OPC MANAGED REHAB LTD V ACCIDENT COMPENSATION CORP CA CA149/04

OPC MANAGED REHAB LTD V ACCIDENT COMPENSATION CORP CA CA149/04 4 October 2005IN THE COURT OF APPEAL OF NEW ZEALAND CA149/04BETWEEN OPC MANAGED REHAB LIMITED Appellant AND ACCIDENT COMPENSATION CORPORATION Respondent Hearing: 3 August 2005 Court: Glazebrook, Chambers and O'Regan JJ Counsel: P R Jagose and S J Fairbrother for Appellant M R Heron and G A D Neil for Respondent Judgment: 4 October 2005JUDGMENT OF THE COURT A We allow the appeal and set aside the order made in the High Court. But we make the following orders: (a) The statutory demand is set aside, except as to the sum of $377,520; and (b) The appellant will have a period of 15 working days from the date of this judgment to pay to the respondent that sum of $377,520, failing which the respondent can proceed with an application to have the appellant placed in liquidation. B The appellant must pay to the respondent costs of $6,000 plus usual disbursements.REASONS(Given by O'Regan J)Introduction[1] The appellant (OPC) provided claims management services to the respondent (ACC). After the termination of their contractual relationship, ACC formed the view that OPC had been overpaid for the services it had provided to ACC by $695,190. Eventually ACC filed a statutory demand claiming a debt due by OPC to ACC for that amount. [2] OPC applied to the High Court to set aside the statutory demand. The application was heard by Associate Judge Gendall, and he issued his decision on 24 June 2004: HC WN CIV–2003–485-1839. The Judge did not set aside the statutory demand, but amended it so that it required payment of a sum of $334,000 only. He ordered that OPC had 15 working days to make payment of that sum failing which ACC could proceed with an application to have OPC placed in liquidation. [3] OPC appealed against the refusal to set aside the statutory demand and ACC cross-appealed against the amendment of the statutory demand reducing the amount to $334,000.Factual background[4] Between June 2000 and May 2002, OPC provided case management services to ACC in relation to Pacific Islanders who were recovering from injuries caused by accident. There were two separate agreements between OPC and ACC, one entered into in June 2000, and the other entered into in June 2001. On 31 May 2002 ACC gave OPC three months notice of termination of the 2001 agreement.[5] After the termination of the arrangement, and a subsequent transitional arrangement, ACC conducted an audit of claims submitted by OPC to ACC between 2000 and 2002. As a result of that process ACC concluded that it had overpaid OPC by $695,190. An interview took place between ACC representatives and a director of OPC, Mr Ikiua and some time later ACC formally claimed the amount it said had been overpaid. [6] There was a dispute between the parties as to whether this interview was a "without prejudice" communication which was not resolved by the Associate Judge and which does not to be resolved by us either. [7] ACC claims that it offered OPC every opportunity to review the files and contest any findings made in the course of the ACC audit, but that OPC has not taken up that opportunity. [8] A subsequent interview took place between ACC representatives and Mr Ikiua on 15 October 2002. During that interview Mr Ikiua acknowledged that overpayments had been made to OPC, but did not quantify them. This interview was not on a "without prejudice" basis. [9] ACC formally sought repayment of the $695,190 in a letter dated 8 November 2002 (but apparently not delivered it to Mr Ikiua until 22 November 2002). OPC replied in a letter dated 29 January 2003. In that letter Mr Ikiua proposed on behalf of OPC that the parties reach agreement on the amount owed by OPC in respect of sums incorrectly paid in 2001-2002, establish an improved case management service by OPC to ACC and agree on a formula for repayment of any amount mutually determined to be owed by OPC to ACC. [10] There was then a meeting on 24 February 2003 between a number of ACC representatives and Mr Ikiua and Mr Apa, who was also a director of OPC. ACC contends that the parties agreed at that meeting that they would settle the dispute by OPC paying to ACC $334,000. In early April 2003, ACC wrote to OPC to record what it said had been agreed on 24 February 2003: the essential point was an agreement that $100,000 would be paid by 15 April 2003 and the remaining$234,000 would be paid in 18 equal monthly instalments, commencing on 15 May 2003. OPC was asked to confirm its agreement, but in a letter written on the same day OPC said it did not accept that any overpayment or incorrect payments to OPC had been made by ACC. [11] Eventually, on 13 August 2003, ACC issued a statutory demand to OPC for $695,190. In the operative paragraph, ACC demanded that OPC pay "the sum of $695,190.00 being an amount overpaid to you pursuant to two contracts between ACC and [OPC] commencing 1 June 2000 and 24 June 2001 in respect of the management and rehabilitation of ACC claims". It did not specify the legal basis on which the sum was payable by OPC to ACC. [12] On 28 August 2003, OPC applied to set aside the statutory demand. [13] On 17 December 2003, OPC was struck off the Register of Companies.High Court decision[14] In the High Court Associate Judge Gendall dismissed OPC's application to set aside the statutory demand, but amended the statutory demand to the sum of $334,000. [15] The Associate Judge considered the three main issues to be: (a) Whether the demand was in respect a "debt due" to ACC. (b) Whether there was a substantial dispute as to whether a sum was due sufficient to justify setting aside the demand. (c) Overall, whether the demand ought to be set aside. [16] In regard to the first issue, the Associate Judge considered that there may have been some merit in OPC's claim that the $695,190 specified in the demand wasnot a debt due to ACC. However he considered that that issue did not require definitive resolution for the determination of the case. [17] On the evidence before him, the Associate Judge found that OPC and ACC had reached a settlement agreement to the effect that OPC would pay ACC $334,000. He found that the settlement agreement created a clear debt due from OPC in the sense of a present obligation to pay the $334,000 when demanded. [18] Accordingly, the Associate Judge took the view that the statutory demand for $695,190 overstated the debt due. However, this could not invalidate the demand: the amount due of $334,000 was not a demand for payment of an entirely different debt or a debt the subject of a substantial dispute. The Associate Judge said: "The $334,000 is undeniably due and clearly represents part of the alleged over-payments for which the original demand was issued". [19] In regard to the second issue, the Associate Judge found that OPC had not discharged its onus of showing there was a genuine and substantial dispute as to the existence of the debt with ACC. He said there may be some dispute as to the exact amount of the total overpayment, but that it was clear that a substantial debt was acknowledged by OPC, at least as to the $334,000. [20] The Associate Judge also discussed OPC's financial position. He cited the fact it was no longer trading, had no or minimal assets, that ACC's claims of insolvency had gone effectively unchallenged, and further that no financial statements or other material or evidence as to solvency were put before the Court. The Associate Judge concluded that the only reasonable conclusion was that OPC's solvency must be seriously in question. [21] The Associate Judge therefore ordered that the debt claimed from OPC in the statutory demand be amended to the sum of $334,000 in accordance with the settlement agreement, and that that debt be paid within 15 working days of the judgment, failing which ACC could proceed with an application to have OPC placed into liquidation.Restoration of OPC to Register of Companies[22] Before turning to the substantive issues, we record that counsel for OPC told us that OPC had been restored to the Register of Companies. It was accepted by counsel for both parties that the restoration of OPC to the register meant that any jurisdictional issues which may have arisen as a result of OPC having been struck off the register were remedied. We therefore say no more about that issue.Was there an agreement to settle?[23] It is also appropriate to record at the outset that, during the course of argument, and after some initial reluctance to do so, Mr Heron abandoned the contention that OPC and ACC had reached an agreement to settle their dispute by the payment to ACC of $334,000 at the meeting of 24 February 2003. That removes the substratum of the High Court decision, which means that we must consider the matter afresh.Sections 289 and 290: Issues on appeal[24] The requirements for a statutory demand are set out in s 289(2) of the Companies Act 1993. For present purposes, the only relevant requirement is that set out in s 289(2)(a), which requires that a statutory demand must "be in respect of a debt that is due and is not less than the prescribed amount". The prescribed amount is $1,000: reg 5 of the Companies Act 1993 Liquidation Regulations 1994. [25] ACC says that the fact that there has been an overpayment by ACC creates an obligation on the part of OPC to refund the amount overpaid, and that that obligation is a "debt due" in terms of s 289(2)(a). [26] OPC denies this. It says that ACC may have a basis for a restitutionary claim for money had and received, but that it must make that claim and obtain judgment before it can say that the overpaid amount is a "debt due". That is the first issue that arises on the appeal.[27] OPC's application to set aside the statutory demand was made under s 290 of the Companies Act. For present purposes, the relevant provision is s 290(4)(a), which provides that the Court may set aside a statutory demand if satisfied that there is "a substantial dispute whether or not the debt is owing or due". If the first issue is decided in ACC's favour, the second issue on the appeal is whether there is such a substantial dispute in this case."Debt due"[28] Counsel for OPC, Mr Jagose argued that there was no "debt due" in the present case. He said that ACC claims that overpayments were made by ACC to OPC, and if that can be established ACC may have a claim for money had and received. But he said that would not be a debt for the purposes of s 289. Rather, it would be just a claim. For OPC's liability to follow, the claim needed to be brought and determined in ACC's favour, and only then would there be a prior obligation transforming ACC's claim into OPC's debt. In that regard, Mr Jagose referred us to the definition of "debt" given by Hammond J in Colonial Mutual Life Assurance Society Limited v Commissioner of Inland Revenue (1999) 19 NZTC 15,375 at [109] (HC):a debt is something owed by one person to another. In legal (and common) usage, it refers to what arises between the parties by reason of a prior obligation, whether contractual or statutory. The debtor has an obligation to pay "the debt", and can be sued on it.[29] Mr Jagose placed particular emphasis on the reference to a contractual or statutory basis for the debt. He noted that there was no provision in the contract between ACC and OPC which provided for repayment by OPC of amounts overpaid by ACC, and no statutory requirement to do so either. There is a statutory requirement for recipients of accident compensation payments who are overpaid to refund overpayments, but it was common ground that this provision did not apply to overpayments for services rendered to ACC under a contract, as happened here. He said ACC's demand in the present case simply sought repayment of the amount allegedly overpaid pursuant to the contracts between ACC and OPC, but he described the overpayment as "an unproven assertion".[30] Mr Jagose said if ACC wished to institute proceedings for recovery of the overpayments in money had and received, it should have done this by way of an ordinary proceeding, or, perhaps, sought summary judgment. If it were successful, then the judgment would create a debt owing to ACC by OPC. But, in the absence of those steps being taken, the institution of a statutory demand was, he argued, an abuse of process and should therefore be set aside. He said it was notable that the Associate Judge upheld the demand only on the basis of a finding (now unsustainable in view of ACC's concession) that there was a settlement contract between OPC and ACC which created a contractual obligation on the part of OPC to pay ACC. [31] Mr Jagose said this case was analogous with the decision in Re Prime Link Removals Ltd [1987] 1 NZLR 510. In that case, the statutory demand was for an amount representing the cost incurred by the creditor in fixing goods which had been damaged as a result of the alleged negligence of Prime Link in transporting them. The demand was set aside as an abuse of process. The claim was a claim for damages for breach of contract which had not been converted to a judgment debt, so it was still wholly prospective and contingent. It was not therefore "a sum due" in terms of s 218(a) of the Companies Act 1955. [32] Mr Jagose said that the conceptual difficulty with the use of the statutory demand process in the present case had been pointed out to ACC as soon as the statutory demand was filed, and ACC has therefore had every opportunity to proceed in a proper manner by the institution of High Court proceedings and, if appropriate, the seeking of summary judgment. [33] On behalf of ACC, Mr Heron said that the affidavit evidence before the Court clearly established that the invoices issued by OPC to ACC charged for amounts to which OPC was not entitled under the service agreements, and that this established that ACC had a valid claim for those amounts. [34] Mr Heron said that ACC could recover the money mistakenly paid to OPC, for which OPC had no entitlement, in an action for money had and received, relying on Moses v Macferlan (1760) 2 Burr 1005; 97 ER 676 and Lipkin Gorman vKarpnale Limited [1991] 2 AC 548. He said that the only possible defence to an action for money had and received was the defence provided for in s 94B of the Judicature Act 1908: that the money had been received in good faith and the recipient had altered its position in reliance on the validity of the payment, making it inequitable to direct repayment, or, at least, repayment in full. [35] In his oral submissions, Mr Heron relied particularly on the decision of this Court in Westpac Banking Corporation v Nangeela Properties Limited [1986] 2 NZLR 1. He said this was authority for the proposition that an action for recovery of money had and received was an action for the recovery of a debt, and that by analogy this meant that the amount owed in the present case should be treated as a "debt due". That contention was disputed by Mr Jagose, and we will consider this case in more detail later. [36] A number of law dictionaries and cases give a definition for "debt". Examples are: (a) Spiller New Zealand Law Dictionary (5ed 2002):A certain sum due from one person to another, either (1) by record, eg judgment, (2) under specialty or deed, or (3) under simple contract, either oral or in writing.(b) Burke Jowitt's Dictionary of English Law (2ed 1977):A sum of money owed from one person to another A debt exists where a certain sum of money is owing from one person (the debtor) to another (the creditor). Hence "debt" is properly opposed to unliquidated damages ; to liability, when used in the sense of an inchoate or contingent debt; and to certain obligations not enforceable by ordinary process "Debt" denotes not only the obligation of the debtor to pay, but also the right of the creditor to receive and enforce payment.(c) Garner Black's Law Dictionary (7ed 1999):1. Liability on a claim; a specific sum of money due by agreement or otherwise.(d) Bone Osborn's Concise Law Dictionary (9ed 2001):A sum of money due from one person to another. Debts are (1) of record eg recognisances and judgment debts; (2) specialty debts, created by deed; (3) simple contract debts; (4) Crown debts (5) secured debts, those for which security has been taken; (6) preferential debts (Insolvency Act 1986, s.328).(e) Walker The Oxford Companion to Law (1980):That which is owed by one person to another, and particularly money payable arising from and by reason of a prior promise or contract, but also from and by reason of any other ground of obligation, eg, statute or order of court. The moral and legal obligation is on the debtor to pay his creditor, but in many cases the existence or extent of the obligation to pay must be determined judicially.[37] In DPP v Turner [1974] AC 357 Lord Reid (with whom the other Law Lords agreed) said that the word "debt" normally has one or other of two meanings: "it can mean an obligation to pay money or it can mean a sum of money owed". In the context of the legislation Lord Reid was considering in that case he chose the former meaning. [38] Overall, a common theme of the above definitions, and that given by Hammond J in the Colonial Mutual case, (see [28] above) is that a "debt" arises where there is money owing from one person to another, and there is an obligation to pay that money. The definitions disclose that the common use of the term is where there is money owing pursuant to a judgment, contract or statute. However the definitions do not discount that a "debt" may arise in some other way; for example the Oxford Companion to Law says "also from and by reason of any other ground of obligation", while Black's Law Dictionary refers to "a specific sum of money due by agreement or otherwise" (emphasis added). [39] Hammond J in Colonial Mutual referred to a "prior obligation", whether under contract or statute. In this case, the issue is whether a claim in restitution can be said to be a prior obligation in the same way as a contract or a statute. Walker comments that in many cases the existence or extent of the obligation to pay must be determined judicially: Mr Jagose's argument is that this is the case with a prospective claim in money had and received.[40] With a contract, statute, or judgment, a creditor can prima facie prove its claim by reference to the terms of the contract, words of the statute, or terms of the judgment. However, the same cannot be said for a prospective claim based in restitution. A debt arises only where there is an obligation in law to pay, and Mr Jagose argued that, in the case of a claim in restitution, there can only be an obligation to pay following a judgment to that effect: there is nothing in the nature of a contract or statute requiring payment of a specific amount. If that were correct, it would mean that where there is an admitted overpayment of an agreed sum and where it is agreed that none of the various defences arises, there is no obligation to pay the agreed sum without a Court order. We do not think that is a tenable proposition. [41] The decision of this Court in Westpac Banking Corporation v Nangeela Properties Limited, although not directly on point, provides some assistance. That case concerned a payment made to Westpac by a company which subsequently went into liquidation. The payment was found to have been a voidable preference and the liquidator sought an order that Westpac pay the amount to the liquidator plus interest. Ultimately, the Court determined that the relevant statutory provision dealing with voidable preferences empowered the Court to make an order for repayment of the sum plus interest. But more importantly for present purposes, two of the Judges, McMullin and Somers JJ, expressed the view that the liquidator could have recovered the amount of the voidable payment in an action for money had and received, and that this would entitle the Court to also make an award of interest under s 87 of the Judicature Act 1908 which provides that a Court can award interest at the prescribed rate in any action "for the recovery of any debt or damages". [42] All of the Judges referred to the decision of the English Court of Appeal inRe F P & C H Matthews Limited [1982] Ch 257, where the amount of a voidable preference was treated as a debt, triggering the jurisdiction under s 3(1) of the Law Reform (Miscellaneous Provisions) Act 1934 (UK) to award interest. McMullin J said at 9:Although there are differences between the English and New Zealand statutory provisions on the recovery of fraudulent preferences, I think that the decision in Re F P & C H Matthews Limited on the payment of interestshould be adopted here. The recovery of the preference was a recovery of money had and received and is so analogous to a debt as to justify it being treated as such for the purposes of s 87 of the Judicature Act 1908.[43] Somers J said at 11:The last point made by the bank is that there was no jurisdiction to award interest. The power to do so is conferred by s 87(1) of the Judicature Act 1908 and arises "In any proceedings for the recovery of any debt or damages". Had the company obtained no more than the order that it sought in its original application, namely that the disposition be set aside, the liquidator would then have had an independent action against the bank to recover the sum received by the bank as moneys had and received. Such a liability has the characteristics of a debt; it would be a sum payable in respect of a liquidated money demand and would be recoverable by action. In Re F P & C H Matthews Limited [1982] Ch 257 the Court of Appeal held that a liquidator's claim in like circumstances to those in the present case was a claim for debt. That debt, it was held, arose not on the making of the order avoiding the transaction but upon the liquidation. With this I agree.[44] The third Judge, Richardson J, also referred to the decision Re F P & C H Matthews Limited. He noted that the English Court of Appeal had held there that an action for money had and received was maintainable against a creditor who had benefited from a voidable preference and that such proceedings were to be characterised as proceedings for the recovery of a debt, thus entitling the Court to award interest under the English counterpart of s 87(1). However Richardson J did not expressly adopt this reasoning and relied on the general wording of s 311A(4)(c). Nevertheless, he did not express any disagreement with the decision of the English Court of Appeal in Re F P & C H Matthews Limited. [45] Mr Heron said that the judgments of McMullin J and Somers J in Westpac Banking Corporation v Nangeela Properties Limited supported his contention that where a creditor has mistakenly overpaid another party and seeks reimbursement of the overpayment, the overpayment can be characterised as a debt, in the same way as a payment made as a voidable preference can be. [46] The decision in Re F P & C H Matthews Limited also concerned a claim by a liquidator for repayment of a voidable preference. In dealing with the claim for interest, Lawton LJ, giving the judgment of the Court, referred to a nineteenth century decision in which it had been said that an action for money had and received could be maintained against a person receiving payment as a voidable preference.Having approved that statement of the law, he concluded that there was a debt due to the liquidator in respect of the voidable payment for the purposes of the English equivalent of s 87, and that such debt arose when the company went into liquidation. [47] Mr Jagose said that Westpac Banking Corporation v Nangeela Properties Limited was not authority for the proposition that an action for money had and received is analogous to a proceeding to recover a debt, and could thus support the issuance of a statutory demand. Rather, he said that the Court determined that Westpac's obligation to repay the money arose on the liquidation, rather than at the time of the order avoiding the preferential payment. So the case was authority for the proposition that, where a prior obligation to repay money exists (as where a Court has made an order avoiding a voidable transaction), the money can be recovered in an action for money had and received, or as a debt, or by some other available means. But he said that, absent that prior obligation, there was no debt, and recovery is dependent on success in the restitutionary proceeding (whether by summary judgment, or at trial). [48] In support of this contention he cited the decision of Chambers J inMcKinnon v Falla Holdings NZ Limited (In Liq) (1999) 8 NZCLC 262,034. In that case, Chambers J referred to the judgments of McMullin and Somers JJ in Westpac Banking Corporation v Nangeela Properties Limited and said at 262,037 the following:Nangeela is therefore Court of Appeal authority for the proposition that, where a company pays a sum of money to a recipient in circumstances which amount to a voidable preference, the liquidator of that company may, on or after the setting aside of that voidable preference, recover the sum as a debt.[49] We think that the decision in Westpac Banking Corporation v Nangeela Properties Limited supports ACC's proposition that an action for money had and received has such similarity to an action for recovery of a debt that an obligation to repay money received in circumstances where there was no entitlement to receive or retain it can be treated as a "debt due" for the purposes of s 289(2)(a), even though there is no contractual or statutory basis to the claim for repayment.[50] We do not accept the limited interpretation suggested by Mr Jagose. The statement made by Chambers J in McKinnon (see [48] above) is correct, but there is no reason to read it as indicating that Westpac Banking Corporation v Nangeela Properties Limited stands for that proposition alone. When Chambers J's judgment is read as a whole, it is clear that it is consistent with the view we are taking. [51] In our view, the availability of a common law claim for money had and received, if clearly available on its facts, should be treated in the same way as a claim based on contract or statute. [52] An analogy with the situation of overpaid ACC benefits illustrates this. Under s 248 of the Injury Prevention, Rehabilitation, and Compensation Act 2001, an overpaid benefit is a debt due to ACC, and can be recovered by way of proceedings. But that is expressed to be subject to s 251(2) which says that ACC may not recover benefits mistakenly paid as a result of an error not intentionally contributed to by the recipient, if the recipient received the payment in good faith and has altered his or her position in reliance on the validity of their payment so that it would be inequitable to require repayment. [53] In substantive terms, therefore, ACC's entitlement to repayment of a mistakenly paid benefit, although based on a clear statutory provision, is in substance the same as its entitlement to obtain mistakenly made payments under a services contract in an action for money having received, which is subject to both s 94B of the Judicature Act and the equitable defence described in National Bank of New Zealand Limited v Waitaki International Processing (NI) Limited [1999] 2 NZLR 211, which are in substance similar in effect to s 251(2). It is hard to see why an amount subject to a claim for reimbursement of a mistakenly made benefit, where the claim is based on statute, and an amount subject to a claim for a mistakenly made service payment, where the claim is based on money had and received, should be treated differently for the purposes of s 289(2)(a). [54] In the result, we conclude that, if a payment is received in circumstances where the recipient is obliged to repay it, whether because of a contractual or statutory provision to that effect or because the circumstances give rise to anobligation to repay on the basis of money had and received, the amount can be treated as a "debt due" for the purposes of s 289(2)(a). If the defence provided for in s 94B or the equitable defence of change of position may be available to the recipient, that may mean that there is a substantial dispute which would justify the setting aside of the statutory demand, but it would not disentitle the payer from using the statutory demand procedure on the basis that the recipient's obligation to repay is a "debt due". [55] The complexities which may be inherent in an action for money had and received in many circumstances may mean that recourse to the statutory demand procedure will not be appropriate. But that is no different to the situation where the circumstance allegedly giving rise to a debt in contract are complex. In principle, where a payer has a clear entitlement to reimbursement of an amount overpaid to a recipient in an action for money had and received, it may have recourse to the statutory demand process if it is otherwise appropriate to do so.Substantial dispute[56] We now turn to the second issue. OPC maintains that there is a substantial dispute as to whether overpayments were made to it and as to whether any obligation exists on its part to make any payment or reimbursement to ACC. ACC points to the affidavit evidence from its officers who were involved in the audit of OPC's files and in subsequent discussions and correspondence with Mr Ikiua to support its case that there is no substantial dispute here. [57] We are somewhat hampered in our consideration of this issue by two aspects of the case. The first is that the Associate Judge dealt with the matter on the basis that there was a settlement agreement which neither party now contends for. That means that the Associate Judge did not turn his attention to the existence or otherwise of a substantial dispute in relation to ACC's demand for payment of $695,190. The second is that OPC's case both in the High Court and in this Court was focused on the contention that any amount claimed on the basis of money had and received would not amount to a "debt due", which, if correct, would have made it unnecessary to consider the "substantial dispute" point. This is evident from thereply affidavit of Mr Ikiua, in which he responded to specific comments made in the affidavit of ACC's Auckland area manager, Mr Spraggon and ACC's audit manager, Mr Oosthuysen, and then continued:However, I should not be taken to accept the truth of any assertion in either affidavit which I do not expressly deny. I am advised that much of both affidavits is irrelevant to the main issue in dispute in this proceeding, being whether there is a debt owed by OPC to ACC. For that reason, I have not answered the majority of allegations raised by Mr Spraggon or Mr Oosthuysen.[58] Although Mr Heron maintained that there was no substantial dispute about any of the $695,190 said to be owing to ACC, he concentrated his submissions on what he said were improperly claimed "standard claimant service fees" which amounted to $377,520. He said the 2000 agreement between ACC and OPC provided for four categories of payments. The standard claimant services fee was a fee of $400 per month for a claimant whose claim for weekly compensation had been accepted for the period until that claimant's "exit" (other than the first month, which attracted a higher "first month fee" of $900). The 2001 agreement had a similar structure, though the amounts were different: $775 for the first month fee and $340 for the standard claimant services fee. [59] Mr Heron took us through the schedules completed by the ACC audit people illustrating the claims which had been made for the standard claimants service fee in respect of particular claimants in relation to months after the relevant claimant had ceased to be a recipient of weekly compensation. He said in some instances the standard claimant services fee was claimed even where the claimant had never received any weekly compensation payment. [60] Mr Heron said that the affidavit from Mr Oostheysen established clearly the extent of these overpayments, and there was no grounds for any dispute that the overpayments in this category amounted to $377,520. He supported that not only by reference to Mr Oostheysen's evidence, but also to an exchange which had taken place in a recorded interview on 15 October 2002 between ACC personnel and Mr Ikiua, in which Mr Ikiua acknowledged that there had been a misunderstanding about the basis on which the standard claimant service fee could be charged. He said:Well the thing is that it was just simply a misunderstanding, we put it up for billing, we thought we were entitled to continue billing past the weekly comp date, we hadn't been taken to issue on it and it just continued on as a course of practice. Under the second contract it was definitely, because that was my full understanding it was brought to our attention quite clearly and I thought there was a change of stance. But I, you know, I accept what you're saying, that was what was written, we shouldn't have been claiming for it past that date but the invoices were still being prepared on that basis, so once the file was closed off that we could, yeah once we closed off that we could stop claiming. I am not certain as to how much money was then involved in it.[61] Mr Heron also relied on a letter sent by Mr Ikiua to ACC in January 2003, in which Mr Ikiua suggested a process for agreeing the amount actually owing by OPC to ACC. He said this letter was predicated on the assumption that an amount was owed, but simply sought to provide for a verification of the actual amount. He said ACC had offered OPC the chance to verify ACC's audit, but this opportunity had not been taken up. [62] Mr Jagose argued that there was a real and a substantial dispute between the parties. He pointed to Mr Ikiua's evidence that all invoices sent to ACC were first sent in draft to ACC for approval, and this approval was obtained in relation to all invoices. He said OPC was entitled to rely on ACC's representation that the invoices were in order, and that ACC may be estopped from claiming back the money charged to it. He also said it was arguable that OPC had altered its position in reliance on the validity of the payments to it, because it had undertaken work for ACC which had value for ACC and had met its overheads in undertaking that work from the amounts received from ACC. However, there was no evidential basis for the change of position claim: rather it was foreshadowed as a defence that may be argued if ACC is required to pursue its claim in a summary judgment context or at trial. However Mr Ikiua was adamant in his affidavit that he had attached considerable importance to ACC's verification of invoices, and had relied on this as substantiating the validity of the invoices. [63] Mr Jagose said that the opportunity to check ACC's audit calculations of the amount owing had not been followed up because, as Mr Ikiua noted in his January 2003 letter, it was not possible to undertake the exercise without having access to thephysical files. However, there was no evidence that ACC had been asked to provide them and had declined to do so. [64] Mr Ikiua also disputed ACC's interpretation of the circumstances in which the standard claimant service fee ceased to be payable. Under the agreement this occurred when a claimant "exited" and the term "exit" was defined in the agreement as being the cessation of weekly compensation due to a claimant ceasing to be incapacitated or being assessed as capable of working. Mr Ikiua suggested that it was possible that a claimant would cease to receive weekly compensation for some other reason, i.e. while still incapacitated or incapable of working. However Mr Ikiua did not point to any of the claimants in respect of whom ACC said standard claimant service fees had been improperly obtained who fell into this category of claimants whose weekly compensation had ceased but in respect of whom a standard claimant service fee could still be rightfully claimed. [65] In the absence of evidence taking issue with the very detailed and meticulous audit figures provided by ACC's witnesses, and any suggestion of a proper basis for reliance on s 94B of the Judicature Act or the equitable change of position defence, we accept Mr Heron's submission that OPC has not discharged the onus which it has to show a fairly arguable basis on which it was not liable to pay $377,520 to ACC:United Homes (1988) Ltd v Workman [2001] 3 NZLR 447 at [27]. Although Mr Heron maintained that the remainder of the $695,190 was also undisputed, he accepted that the other categories of alleged overpayments were not as clear cut and were not referred to in the apparent admission made by Mr Ikiua in his interview with ACC on 15 October 2002. He did not press us to determine that there was no dispute in relation to those matters, contenting himself with reliance on a claim for $377,520. He suggested that we amend the demand to reflect that amount, as this Court did in United Homes at [46]. He noted that even though Mr Ikiua's affidavit took issue with aspects of ACC's evidence, he did not explicitly state that there were no overpayments (or that they were for lesser amounts), nor did he explicitly state that he believed that OPC had no liability to repay any overpayments. [66] We acknowledge that Mr Ikiua's affidavit records that he has not engaged in a detailed response to the allegations made by the ACC witnesses because he seesthe fundamental issue as being whether there is a "debt due". But once it is found that the "debt due" test has been met, the onus to show a fairly arguable basis on which it is not liable falls on OPC, and Mr Ikiua's stance of not engaging in disputing ACC's evidence means that much of ACC's evidence is effectively uncontested. OPC must have recognised that there was a risk that its "no debt due" argument might not succeed. If it had a fallback position, it should have ensured that appropriate evidence was before the Court. [67] The Associate Judge noted that Mr Ikiua had acknowledged that OPC was no longer trading, and observed that OPC appeared to have minimal or no assets. He said that ACC's claim that OPC was insolvent was effectively unchallenged by Mr Ikiua, and that no financial statements of OPC had been provided to the Court. He thus concluded that OPC's solvency must be seriously in question. There was no real challenge to that conclusion on his part. [68] The Associate Judge amended the amount claimed in the statutory demand to $334,000. We have found that he was wrong to do that, because that figure was derived from the alleged settlement agreement which neither side now contends for. We are however satisfied that there is no real or genuine dispute that there is a debt due by OPC to ACC for at least $377,520. In our view the High Court ought to have set aside the statutory demand except in relation to that amount: s 290(5) and (6) andUnited Homes at [46]. It is therefore appropriate that we make an order to that effect: r 48 of the Court of Appeal (Civil) Rules 2005.Result[69] We allow the appeal and set aside the order made in the High Court. But we make the following orders: (a) The statutory demand is set aside, except as to the sum of $377,520; and(b) OPC will have a period of 15 working days from the date of this judgment to pay to ACC that sum of $377,520, failing which ACC can proceed with an application to have OPC placed in liquidation.Costs[70] Although the appeal has technically been allowed, ACC has been successful in substance and we therefore award costs to ACC of $6,000 plus usual disbursements.Solicitors: Chapman Tripp, Wellington for Appellant Meredith Connell, Auckland for Respondent