HURAKIA LODGE LIMITED V DIXON & ANOR HC AK CIV 2007-404-005833

HURAKIA LODGE LIMITED V DIXON & ANOR HC AK CIV 2007-404-005833 26 March 2008IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-005833IN THE MATTER OF Section 290(4) of the Companies Act 1993 BETWEEN HURAKIA LODGE LIMITED Applicant AND PAUL ANDREW DIXON AND LEANNE JANE DIXON AS TRUSTEES OF THE P & L BUILDERS TRADING TRUST Respondent Hearing: 26 March 2008 Counsel: P Ross for applicant C Langstone for respondent Judgment: 26 March 2008 at 1430(ORAL) JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application to set aside statutory demand]Solicitors: McKay Hill, PO Box 1143, Napier for applicant Jones Fee, PO Box 1801, Auckland for respondent[1] The applicant applies to set aside a statutory demand dated 7 September 2007. Counsel filed a consent memorandum dated 2 October 2007 inviting the Court to make orders as follows:1.1 the respondent shall have until 16 October to file and serve a notice of opposition and affidavits in support; 1.2 affidavits in reply (if any) shall be filed and served by 30 October; 1.3 the matters shall be set down for 90 minutes at the first available fixture date after 5 November, excluding Wednesdays.[2] Associate Judge Abbott made orders in a minute issued on 3 October 2007 as follows:3. I make orders by consent that: a. the respondents are to file and serve notice of opposition and affidavits in support by 16 October 2007; b. the applicant is to file and serve any affidavits in reply by 30 October 2007; c. the Registrar is to allocate a hearing for the defended application for the first available date after 5 November 2007 (excluding Wednesdays if possible). One and a half hours is to be allowed.[3] The Associate Judges' scheduler notified counsel of this fixture. [4] Counsel filed a consent memorandum on 19 March 2008 seeking an adjournment of the fixture and that memorandum provided in particular:1. This matter arises in the context of a larger building dispute, of which the present matter before the Court is only a small part. 2. Counsel are agreed that it would be more productive to resolve the whole matter rather than deal with it in a piecemeal fashion. 3. Counsel are hopeful that negotiations may result in a settlement, or at least narrow the scope of the issues in contention. 4. Counsel consent to an adjournment of this matter for a fixture to be allocated in approximately two months time.[5] Associate Judge Robinson declined the application of adjournment for the reasons given in a minute dated 19 March 2008 as follows:1. Counsel have submitted a memorandum advising the Court that they seek an adjournment on the ground that the matter referred to in these proceedings arises in the context of a large building dispute. The application before the Court is to set aside a statutory demand on the ground that the appropriate has by way of counterclaim or cross-demand a set-off which equals or exceeds the sum demanded in the statutory demand. 2. For the purpose of these proceedings to justify an order setting aside the statutory demand all the application [sic] need do is satisfy the Court that it has an arguable case. 3. If as counsel contend the subject of the statutory demand is part of a larger dispute which is already before the Court, then it would seem to me that the applicant has an arguable which will be resolved by those proceedings. In those circumstances it does not seem appropriate for the Court to grant the adjournment. Because the applicant has an arguable case, the appropriate course is to make an order setting aside the statutory demand and not await the outcome of the other proceedings. 4. I observe that the respondent is in default of the consent order made on 2 October for the filing and service of the respondent's affidavit in opposition. 5. For the above reasons, the application for adjournment is declined.[6] No papers have been filed in opposition. [7] The applicant relies on s 290(4) of the Companies Act 1993. It is evident from the papers that applicant and the respondent are parties to a contract to build a lodge on Rakino Island in the Hauraki Gulf. [8] The respondent is the builder under the contract. [9] Without detailing matters raised by the application, the applicant claims numerous breaches in respect of that contract by the respondent. [10] Counsel today advised me that there is no opposition to the making of an order setting aside the statutory demand. That position was apparently communicated before preparation for a defended fixture was undertaken. It arises from the fact that counsel have conferred and are in the course of agreeing a procedure for resolving disputes in relation to the building contract which go beyond the matters raised in the statutory demand.[11] That is appropriate, as is the fact that the respondent no longer opposes the setting aside of the statutory demand. In Jones Odell Motor Bodies Ltd v Hard Core Ltd 17 PRNZ 809 at 813 I repeated a comment I had made in an earlier decision referred to in that judgment that statutory demands should only to be used in cases:which are appropriate, that is, where there is a genuine basis for establishing the evidential foundation so that an application can ultimately be made to appoint a liquidator. It is quite improper for the procedure to be used as a debt collection device or as a device to embarrass a party in a situation where there is a contest as to liability for a given debt.[12] There is a need, however, to deal with costs. Costs on an originating application to set aside a statutory demand are covered by Items 26 and following of the Third Schedule to the High Court Rules. What is appropriate, in this case, is that a category be fixed. This is a Category 2 case. It is necessary that the appropriate Bands for each step are also fixed. [13] I have mentioned that there is no need to prepare for a defended hearing. The result is that an allowance should be made in terms of Item 26 and for the appearance today under Item 29 of Schedule 3 of the High Court Rules.Orders[14] I order: a) That the statutory demand the subject of this application be set aside; b) That the respondent pay costs based on Category 2 Band B and, in particular, as called for under Items 26 and 29 of the Third Schedule to the High Court Rules. _____________________ JA Faire Associate Judge