, in my view, that the circumstances of the present case amount to the "very special reason" otherwise needed to justify the Court exercising its inherent jurisdiction to recall:Horowhenua County v Nash (No 2) [1968] NZLR 632.[6] GSAL's request is analogous to an application to set aside a judgment obtained in default. On that basis it is appropriate to apply the considerations set out in Mathieson v Jones (which I adapt for the instant case) : a) Is the failure to appear excusable? b) Does the application for setting aside must have a substantial basis? c) Will the other party suffer or be likely to suffer irreparable injury if the order is set aside? [7] Counsel also invited the Court to adopt, by analogy, the approach taken to applications to enlarge time for filing an amended statement of claim following substitution under r 700 X of the High Court Rules. He referred to authorities which hold that time can be extended under r 6 of the High Court Rules even after the time for filing has expired (and, arguably, the proceeding had thereby come to an end). [8] The following factors support the order being set aside, and the application for liquidation being reinstated: a) There has been no formal sealing of the order; b) It is difficult to see how the plaintiff or the defendant could be prejudiced. GSAL had a right to be substituted. It is reasonable to infer that when the plaintiff made its decision to withdraw it did so knowing that GSAL was likely to seek and be granted substitution. The defendant similarly agreed to make its payment to the plaintiff at a time when it was likely that the substitution would be sought; c) Counsel's oversight was picked up immediately, and the request for setting aside was made the following day; d) GSAL has served its own statutory demand which has expired without any dispute being raised. It is more efficient for it to substitute as plaintiff rather than commence fresh proceedings;e) Filing of fresh proceedings potentially affects the commencement of insolvency (and the various statutory consequences of liquidation). [9] I take the view on the facts before the Court that a just disposal of this application requires that the order granting leave to withdraw the application should be set aside. However, there is no evidence before me that GSAL has given the plaintiff notice of its application. It is entitled to the opportunity to respond to the application. The defendant is not entitled to the same opportunity, having taken no steps to date. It will of course have an opportunity to respond to GSAL's claim if it is substituted as plaintiff. [10] I make the following orders: a) The order made on 18 October 2007 granting the plaintiff leave to withdraw its application for liquidation is set aside unless the plaintiff files a memorandum by 4pm on 9 November 2007 setting out grounds for opposing the application; b) If the plaintiff does oppose the setting aside and GSAL wishes to continue with its application, GSAL is to file and serve a formal application by 15 November 2007, which application is to be listed for hearing in the Miscellaneous Companies List at 11.45am on 22 November 2007; c) If the plaintiff does not oppose, there is an order to take effect at 4pmon 9 November 2007 substituting GSAL as plaintiff, on condition that it files and serves its amended statement of claim and other documents in accordance with r 700 X, and the application for liquidation is to be listed for hearing at 10am on 22 November 2007. ________________________Associate Judge Abbott