COLEBROOK v OKARAHIA DOWNS LIMITED [2019] NZHC 241 .

COLEBROOK v OKARAHIA DOWNS LIMITED [2019] NZHC 241 .

The Court concluded the plaintiff is a creditor entitled to pursue enforcement because the Agreement's express no set-off clause barred the defendant from withholding the Sharemilker's agreed percentage of Milk Payments and from asserting set-off to defeat the statutory demand; the arbitration/dispute resolution regime did not prevent the applicant using statutory demand/liquidation where the contract expressly forbids set-off; however the interest claim fell outside the no set-off clause and was at least arguably a penalty giving rise to a genuine dispute; s 310 set-off does not retrospectively deprive the plaintiff of creditor status though potential s 310 set-off is relevant to the...

Citation
[2019] NZHC 241
Parties
Plaintiff (trustee for the Brookfield Trust): Stuart James Colebrook; Defendant (partner of the Kowhai Banks Partnership): Okarahia Downs Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
22 February 2019
Procedural Posture
Liquidation (winding Up) Application Under the Companies Act 1993 / Opposed Liquidation Application; Adjourned to List on 7 March 2019 Pending Payment/solvency Evidence
Outcome
Liquidation application not granted at this hearing; proceeding adjourned to list on 7 March 2019 to permit defendant to demonstrate solvency
Legal Topics
Statutory Demand, No Set Off Clause, Arbitration Stay, Insolvency Set Off (s 310), Liquidation Discretion, Penalty/contractual Interest
Company Law Insolvency Law Contract Law Arbitration Law Statutory Demand No Set Off Clause Arbitration Stay Insolvency Set Off (s 310) +2 more

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Parties

Stuart James Colebrook

Plaintiff (trustee for the Brookfield Trust)

Okarahia Downs Limited

Defendant (partner of the Kowhai Banks Partnership)

Procedural Posture

Liquidation (winding Up) Application Under the Companies Act 1993 / Opposed Liquidation Application; Adjourned to List on 7 March 2019 Pending Payment/solvency Evidence

Legal Issues

  1. 1 Whether the plaintiff is a creditor entitled to issue a statutory demand
  2. 2 Whether a genuine and substantial dispute exists that bars winding up
  3. 3 Effect and enforceability of a contractual no set-off clause

Ratio Decidendi

The Court concluded the plaintiff is a creditor entitled to pursue enforcement because the Agreement's express no set-off clause barred the defendant from withholding the Sharemilker's agreed percentage of Milk Payments and from asserting set-off to defeat the statutory demand; the arbitration/dispute resolution regime did not prevent the applicant using statutory demand/liquidation where the contract expressly forbids set-off; however the interest claim fell outside the no set-off clause and was at least arguably a penalty giving rise to a genuine dispute; s 310 set-off does not retrospectively deprive the plaintiff of creditor status though potential s 310 set-off is relevant to the...

Court Disposition

Liquidation application not granted at this hearing; proceeding adjourned to list on 7 March 2019 to permit defendant to demonstrate solvency

Orders

  • Proceeding adjourned to the list on 7 March 2019
  • If the defendant pays $43,753.33 (the statutory demand amount less the disputed interest) that will serve as practical confirmation of solvency