INTERNATIONAL INVESTMENT & FINANCIAL PLANNING LTD V CHEEKY LIL MONKEE AUCKLAND LTD HC AK CIV 2006-404-1629 [2006] NZHC 456 (4 May 2006)

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
                                                                   CIV 2006-404-1629


                IN THE MATTER OF            an application pursuant to Section 290 of
                                        
   the Companies Act 1993

                BETWEEN                     INTERNATIONAL INVESTMENT AND
                            
               FINANCIAL PLANNING LIMITED
                                            Plaintiff

                AND            
            CHEEKY LIL MONKEE AUCKLAND
                                            LIMITED
                                     
      Defendant


Hearing:        4 May 2006

Appearances: R.N. McIlroy for Applicant
             M.L. Clark for Respondent

Judgment:
      4 May 2006 at 5pm


             COST JUDGMENT BY ASSOCIATE JUDGE D.H. ABBOTT
                   [REASONS FOR JUDGMENT ON COSTS]




Solicitors:
Shieff Angland, PO Box 2180, Auckland
Vallant Hooker & Partners, PO Box 47088, Ponsonby, Auckland


INTERNATIONAL
INVESTMENT & FINANCIAL PLANNING LTD V CHEEKY LIL MONKEE
AUCKLAND LTD HC AK CIV 2006-404-1629 4 May 2006

[1]    The applicant seeks
an order that a statutory demand served on it by the
respondent be set aside.


[2]    The application to set aside had its first
call in the Statutory Demands List
before me at 11.45am today.


[3]    Ms Clark advised me that the respondent has withdrawn the
demand. The
only issue between the parties is over a claim by the applicant for costs.


[4]    After hearing counsel, I made an
order that the respondent was to pay costs to
the applicant on a 2B basis with disbursements as fixed by the Registrar. I said I
would give my reasons in writing.


Background


[5]    The statutory demand was issued by the respondent's solicitors on the
respondent's
behalf. It is dated 13 March 2006. It demands payment of $148,000
said to be due to the respondent under an agreement for sale and
purchase dated 17
May 2005.


[6]    The demand was received by a director of the applicant, Haiming Zhu on
Friday, 17 March 2006.
It was delivered to him by courier at an address other than
the company's registered office at that time. Mr Zhu says in an affidavit
in support of
the application that the applicant had stopped operating from the registered office in
August 2005. It appears that
a change of registered office may not have taken place
until 23 March 2006. Mr Zhu says he could not be certain whether the demand
had
been served at the registered office at some point between 13 March and 17 March
as he does not know who or what now operates
from that address.


[7]    The application to set aside was filed and served on 27 March 2006. This was
just within the 10 working
days allowed, on the assumption that the demand could
have been served on 13 March 2006.

[8]        In his affidavit Mr Zhu asserts
that the sale and purchase agreement was a
sham, was not acted upon, and could not have been acted upon (the landlord of the
business
premises having re-taken possession under the lease). Mr Zhu asserts that
the sham agreement was drawn up to try to assist the respondent
to resist a claim for
re-entry for non-payment of rent and to resist claims by a previous owner of the
business.


[9]        The
applicant has also filed evidence showing that the Registrar of
Companies gave public notice on 23 February 2006 of his intention
to remove the
respondent from the Register of Companies because he was satisfied that it had
ceased to carry on business, and that
the respondent was struck-off the Register on
24 March 2006. There is no evidence before the Court, and no suggestion from
counsel
for the respondent, that the respondent has been restored to the Register or
that any steps are being taken to achieve that.


Opposing
arguments


[10]       The applicant seeks costs on the basis that the debt was clearly a matter of
dispute and the application was
necessary and properly made. He also submitted that
it was an abuse of the process to serve the notice whilst it was in the process of being
struck-off.


[11]       The
respondent opposed an order for costs on the grounds that there was no
indication of dispute at the time that the demand was issued.
Counsel also submitted
that the applicant could have responded to a letter explaining the basis for the claim
(served with the statutory
demand and also dated 13 March 2006) rather than go to
the expense of issuing the application to set aside.


Discussion


[12] 
     The statutory demand appears to have been issued, without any antecedent
correspondence, nine months after the "agreement" was
allegedly to have been
settled.

[13]   Given the short period allowed for filing of the application, and the
uncertainty regarding
service on the registered office, I do not consider it
unreasonable for the applicant to have filed its application rather than engage
in
correspondence with the respondent. That is all the more so given the apparent
absence of any raising or explanation of claim
prior to the letter served with the
statutory demand.


[14]   I am satisfied that there is a basis for the dispute raised by the
applicant.
There is support for this view in the decision not to contest the application. It is
further supported by the lack of
any explanation of the difference between the sum
claimed in the demand ($148,000) and the sum shown as the purchase price in the
"sham agreement" ($56,500).


[15]   In my view the dispute should have been identified before issue of the
statutory demand, and
the demand should not have been issued. I also have
misgivings about a demand which is issued when striking-off is imminent. I suspect
that the respondent did not instruct its solicitors fully.


Decision


[16]   In all circumstances, I consider that the applicant
is entitled to costs against
the respondent of and incidental to its application to set aside the statutory demand.
Those costs are
to be fixed on a 2B basis. Disbursements are to be confirmed by the
Registrar.




                                             
  _______________________________
                                                    Associate Judge D.H. Abbott