IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2010-404-001160

	IN THE MATTER OF

BETWEEN	the Companies Act 1993

DANIEL GRANT	
		Plaintiff	
	
AND	
CYBER ELECTRICS LIMITED Defendant	

Hearing:	
14 July 2010		

Counsel:	
WT Nabney for plaintiff		

Judgment:	
14 July 2010 at 10:34am		

(ORAL) JUDGMENT OF ASSOCIATE JUDGE FAIRE
[on application that defendant company be placed into liquidation]

Solicitors:	Holland Beckett, Private Bag 12 011, Tauranga, for plaintiff

And To:	W Jefferys, Cyber Electrics Ltd, PO Box 3240, Tauranga

GRANT V CYBER ELECTRICS LTD  HC AK CIV 2010-404-001160  14 July 2010

[1]       The plaintiff applies for an order that the defendant be placed into liquidation and that a liquidator be appointed.

[2]       A  statement  of  defence  and  counterclaim  was  filed  on  the  defendant company’s  behalf.    An  address  for  service  and  the  name  of  counsel  instructed appears on that document.

[3]       The proceeding was called before Associate Judge Christiansen on 23 April

2010.  At that time his Honour directed that an affidavit in support of the statement of [defence] and counterclaim be filed and served by 7 May 2010 and that reply affidavits be filed and served by 21 May 2010.  He directed a ½-day fixture at a date to be appointed by the Registrar.  That is today’s date.

[4]       No  affidavits  have  been  filed  on  behalf  of  the  defendant  company.    A document, however, was filed by Mr Jefferys which has a date on it of 28 June 2010. It advises that the solicitors and counsel instructed will now no longer act and it gives an address for service for future documents at a company address in Tauranga.

[5]       A company must be represented by a person on the roll of barristers and solicitors: re GJ Mannix.   If a company wishes to file documents it must appoint a solicitor for that purpose: Time Ticket International Ltd v Broughton.      Whilst the court will permit a lay person to act on a first call where the matters are covering a relatively narrow compass that is an exception and certainly not the rule.

[6]       I asked Mr Jefferys why counsel was not appointed to represent the company and he advised that it was a question of available funds.  He is also concerned about the appointment of a liquidator, again because of the cost involved.  He told me there had been effectively a falling out between himself and the plaintiff, Mr Grant, in this proceeding.

[7]       The  position  I now  face  is  that  the  plaintiff’s  case  has  been  proved  by evidence.  There is no evidence in opposition as was directed.

[8]       The Companies Act 1993, s 241 gives the court a discretion to appoint a liquidator  if  it  is  satisfied  that  the  company  is  unable  to  pay  its  debts.    The Companies Act 1993, s 287 provides that:

287	Meaning of “inability to pay debts”

Unless the contrary is proved and subject to s288 of this Act, a company is presumed to be unable to pay its debts if –

(a)	the company has failed to comply with a statutory demand …

[9]       The  approach  that  the  court  should  take  in  considering  an  opposed application to appoint a liquidator has been examined in a number of authorities. In Bateman Television Limited (in liq) & Anor v Coleridge Finance Company Ltd reference was made to the general rule that no order will be made on a petition founded on a debt which was genuinely disputed.  To apply to wind up a company in such a circumstance is an abuse of the court’s process. The court has an inherent
jurisdiction to prevent such an abuse of process.  The position has been considered in a number of cases both in relation to opposed applications to wind up and in respect of applications for orders restraining advertising and staying proceedings:  Exchange Finance Co Ltd v Lemington Holdings Ltd;  Taxi Trucks Ltd v Nicholson;  Edge Computers Ltd v Colonial Enterprises Ltd.

[10]     From the authorities I extract the following specific principles which are applicable to such applications:

a)      A winding up order will not be made where there is a genuine and substantial dispute as to the existence of a debt such that it would be an abuse of the process of the court to order a winding up;

b)      In such circumstances, the dispute, if genuine and substantially disputed, should be resolved through action commenced in the ordinary way and not in the companies court;

c)      The assessment of whether there is a genuine and substantial dispute is made on the material before the court at the time and not on the hypothesis that some other material, which has not been produced might, nonetheless be available;

d)      The governing consideration is whether proceeding with an application savours of unfairness or undue pressure.

[11]     A statutory demand was served on the defendant company.   It is therefore presumed to be unable to pay its debts. The statutory grounds for the appointment of a liquidator have therefore been made out.

[12]     I am satisfied therefore that an order should be made.  Proof of the debt is confirmed by counsel’s certificate.  I have been provided with a consent by Kenneth Peter Brown and Robert James Neilson of Tauranga, chartered accountants, to their being appointed as liquidators.

Orders

[13]     I order:

a)	The defendant company is put into liquidation.

b)	Kenneth  Peter  Brown  and  Robert  James  Neilson  of  Tauranga, chartered accountants, are appointed the liquidators.

Costs

[14]     The defendant shall pay costs based on Category 2 Band B together with disbursements as fixed by the Registrar.

[15]	This is order is made at 10:34am.

JA Faire
Associate Judge