KUM FU STAINLESS STEEL KITCHEN EQUIPMENT LIMITED v LITTLE REPUBLIC NZ LIMITED [2021] NZCA 451

KUM FU STAINLESS STEEL KITCHEN EQUIPMENT LIMITED v LITTLE REPUBLIC NZ LIMITED[2021] NZCA 451 [9 September 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA63/2021[2021] NZCA 451BETWEEN KUM FU STAINLESS STEEL KITCHENEQUIPMENT LIMITEDAppellantAND LITTLE REPUBLIC NZ LIMITEDRespondentHearing: 1 September 2021Court: Kós P, Mander and Palmer JJCounsel: A M Swan for AppellantT J Herbert for RespondentJudgment: 9 September 2021 at 9 amJUDGMENT OF THE COURTA The application to amend the notice of appeal is granted.B The appeal is dismissed.C The appellant must pay the respondent costs for a standard appeal on aband A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Palmer J)[1] This is a commercial dispute over $13,828.50 and a costs award of $20,000.On 9 March 2020, Little Republic NZ Ltd (Little Republic) accepted a quote byKum Fu Stainless Steel Kitchen Equipment Ltd (Kum Fu) to provide and installkitchen equipment for a new restaurant. In May and June 2020, Little Republic raisedconcerns about the work not being done as required. From June to August 2020, theparties disagreed about what was to be done and on what terms. Kum Fu was preparedto do the remedial work but wanted to be paid what it said it was owed under thecontract. Little Republic wanted remedial work done, its legal costs paid, a 10-yearguarantee and for Kum Fu to take responsibility for any non-compliant worksdiscovered. On 27 July 2020, Kum Fu said the remedial work had been done andsought full payment. Little Republic sought originals of the PS3 Producer Statement,warranty and completion certificates. Kum Fu refused to provide them unless anduntil it was paid in full. On 26 August 2020, Kum Fu served a statutory demand onLittle Republic for payment of $13,828.50. A subsequent inspection by an expert forKum Fu revealed two aspects of the work were not compliant with the contract: thefans were not the required distance apart; and the fans did not have speed controls.Kum Fu remedied the first of those matters and offered a credit of $300 (plus GST) inlieu of remedying the second.[2] Little Republic applied to the High Court to set aside the statutory demand.On 21 December 2020, Associate Judge Sussock held there was no question that therewas a substantial dispute between the parties as to whether the debt was owing.1Accordingly, she set aside the statutory demand under s 290(4)(a) of the CompaniesAct 1993 (the Act). She did not allow the demand to stand in reduced figures.2She observed there was evidence that Little Republic had an arguable counterclaimjustifying setting aside the demand under s 290(4)(b) as well, but did not determinethat.3 The Judge subsequently awarded indemnity costs and disbursements of $20,000to Little Republic because Kum Fu acted improperly and unnecessarily in opposingthe application.4[3] Kum Fu appeals. We give leave to enlarge the appeal to include the costsaward, there being no prejudice to Little Republic. Mr Swan, for Kum Fu, submitsthat there was no dispute between the parties when the statutory demand was served,1 Little Republic New Zealand Ltd v Kum Fu Stainless Kitchen Equipment Ltd [2020] NZHC 3478at [47].2 At [46].3 At [47].4 Little Republic New Zealand Ltd v Kum Fu Stainless Kitchen Equipment Ltd [2021] NZHC 1836that Kum Fu was entitled to the payment it sought and that there was no evidentialbasis for an arguable counterclaim by Little Republic.[4] There was clearly a substantial dispute between the parties at the timethe statutory demand was served. The dispute concerned what sum was owing andalso, by inference, whether the remedial works had been satisfactorily completed.There was an even more substantial dispute about those issues at the timethe Associate Judge determined, under s 290(4)(a) of the Act, "there is a substantialdispute whether or not the debt is owing or is due".5 By then, it was clear the workcontracted for had not been done. It is not clear Kum Fu was entitled to the paymentit sought. The Associate Judge was correct to set aside the statutory demand.The application should not have been opposed. It was open to her to award indemnitycosts against Kum Fu.Result[5] Accordingly, we dismiss the appeal. The appellant must pay the respondent costsfor a standard appeal on a band A basis and usual disbursements.Solicitors:Auckland Property Legal Service, Auckland for AppellantForest Harrison Lawyers, Auckland for Respondent5 See Substantive judgment, above n 1, at [35] and [47].