Kent Trust No.1 Limited v School Holdings Limited (in liq) HC Wellington CIV-2011-485-1995 [2011] NZHC 1756 (14 November 2011)

Last Updated: 14 December 2011

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

_{CIV-2011-485-1995}

UNDER The Companies Act 1993

IN THE MATTER OF the liquidation of KENT TRUST NO. 1

LIMITED

BETWEEN KENT TRUST NO. 1 LIMITED Applicant

AND SCHOOL HOLDINGS LIMITED (IN LIQUIDATION)

Respondent

Hearing: 14 November 2011 (Heard at Wellington)

Counsel: D. Rowley - Director of Applicant on behalf of Applicant

J.K. Brown - Counsel for the Respondent

Judgment: 14 November 2011

_{JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL}

This judgment was delivered by Associate Judge Gendall on 14 November 2011 at

3.30 pm under r 11.5 of the High Court Rules.

_{Solicitors: Lowndes Jordan, Solicitors, PO Box 5966, Wellesley Street, Auckland}

KENT TRUST NO. 1 LIMITED V SCHOOL HOLDINGS LIMITED (IN LIQUIDATION) HC WN CIV-2011-

485-1995 14 November 2011

[1] Before the Court is an application to set-aside a statutory demand by the applicant Kent Trust No. 1 Limited. That application is opposed by the respondent.

[2] Having heard submissions on this application on behalf of the applicant and the respondent, the matter, in my view, is quickly disposed of.

[3] The principal ground of opposition to the application advanced by the respondent is a jurisdictional one.

[4] This relates to the provisions of s 290(2) Companies Act 1993. These provide a fixed deadline for any company served with a statutory demand both to bring an application to set-aside the demand and to serve that application on the other side. And s 290(3) provides that no extension of time may be given for bringing or serving such an application itself, although a Court may extend the time for compliance with a statutory demand.

[5] As Brookers Company & Securities Law at para CA290.01 notes in dealing with these provisions and the strict time limits:

CA290.01 Time limits and service

(1) 10 working days

The company has 10 working days following service on it of the statutory demand to make an application to the Court to set aside the demand. During that period the application to set aside must also be served on the creditor who issued the statutory demand in the first place. In Queen City Residential Ltd v Patterson Co-Partners Architects Ltd [1995] 3 NZLR

307; (1995) 8 PRNZ 709, it was confirmed by the Master that the 10 working-day period referred to in s 290 commenced on the first minute of the day following service of the demand and ran thereafter. Any failure to observe either of these time limits means that the company’s opportunity to set aside the statutory demand is lost. Subsection (3) makes it clear that no extension of time may be given for the making or serving of an application to have the statutory demand set aside. See also Direct Fish Markets Ltd v Seamart Ltd 30/5/05, Associate Judge Gendall, HC Wellington CIV-2005-485-561.

In Deadline Typesetting Ltd v Fuji Xerox New Zealand Ltd (2001) 15

PRNZ 589; 9 NZCLC 262,629, it was held that where the Court is not open on the tenth working day, “[it] is a matter of construing the period allowed to the applicant as expiring on the next day upon which the

offices of the Court are open and it is possible to do the act in question”. In Hartner Trustee Ltd v Colin MacKenzie Plastering Ltd (2001) 15 PRNZ 318; 9 NZCLC 262,645, it was held that where an application to set aside a statutory demand is filed, but not served within time, the application is a nullity.

(2) Time limits not observed

Where the time limits for the application to be set aside are not observed, the company is faced with the prospect of satisfying the Court that it is solvent if an application for its liquidation should be made within the 30 working days referred to in s 288(1). An example of this occurred in Chateau Raphael Limited v Meridian Energy 9/12/02, Master Gendall, HC Blenheim M4/02, where an application to set aside a statutory demand was dismissed because it was made one day after the time limit expired. However, pursuant to rule 700K of the High Court Rules, Master Gendall granted an application to stay the liquidation proceedings and restrain advertising because the company had paid the full amount of the statutory demand into the Court and, consequently, there was no evidence before the court to suggest that the company was not solvent.

[6] In the present case it does seem that the application to set-aside the statutory demand was filed in this Court within 10 working days of the date it was served on the applicant. The demand was served on 14 September 2011. And, the application to set-aside the statutory demand it seems was filed in this Court on 28 September

2011, which was the last date for that to occur.

[7] That application, however was not supported by any accompanying affidavit. Nor critically was it served on the respondent company within that same 10 working day period, as required by s 290(2)(b) Companies Act 1993.

[8] At best, details of the application were provided to the respondent by being sent by Mr Rowley by email to generic firm email addresses of the liquidators of the respondent company.

[9] Service of the application, however was clearly not carried out within the methods expressly provided for in s 387 Companies Act 1993. That section in the absence of agreement otherwise, does not permit service by email.

[10] Nor in any event was service completed in time within the 10 working day period after service of the statutory demand on the applicant. This required service by 28 September 2011 and the applicant itself clearly acknowledges that this did not occur.

[11] From Hartner Trustee Ltd v Colin MacKenzie Plastering Ltd it is clear that, although the present application to set-aside the statutory demand may have been filed in time, it was not served within time and therefore must be considered to be a nullity.

[12] That said, the application before the Court to set-aside the statutory demand is dismissed.

[13] Costs must be awarded on this application to the respondent for its successful opposition to the present application. These costs are awarded on a category 2B basis together with disbursements as fixed by the Registrar.

‘Associate Judge D.I. Gendall’