Burrill v John's Farmlet Services Ltd [2014] NZHC 461 (12 March 2014)

Last Updated: 5 May 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-350 [2014] NZHC 461

UNDER	the Companies Act 1993
IN THE MATTER	of an application for the liquidation of a Company
BETWEEN	ANGELA FAY BURRILL Plaintiff
AND	JOHN'S FARMLET SERVICES LTD Defendant

Hearing:	12 March 2014
Appearances:	Ms Thompson for Plaintiff Ms C L Waugh for Defendant
Judgment:	12 March 2014

_{ORAL JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE}

BURRILL v JOHN'S FARMLET SERVICES LTD [2014] NZHC 461 [12 March 2014]

[1] The liquidation proceeding which has been brought in this case is based upon a debt which the plaintiff says is owed to her in the sum of $185,766.00 as the unpaid balance of the current account owing to her by the defendant company.

[2] At a late stage, an application has been made to restrain advertising of the proceedings. The grounds upon which the orders are sought are that the bringing of liquidation proceedings is inappropriate in the circumstances. The alleged debt relates to relationship property proceedings between the plaintiff and sole director of the defendant and that appropriate proceedings are afoot in the family Court for resolution of the relevant issues. It is further said that advertising will be detrimental to a defendant and will almost certainly result in the business being lost. An affidavit filed in support by Mr J M Burrill while affirming the grounds of opposition to which I have just made mention also says that the defendant is solvent and that:

Typically shareholders would not call up a current account loan in this fashion. I believe the plaintiff has inappropriately brought this liquidation proceeding to try and force a settlement of our relationship property matters. Proceedings are already afoot to accomplish this in the appropriate forum.

[3] Ms Waugh who appeared for the defendant said that the amount owing to the plaintiff was relationship property. She further submitted that the plaintiff is using the company’s Court procedures to compel her husband who is in control of the defendant company to come to an early relationship property agreement rather than allowing the proceedings in the Family Court to take their course. It was her submission that to use liquidation proceedings in this way is to use them for a collateral or extraneous purpose and for the purpose of applying undue pressure. For those combined reasons she submitted the proceeding is an abuse of process.

[4] A notice of opposition has been filed to the application for the order that has been sought. In that notice of opposition it is denied that there is any evidence that advertising will have a detrimental effect or that the defendant is solvent. It is noted that no application has been made to set aside the statutory demand and in those circumstances the defendant company needs to show good reason to justify challenging a debt under r 700K (sic).

[5] The point that is taken by the plaintiff is that this is a conventional debt which is overdue and that because of the expired statutory demand the company is presumed to be insolvent and there has been no evidence filed to contradict that presumption.

[6] Neither Ms Thompson for the plaintiff nor Ms Waugh referred me to authority on the abuse of process point. I understand they have both been instructed late in the piece. I consider though that that point does need to be given better and fuller consideration than is available today in this list Court. I therefore propose that this proceeding be listed for a defended hearing on 29 April 2014 at 10 a.m. (one half-day). The applicant will have the usual obligation to prepare a bundle etc and the bundle and synopses of submissions will be required ten working days and five working days respectively ahead of the fixture.

[7] There will be an interim order restraining advertising of the liquidation proceedings until further order of the Court.

[8] There is an argument available to the defendant that by bringing these proceedings in the current situation that the parties find themselves in relation to their family court matters, could be an abuse of process in that these proceedings are an attempt to compel the defendant to relinquish the rights he would otherwise have to obtain the determination of the Family Court on relationship property issues. Needless to say, when another Judge has heard argument on this matter that view may not be accepted.

[9] The following timetable directions are given:

(a) The plaintiff is to file and serve any affidavit in support of the notice of opposition within 10 working days and the defendant will have five working days thereafter to file any affidavit in reply.

J.P. Doogue

Associate Judge