OAKLEY v NEW ZEALAND LIVESTOCK HOLDINGS LTD [2022] NZHC 1323

OAKLEY v NEW ZEALAND LIVESTOCK HOLDINGS LTD [2022] NZHC 1323 [7 June 2022]IN THE HIGH COURT OF NEW ZEALANDDUNEDIN REGISTRYI TE KŌTI MATUA O AOTEAROAŌTEPOTI ROHECIV-2022-412-000020[2022] NZHC 1323UNDER the Companies Act 1993IN THE MATTER of an application to put NEW ZEALANDLIVESTOCK HOLDINGS LIMITED intoliquidationBETWEEN JOHN ROBERT OAKLEYPlaintiffAND NEW ZEALAND LIVESTOCKHOLDINGS LIMITEDDefendantHearing: 2 June 2022 (List Court)Appearances: A L Clark-Tahana (as agent) for PlaintiffG A Paine for DefendantJudgment: 7 June 2022COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSENThis judgment was delivered by me on 7 June 2022 at 2.30 pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:[1] The plaintiff applies to liquidate the defendant company. This ruling concernsan application by the defendant company for leave to file a statement of defence outof time.1[2] The proceeding first came before the Court for hearing on 5 May 2022. Thedefendant company had not filed a statement of defence. Mr Paine appeared on behalfof the defendant company and advised the debt claimed by the plaintiff was disputedand that the defendant company wished to file a statement of defence. To do so thedefendant company required the leave of the Court and the plaintiff opposed thegranting of leave. I made timetabling orders for the filing of an application for leaveand adjourned the proceeding to 2 June 2022.[3] The defendant company filed an application for leave to file a statement ofdefence on 18 May 2022. The application was made on one ground only, that is:That the amount claimed in the statutory demand was paid and paid prior tothe matter being called on the 5th of May in this Honourable court.[4] The defendant company's application was not supported by an affidavit. Nonehas been filed since. I note, however, that on 6 May 2022 the defendant company hadpurported to file a statement of defence without leave. In it the defendant companydenied it was indebted to the plaintiff. It asserted that a statutory demand dated 5 April2022 for $43,915.63 had been served by the plaintiff which had been paid in full withinthe statutory timeframe. This was a curious pleading as in this proceeding the plaintiffrelies upon a statutory demand for $146,210.77 served on 3 March 2022. The statutorydemand the defendant company referred to is another statutory demand issued by theplaintiff in respect of a further amount owed to it by the defendant company. Theamount claimed in that further demand was for rent that fell due for payment on 1April 2022 and is not the subject of this proceeding.[5] The plaintiff filed a notice of opposition to the defendant company'sapplication on 31 May 2022. The notice of opposition was supported by an affidavitalong with helpful written submissions.1 High Court Rules 2016, rr 31.22 and 31.22.[6] When the matter was called before the Court on 2 June 2022, Mr Paine advisedthat his client had, late on 1 June 2022, made a payment to the plaintiff which clearedall of the defendant company's indebtedness to the plaintiff save in respect of anamount for rent that fell due on 1 June 2022. Ms Clark-Tahana, who appeared for theplaintiff, advised me the amount owed is a balance of $39,760.35 but it has not beenthe subject of any demand.[7] Notwithstanding the payment made on 1 June 2022, the plaintiff continued toseek an order for liquidation. Mr Paine opposed the making of such an order. Itappears, having heard from Ms Clark-Tahana, the plaintiff continues to seek aliquidation order because the defendant company remains indebted to it and becausethere are issues between the parties concerning a lease of land which the plaintiff feelswould be resolved by the appointment of a liquidator. Mr Paine submitted that theCourt has no jurisdiction to make a liquidation order. He submits the defendantcompany has proven, by the payments it has made, that it is not insolvent.[8] Having heard from counsel, I advised them that I would require furtherevidence to consider the plaintiff's position and adjourned the hearing to 30 June 2022to allow that further evidence to be filed and responded to by the defendant company,if the plaintiff wished to pursue the matter.[9] I also advised counsel that I intended to dismiss the defendant company'sapplication for leave to file its statement of defence out of time and award costs onthat application to the plaintiff. Mr Paine objected to that course. He referred to thefact the defendant had made three large payments to the plaintiff since the proceedingwas filed. I understood him also, initially, to maintain the position that the defendantcompany had paid the debt that was the subject of the proceeding before the lasthearing. He referred to there being confusion about the actual amount owing whichhas now been cleared up and all debt, apart from the $39,760.35 due 1 June, has beenpaid.[10] The evidence satisfies me that the following are the facts of this case:(a) On 3 March 2022, the plaintiff served upon the defendant company astatutory demand for an amount of $146,210.77 which was made up asfollows:(i) Rent for lease of land under deed of lease dated 19 December2019 being $131,746.89 ($43,915.63 payable on 1 January2022, 1 February 2022 and 1 March 2022);(ii) Interest payable on rent due 1 January and 1 February under thelease being $1,024.68 and $512.34 respectively; and(iii) Invoice 74951 dated 30 November 2021 for $12,926.86 inrespect of use of equipment.(b) The statutory demand expired 15 working days later on 24 March 2022.(c) On 30 March 2022, the plaintiff commenced this proceeding for theliquidation of the defendant company.(d) On 11 April 2022, the defendant company made a payment to theplaintiff of $95,975.(e) On 12 April 2022, the defendant company made a further payment tothe plaintiff of $35,771.89.(f) The effect of the two payments was that a balance was left owing underthe statutory demand of $14,463.88.(g) On 12 April 2022, the plaintiff served a further statutory demand inrespect of rent due on 1 April 2022 amounting to $43,915.63.(h) Also, on 12 April 2022, the defendant company was served with theseproceedings.(i) The defendant company had 10 working days from service to file astatement of defence but did not do so.(j) On 22 April 2022, the plaintiff's application was advertised in theGazette.(k) On 25 April 2022, the plaintiff's application was advertised in theOtago Daily Times.(l) On 1 May 2022 and 1 June 2022 further rent fell due for payment bythe defendant company amounting to $87,831.26.(m) On 5 May 2022, the matter came before the Court for the first time.(n) On 1 June 2022, the defendant company made a further payment to theplaintiff which cleared the balance owing under the statutory demand(served on 3 March 2022) and all other sums owing by the defendantcompany to the plaintiff other than the rent of $39,760.35, being abalance of rent due 1 June 2022.[11] I understand the defendant company's application relies upon r 31.20, althoughthe notice of application does not refer to any High Court Rule or legal principles.Rule 31.20 provides:31.20 Effect of failure to file statement of defence or appearanceIf a person who is entitled to file a statement of defence or anappearance in a proceeding commenced by the filing of a statement ofclaim under rule 31.3 fails to file a statement of defence or anappearance within the time prescribed, that person must not, withoutan order for extension of time granted on application made under rule31.22 or the special leave of the court, be allowed to appear at thehearing of the proceeding.[12] The relevant principles are as follows:(a) Liquidation proceedings should not be protracted for proceduralreasons as the rules of the Court are designed to assist the speedyresolution of such proceedings.(b) An applicant seeking an extension of time under r 31.20 must producematerial of substance to justify the Court exercising its discretion or, inother words, that there is a proper foundation for the application.(c) To obtain an extension of time under r 31.20 the applicant mustestablish that it has a genuine argument or defence to the claim. If theapplicant can establish the threshold requirement, the Court may alsoconsider whether the applicant is solvent, whether the applicant'sfailure to file a statement of defence is reasonably explained andwhether there is any prejudice to the plaintiff in granting the extension.(d) The ultimate consideration that informs the exercise of the Court'sdiscretion is the overall justice of the case.2[13] Here, the defendant company had no grounds to seek an extension of time tofile a defence. It had no defence. The only matter it raised was an assertion theplaintiff's statutory demand had been satisfied in full prior to the hearing on 5 May2022 when that was not the case. It advanced no other grounds of defence. Further,the defendant company filed no affidavit/s in support of its application and there wasno evidence as to its solvency and no explanation for its failure to file a statement ofdefence within the time prescribed by r 31.17 of the High Court Rules 2016.[14] The plaintiff has been put to the cost and delay associated with opposing theapplication. It was inevitable, in the circumstances as I have described, that thedefendant company's application would be dismissed and that costs would follow theevent and be payable to the plaintiff. It is appropriate that such costs be awarded on a2B basis with any reasonable and necessary disbursements.Result.[15] The defendant company's application for leave to file a defence out of time isdismissed. The plaintiff is entitled to costs on a 2B basis and disbursements to be fixedby the Registrar.2 Body Corporate 62870 v Health Distributors (Holdings) Ltd [2018] NZHC 1717 at [8].[16] This proceeding is adjourned to be called before the Court again at 10.00 amon 30 June 2022. If the plaintiff intends to maintain its position and seek to persuadethe Court that an order for liquidation of the defendant company should be made(notwithstanding the defendant company's payments) then it must have filed anyfurther evidence by 16 June 2022. The defendant company shall have leave to beheard on that matter and file any evidence in reply by 23 June 2022._______________________O G PaulsenAssociate JudgeSolicitors:Argyle Welsh Finnigan, AshburtonG A Paine, Barrister, Dunedin