Amalgamated Builders Ltd v Nile Holdings Ltd [2000] NZCA 217; (2000) 14 PRNZ 652 (26 September 2000)

Last Updated: 8 December 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA 115/00

UNDER

THE COMPANIES ACT 1993

	BETWEEN	AMALGAMATED BUILDERS LIMITED
		Appellant

	AND	NILE HOLDINGS LIMITED
		Respondent

Hearing:	26 September 2000
Coram:	Gault J Ellis J Robertson J
Appearances:	A D G Hitchock for Appellant C R French for Respondent
Judgment:	26 September 2000

JUDGMENT OF THE COURT DELIVERED BY ROBERTSON J

[1] This is an appeal from a decision delivered in the High Court at Invercargill on 24 May 2000 following a hearing on 8 May.
[2] The application before that Court was for an order by the appellant (ABL) setting aside a statutory demand issued by the respondent (Nile).
[3] The Master noted by way of background :

ABL is a construction company with offices in Invercargill, Dunedin and Queenstown. It has carried on business in the lower half of the South Island for years. More recently it expanded into the Auckland market by purchasing the business of Goodall Construction Ltd. It formed a new company Goodall ABL Construction Ltd (Goodall). That company operated in the Auckland market. It was unsuccessful. It went in to voluntary liquidation on 1 March 2000.

Goodall employed a Mr J S Greenwood as general manager/managing director. Mr Greenwood is a director of Nile. At Mr Greenwood’s request Goodall entered a service contract with Nile pursuant to which Nile agreed to make Mr Greenwood’s services available as managing director for Goodall.

In 1998 Goodall experienced cash flow shortages. Mr Greenwood agreed to lend $300,000 to Goodall. Mr Greenwood required Messrs Hill and Burke (directors of ABL) and ABL to guarantee the advance. An agreement recording the advance of $300,000 was executed in June 1998. The agreement recorded Nile as the lender and Goodall as the borrower. It also recorded Messrs Hill and Burke and ABL were guarantors. The agreement provided for payment on 20 October 1999.

Goodall failed to repay the monies on 20 October 1999. Nile subsequently gave notice of demand to Goodall and to the guarantors. The notice was dated 31 March. It required payment by 7 April 2000. Before the notice expired a statutory demand was issued and served on ABL. Although the statutory demand was dated 7 April it was in fact served on 5 April.

[4] The application to set aside was filed and served within the 10 day period prescribed by s 290 of the Companies Act and was advanced on the basis :

• [a] That the debt was not due and owing;
• [b] that there was a substantial dispute as to whether or not the debt was owing; and
• [c] in the circumstances the applicant had a counterclaim, set-off or cross-demand equal to or exceeding the amount claimed in the statutory demand.

[5] The Master found that as the statutory demand had been served prior to the date upon which payment was required it could not be valid.
[6] Having reviewed the relevant legislation and authorities the Master concluded :

The applicant therefore succeeds on what might be termed a technical defence. In deference to counsels’ submissions, I turn to consider the more substantive defences raised.

[7] In light of that indication the Master undertook a sustained analysis of the other issues raised particularly the question of the identity/capacity of Nile in the proceedings and the effect which his determination of that issue would have on the other claims which had been made. In the event he concluded that the other grounds which had been relied upon by ABL would not have availed it.
[8] He however concluded his judgment in accordance with his initial finding:

For the technical reason that the demand has been issued prematurely, and before the debt was due, it must be set aside. Order accordingly.

[9] The notice of appeal is expressed as being :

... from those parts of the judgment of Master Venning in the High Court at Invercargill under M No 13/00 dated 24 May 2000 in which :

1. He dismissed the ground of application that the debt was not due as a result of acts of the respondent.
2. He dismissed the ground of application that there was an arguable basis for a counterclaim, set-off or cross-demand at least equalling the amount of the statutory demand arising in negligence.

Upon the grounds that those parts of the judgment are wrong in fact and law.

[10] The first issue is whether this Court has jurisdiction to hear this appeal.
[11] It is contended by the respondent that inasmuch as the appellant obtained the relief which it wanted in the High Court, the matters which are now raised on appeal are issues which are unconnected with the decision of the Court and are not “a judgment decree or order” within the meaning of s 66 of the Judicature Act 1908.
[12] The appellant in opposition to this approach places particular emphasis on the decision of this Court in Winstone Pulp International Limited v Attorney General (CA 175/99, 30 August 1999) and Association of Dispensing Opticians of New Zealand Inc v Opticians Board [2000] 1 NZLR 158.
[13] In the former case this Court noted that interlocutory rulings can be put into at least three categories :

Those that determine or affect the rights or liabilities which are in issue, that is the merits; those that decide the shape of the substantive proceedings; and those ancillary but important rulings on times and procedures.

[14] Counsel argued that these findings by the Master in this case were in the first category and could subsequently be influential.
[15] In Association of Dispensing Opticians the Court noted that boundary lines were not cut and dry and that rulings which have substantive effect on rights and liabilities in issue could be susceptible to appeal.
[16] The appellant submits on the basis of these two decisions it could be argued that the dismissal of the other grounds in support of the application to set aside the statutory demand (which were heavily influenced by the finding of the Judge on the status or capacity of Nile) involved a final disposal of those issues and determined or affected the liability of ABL as guarantor accordingly.
[17] Mr Hitchock recognised the contrary approach typified by this Court in Talyancich v Index Developments Limited [1992] 3 NZLR 28 at 39 :

The learned authors of Spencer Bower and Turner refer at p 182 para 211 to the useful test of asking whether it was possible to appeal against the finding which was being put forward as founding an estoppel. If there can be no effective appeal against the particular determination, it is impossible to regard it as fundamental to the judgment. They continue at p 186 para 215 :

To recall the statement of principle from the judicial pen of Coleridge J, set out in an earlier paragraph, the question as to findings or decisions not expressly set out in the formal record (ie the sealed judgment or order) is as to what matters were necessary to decide, and actually decided, as the groundwork of the decision itself. Not every finding of fact in a judges judgment, not every issue of fact determined by a judge or jury, is res judicata between the parties in later proceedings. Thus a decision of fact or law against the party in whose favour the substantial dispute was ultimately decided will not found an estoppel in a later proceeding; and this because it cannot have been necessary to the substantive decision ...

[18] Counsel noted that the Court was dealing with estoppel in that case but was concerned that the reasoning could apply in a situation like the present. The concern of ABL is that having succeeded on another ground it does not wish subsequently to be caught with the fact that a Court has finally disposed of other issues referred to in the judgment with those matters having influence or consequences as far as the outstanding substantive issues between the parties are concerned.
[19] The appellant’s counsel also accepted it faced problems with the reasoning of this Court in Walls v Calvert & Co [1994] 1 NZLR 424. There could be no question that the appellant obtained the relief that it required. It was successful in having the demand set aside. Mr Hitchcock understood he needed to meet the comment of Richardson J in Walls who noted at page 38 :

If those concerned feel the need to test any adverse ruling on invalidity on appeal they can elect to have appealable orders made against them.

[20] In Walls there was reference to Lake v Lake [1955] 2 All ER 538 where Evershed MR in the English Court of Appeal noted at page 40 :

...nothing from the cases brought to our attention by counsel for the wife persuades me that by the words “judgment or order” in the rule or in the subsection is meant anything other than the formal judgment or order which is drawn up and disposes of the proceedings ... in other words, I think that there is no warrant for the view that there has by statute been conferred any right on an unsuccessful party, even if the wife can be so described, to appeal from some finding or statement – I suppose it would include some expression of view about law – which you may find in the reasons given by the Judge for the conclusion at which he eventually arrives, disposing of the proceeding.

[21] The respondent’s submission was that although the recent cases like Winstone Pulp and the Association of Dispensing Opticians might indicate a slightly more relaxed approach than has traditionally been the situation in cases like Re Alwinco Products Ltd [1985] 1 NZLR 710 and Murphy v Murphy [1989] 1 NZLR 204, the recent cases were concerned with rulings made before the delivery of the substantive judgment and that the present case could not fall within that category.
[22] The appellant had made an original application to have the statutory demand set aside. That was granted. All that occurred thereafter were comments by the Master expressed to be “in deference to counsel’s submissions”.
[23] Counsel submitted, in our view correctly, that the findings and comments of the Master thereafter and the reasoning underlying those further comments were in no way determinative of or effective in the outcome of the application before the Court.
[24] Consequently everything which was said thereafter cannot constitute a judgment decree or order within the meaning of s 66 and thus there is nothing about which an appeal can properly lie. Those subsequent comments and findings would not appear to be binding on the parties or influential in any subsequent proceedings between the parties.
[25] The appeal is accordingly dismissed with costs to the respondent of $3,500 together with disbursements as fixed by the Registrar.

Solicitors
Arthur Watson, Invercargill
French Burt, Invercargill