IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE	
CIV-2018-409-000609
[2018] NZHC 3178	

BETWEEN	GEOTECH LIMITED
Applicant	
AND	MOUNT GREY DOWNS LIMITED
Respondent	

Hearing:	26 November 2018	
Appearances:	A N Riches and C Mo for Applicant D J Ballantyne for Respondent	
Judgment:	26 November 2018	

JUDGMENT OF ASSOCIATE JUDGE OSBORNE
(an application to set aside statutory demand)

Introduction

[1]	The applicant, Geotech Ltd (Geotech), has mining and mineral interests. The respondent, Mount Grey Downs Ltd (Mt Grey), provides a range of contracting services, including site works, cartage and vehicle maintenance. Geotech was using Mt Grey’s services relevantly from mid-2017.

[2]	Mt Grey regularly billed Geotech by invoices which were stated to be due for payment by the 20th day of the month following the invoice date. Invoices rendered up to 1 November 2017 were fully paid by Geotech. After that, sums claimed under invoices went unpaid and continued to accrue.

GEOTECH LIMITED v MOUNT GREY DOWNS LIMITED [2018] NZHC 3178 [26 November 2018]

The statutory demand

[3]	On 23 July 2018, Mt Grey served on Geotech a statutory demand (the demand) for $446,109.16, stated to be the balance of the sum owing for goods and services rendered. The demand did not have a statement of account attached – such a statement, dated 30 June 2018, was subsequently provided.  It  includes invoices dated up to   30 June 2018.

Setting aside application

[4]	Geotech applies to set aside the demand. It asserts that:

(a)	that there is a substantial dispute whether the debt is due and owing under s 290(4)(a) Companies Act 1993; and

(b)	a set-off and/or counterclaim of $146,666.21; and

(c)	that other grounds exist to set aside the demand.

[5]	Geotech’s dispute as to the claimed debt contains three sets of assertions:

(a)	Mt Grey has provided no evidence as to what was undertaken under each invoice despite Geotech’s demand for such information. The invoices are therefore not due and owing.

(b)	Mt Grey’s claim in one of its invoices (#FC3 dated 31 May 2018 for
$24,954.01) is for interest or finance charges which Geotech staff did not have authority to authorise or agree to. It is therefore disputed.

(c)	Four of Mt Grey’s invoices, (1490, 1514, 1515 and the same invoice as at [5](b) – #FC3), altogether totalling $109,612.90, were not at the time of the demand due and owing.

Principles

The jurisdiction to set aside a statutory demand – the principles

[6]	The Court’s jurisdiction to set aside a statutory demand is contained in s 290 Companies Act 1993, and I refer specifically to the basis upon which the Court may grant an application as contained in s 290(4) which reads:

290	Court may set aside statutory demand

…

(4)	The court may grant an application to set aside a statutory demand if it is satisfied that—

(a)	there is a substantial dispute whether or not the debt is owing or is due; or

(b)	the company appears to have a counterclaim, set-off, or cross- demand and the amount specified in the demand less the amount of the counterclaim, set-off, or cross-demand is less than the prescribed amount; or

(c)	the demand ought to be set aside on other grounds.

[7]	For the purposes of this hearing I adopt as a general approach to the exercise of this jurisdiction the principles I set out below.

As to s 290(4)(a):

•	The applicant must show that there is arguably a genuine and substantial dispute as to the existence of the debt. Put another way, the applicant must show that there is a real and not a fanciful or insubstantial dispute.1

•	The mere assertion that the dispute exists is not sufficient. Material short of proof is required to support the claim that the debt is disputed.

•	If such material is available the dispute should normally be resolved other than by means of proceedings in the Court’s Companies Act jurisdiction.

1	Re A Company [1991] BCLC 737 (Ch) at 740, adopted in AAI Ltd v 92 Lichfield Street Ltd (in rec and in liq) [2015] NZCA 559, [2016] NZAR 1338 at [22].

As to s 290(4)(b):

•	An applicant must establish that it appears to have a counterclaim, cross demand or set-off which is reasonably arguable in all the circumstances.

•	The “appearance” test involves a review of low threshold.2 As Master Faire observed in Trenchless Utility Services Ltd v Nixon, what is required is some sort of material short of proof which backs up the cross-claim.3 To require a party to go further and analyse the matters further involves the risk of a trial of the dispute proper within the Companies Court.

•	The hearing relating on a s 290(4)(b) argument is to be short and to the point
– it is to be distinguished from a summary judgment application where complex legal issues are not a bar to a remedy.4

As to both ss 290(4)(a) and (b):

•	It is not usually possible to resolve disputed questions of fact on affidavit evidence alone, particularly when issues of credibility arise.5

As to s 290(4)(c):

•	There exists a residual discretion under the “other grounds” jurisdiction of 290(4)(c) which enables the Court to do justice between the parties. As Tipping J indicated in Commissioner of Inland Revenue v Chester Trustee Services Ltd, the exercise of the discretion comes down to the Court’s judgement as to whether the creditor’s prima face entitlement to liquidate the company is outweighed by some factor making it plainly unjust for liquidation to occur.6

2	Industrial Group Ltd v Bakker [2011] NZCA 142, (2011) 20 PRNZ 413 at [25]; AAI Ltd v 92 Lichfield Street Ltd (in rec and in liq), above n 1, at [21] – [22].
3	Trenchless Utility Services Ltd v Nixon HC Auckland M322/98, 28 October 1998, at [25].
4	Industrial Group Ltd v Bakker, above n 2, at [25].
5	For this formulation of the applicable principles, I acknowledge the authors of Company and Securities Law (looseleaf ed, Brookers) at [CA290.02(1)].
6	Commissioner of Inland Revenue v Chester Trustee Services Ltd [2003] 1 NZLR 395 (CA).

[8]	The way in which a cross-claim may be brought into account on a liquidation application was identified by the Court of Appeal in Covington Railways Ltd v Uni- Accommodation Ltd:7
Where a company which is the subject of a liquidation application is indisputably in debt to the applicant creditor, it may nonetheless be able to show that it has a claim against the applicant which reduces the net balance owing to the creditor or even offsets it altogether.

[9]	While a cross-claim for a sum less than the creditor’s demand does not fall within the strict wording of the test under s 290(4)(b), the Court’s residual discretion under s 290(4)(c) provides a basis for the Court in the setting aside jurisdiction to deal with set-offs for lesser sums on a parallel basis to that set out in Covington.

Issue 1: Evidence lacking as to verification of Mt Grey’s invoices

Geotech’s position

[10]	Geotech’s position was explained in the affidavit of its Chief Financial Officer, David Currie. He deposed that:

[Mt Grey] has failed to provide us with the information requested to justify the amounts claimed as due and owing and there is no evidence that the amount is actually payable.

and he continued:

The demand has been issued in circumstances where requests for further information have not been answered. The amount claimed has never been put to [Geotech] and requested for payment prior to the issue of the demand and should be set aside on other grounds as it has been improperly issued.

[11]	Mr Currie exhibited the invoices which together made up the sum claimed in Mt Grey’s demand. They were provided to Geotech’s solicitor by Mt Grey’s solicitor on 31 July 2018. Mr Currie deposed that:

All invoices were apparently provided to a casual staff member [of Geotech], Mel Cameron, who undertook casual administrative works for us.

7	Covington Railways Ltd v Uni-Accommodation Ltd [2004] 1 NZLR 272 (CA) at 274-275. See also Company and Securities Law (looseleaf ed, Brookers) at [CA290.04].

[12]	In email correspondence, Ms Cameron’s name appears above the description “Project Administration”. Geotech has not produced affidavit evidence from her. Mr Currie refers to two of the invoices by way of example. He notes that they contain the following detail:

•	Kaikoura Trucking for May – $40,583.75;

•	Kaikoura Trucking for June – $7,530.

[13]	Mr Currie deposes:

The invoices were rendered in specific amounts however were so vague so we could not actually ascertain the work they claim to have done, the justification for the figures or whether there is a basis to pay:

He continues:

We cannot tell whether [the May and June invoices] are for actual hours worked, materials or simply an hourly basis of their staff.

and:

My staff and our general manager, Louis Nel, in the management team had been requesting further information from [Mt  Grey]  for  some  time  but [Mt Grey] refused to provide this information and continually demanded payment.

[14]	In summary, Geotech’s argument is that the detail in the invoices was inadequate and the narration did not allow Geotech’s staff to understand the justification of the invoiced sum.

Mt Grey’s position

[15]	Mt Grey’s opposition evidence was provided by its two shareholder/directors, Glenn Johnstone and Bridgit Rowe. They explain that their dealings regarding invoicing were with Ms Cameron. They invoiced for work other than mechanical repairs and maintenance work in a one-line form requested by Ms Cameron upon the basis of Geotech’s own records. Mr Johnstone deposed:

From day one the arrangement was that Geotech would keep the time records for our staff and machines and then provide us with a spread-sheet which would form the basis of our invoices. We were specifically asked to send one line invoices for the work we did that was not mechanical repair and maintenance work. We did. Mt Grey relied on this.

[16]	Ms Rowe provided Mt Grey’s detailed evidence as to the history of invoicing. She exhibited all the invoices for mechanical repair and maintenance. They are detailed and are not the subject of any criticism by Geotech for lack of detail. Those invoices all remain unpaid.

[17]	Ms Rowe then referred to dealings in relation to site work projects at two sites, Avon and Kaikoura. She deposed that the points of contact for those were Ms (Mel) Cameron and Rob Cameron respectively. It was Ms Cameron who provided the spreadsheets for both sites to Mt Grey. Ms Cameron emailed the spreadsheets at the end of each month. Ms Rowe exhibited each set of spreadsheets sent by Ms Cameron between 1 November 2017 and 17 July 2018.

[18]	In Ms Cameron’s email of 1 November 2017, she stated:

Hi Glenn

Please see attached a copy of the hours for your works for October. As I have broken this down, all I require is a one-line invoice for the total at the bottom if you are in agreeance with this figure.

****October Avon River Works JN 90000.1000 as per BCS supplied by customer PO number 17610 ***

… Mel
[19]	Ms Rowe refers to subsequent exchanges between the parties which to some extent amended the invoicing arrangement but did not alter the basic “one line” approach following on from Ms Cameron’s provision of the spreadsheeted information.

Geotech’s reply evidence

[20]	For Geotech, various personnel provided reply evidence. Two, in particular, responded to the evidence about invoicing.

[21]	Mr Currie provided a second affidavit. He stated:

I believe we have come to this difficult position because Mr Johnstone chose not to deal with me but instead chose to deal with a casual staff member. This was the reason upon him contacting my office. No invoices have been approved for payment given the fact we had received no information verifying work which had been undertaken.

[22]	Geotech’s sole director, Anthony Black, also gave a reply affidavit. He goes into some detail, effectively minimising Ms Cameron’s role, variously describing her:

-	Never a permanent member of our staff;

-	A casual staff member for particular projects;

-	Primarily a quality assurance person;

-	To ensure testing had been undertaken.

Discussion

[23]	The evidence establishes beyond dispute that Geotech was in possession of all the information it required for the purposes of processing invoices. It has been exhibited by the deponents. Geotech has not put forward any analysis of that evidence to indicate that a single invoiced sum was inappropriately calculated. Geotech’s repeated emphasis upon Ms Cameron’s lowly ranking within their structure is a red herring. Ms Cameron, over the relevant period, clearly had the responsibility of dealing with Mt Grey’s invoicing. It is not open to Geotech to say after the event that the approach she adopted was unacceptable or that Mt Grey should not be permitted to rely on the invoices as presented.

Issue 2: Geotech’s claim for $24,954.01 interest

The interest claimed

[24]	On 31 May 2018, Mt Grey invoiced Geotech a sum of $24,954.01 on account of interest calculated on a basis which is not stated on overdue invoices rendered in March 2018. Geotech has not challenged the calculation (although the precise mathematical calculation is not clear to me). Rather, Geotech disputes Mt Grey’s entitlement to charge interest.

Geotech’s position

[25]	By his affidavit, Mr Currie expressed an understanding that Mt Grey’s claim to interest was based upon a credit account application (“the credit contract”) which Ms Cameron had executed on behalf of Geotech on 1 November 2017. Mr Currie deposes:

We never accepted their terms and conditions. Mel Cameron had no authority to bind the company.

Mt Grey’s position

[26]	Until the invoice of 31 May 2018, it appears that Mt Grey had not sought to impose an interest charge for outstanding sums. Mr Johnstone deposed that he had become concerned from February 2018 that Geotech had fallen behind in payments. He deposed that Mt Grey had had to obtain a loan to cover cash-flow requirements. He decided that unless Geotech came up to date, he would pursue interest on what was outstanding. He deposed that he spoke to both Ms Cameron and Mr Cameron about this. He exhibited an email he sent to Mr Cameron on 27 May 2018 as to the outstanding invoices in which he stated that Geotech:

…unfortunately, will have to charge you the 10% penalty fee on your outstanding invoices.

[27]	The “10% penalty fee” to which Mr Johnstone was referring may arise from the standard form of invoice which Mt Grey had issued to Geotech throughout their dealings. Each invoice carries a statement, in bold and capitals, at the bottom:

TERMS STRICTLY 20TH MONTH FOLLOW INVOICE DATE ON ALL PRE ARRANGED ACCOUNTS

ALL OTHER ACCOUNTS PAYMENT ON INVOICE

…
ALL    OVERDUE   ACCOUNTS   WILL   ATTRACT	10%	INTEREST CHARGE.

[28]	Mr Johnstone deposes that Mr Cameron told him that he understood Mt Grey’s need to “on-charge” the interest and that Mr Cameron explicitly said it was fine.

Geotech’s reply evidence

[29]	Geotech did not adduce evidence from Mr Cameron, a matter which may be explained by evidence of its other deponents which indicates that Mr Cameron subsequently left Geotech through redundancy. Those that gave reply evidence on the issue of interest were Mr Black and Mr Currie, both deposing that Mr Cameron did not have authority to commit Geotech to financing charges.

Discussion

[30]	Had it not been for the discussions between Mr Johnstone and Mr Cameron in late-May 2018, it would have been clear that Mt Grey was entitled to charge Geotech 10% interest on invoiced sums which were overdue. But in those discussions, as deposed to by Mr Johnstone in his evidence, Mr Johnstone obtained the agreement of Mr Cameron that Geotech would be “on-charged” for interest, Mt Grey having taken out a loan to cover cash-flow requirements. Mt Grey then presented an invoice for sums stated to be for “finance charges”. It has not given evidence as to the calculation of the sums claimed in terms of either the interest it was paying to its bank or the 10 per cent that applied in terms of its invoices. Given Mr Johnstone’s deposed version of his late-May agreement with Mr Cameron, it is at least arguable that any claim for interest after that had to be by reference to the interest charged by Mt Grey’s bank and not upon the basis of the 10 per cent calculation. Mt Grey was clearly entitled to charge something but the Court cannot be satisfied on the evidence adduced that the sum invoiced was the correct amount in terms of the late-May discussion.

Issue 3 – unrendered invoices

Geotech’s position

[31]	Mr Currie deposed that one ground of Geotech’s application was that:

Invoices 1514, 1515, #FC3 and 1490 amounting to $109,612.90 had never been rendered or received by Geotech at the time of the demand being issued. They could not be due and owing at the time of the demand.

[32]	Mr Currie, in his affidavit, did not explain this allegation any further. He did not relate it to any exhibit (whether invoicing record or otherwise).

[33]	In his written submissions, Mr Riches explained that the issue turned on when the invoices had been rendered to Geotech. On this basis, he withdrew the argument as to invoice 1490.

Mt Grey’s position

[34]	Ms Rowe addressed each of the invoices identified by Mr Currie. She exhibited invoices and email trails. Her evidence establishes:

•	Invoice 1490 was emailed to Geotech on 18 June 2018;

•	Invoices 1514 and 1515 were emailed to Geotech on 10 July 2018;

•	Invoice #FC3 was emailed to Geotech on 11 July 2018.

[35]	For Mt Grey, Mr Ballantyne’s written submission was put on a conditional basis. He submitted that if, as Geotech appears to now allege, there was no prearranged account, under Mt Grey’s ordinary terms of trade, all invoices became due and payable on invoice. At the hearing, Mr Ballantyne alternatively submitted that in terms of the pattern of dealings between the parties and the precise terms of each invoice, payment for invoices bearing a June 2018 date were due on 20 July 2018.

Discussion

[36]	From the time the parties commenced their significant level of dealings in the latter part of 2017, accounting issues were dealt with between Ms Cameron and Mr Johnstone. It is clear that Geotech’s account fell within the category of an “arranged account”. No evidence exists that in the following months there was any expectation on the part of Mt Grey that payment would be immediate. That disposes of Mr Ballantyne’s original written submission. But it is clear that both in terms of Mt Grey’s pattern and terms of invoicing, and Ms Cameron’s dealing with invoices, that Mt Grey was entitled to payment in the month following the date of invoice. The date of rendering the invoice therefore becomes irrelevant. Each of the invoices in question was due and owing when the demand was issued.

Issues 1 – 3: Conclusion

[37]	Geotech has raised an arguable defence as to the interest claimed by Mt Grey on the basis that it may not be due and owing. That represents a total of $24,954.01. Geotech is entitled to have the statutory demand set aside to that extent. Geotech has not established that it has a genuine and substantial dispute as to the balance of the invoices. The remaining invoices were issued in appropriate terms with Geotech having the information to understand them. They are all due for payment, including the invoices which were dated June 2018, but not emailed in that month.

[38]	Given the certainty with which that conclusion is reached, it is unnecessary to examine in detail a further matter recurrently identified in the evidence of Mt Grey. On the occasions Mt Grey pursued payment of overdue invoices from May 2018, Geotech did not at the time dispute the invoices, either in relation to their narrative or the information supporting them. Instead, Geotech apologised for its failure to pay, citing difficult trading conditions in the last few months with non-payment by its own debtors. Geotech gave Mt Grey the written assurance that:

You are on the top of our list for making a payment as soon as we possibly can.

[39]	It was only when Mt Grey in July 2018 withdrew all its staff from working for Geotech that Louis Nel, Geotech’s recently appointed General Manager, intervened and requested copies of invoices and supporting information. Geotech’s conduct and statements up to mid-July 2017 strongly indicate through their explanation for failures of payment that the issues since raised about invoicing are not genuine. They support the conclusions I have reached above but they are not necessary in order to reach those conclusions. The conclusions I have reached stand for the reasons I have already identified.

Issue 4: a counterclaim or set-off of $146,666.21 in relation to detained goods

The incident

[40]	By 18 July 2018, Mt Grey had taken legal advice and was threatening to issue a statutory demand. Exchanges occurred between the parties’ lawyers on 18 and 19 July 2018.

[41]	It is Mr Currie’s evidence that Mr Cameron, Geotech’s “Operations Manager”, around 11.00 am on 19 July 2018, “allowed” a large transporter to be taken to Mt Grey’s premises to have a diesel leak fixed. (Mr Currie adds that this was “against our resolution at a meeting at which this manager was present”. I disregard that particular evidence. There is no suggestion that Mt Grey was made aware of any limitations intended by Geotech’s board).

[42]	Mr Currie continues that after the truck was in Mt Grey’s yard and its driver had been given a lift home, Mt Grey retained the vehicle. Mr Currie deposes that Mr Johnstone phoned him soon afterwards to say he was keeping the truck until paid. Mr Currie says that there were also two other vehicles held by Mt Grey which they had refused to release.

[43]	The next day, 20 July 2018, Geotech’s solicitor demanded the return of the truck and another vehicle. Geotech forbade Mt Grey from undertaking any work on the truck. Geotech asserted a counterclaim for the value of its truck and for loss of profits.

[44]	The vehicles were subsequently returned to Geotech, the truck being returned on 3 October 2018. Shortly before this hearing, Mr Nel filed an updating affidavit. The need for that affidavit is of course partly explained by the fact that Geotech initially asserted a counterclaim based on the value of its truck. That meant that calculations of other loss became irrelevant in a statutory demand context because the value of the truck was sufficient in itself. Mr Nel, in his affidavit, provided detailed calculations as to additional costs and lost revenue. He deposed that third party transporter costs had totalled $122,746.21 and that lost revenue from two sources amounted to $15,295 and $23,920.

Geotech’s position

[45]	Geotech initially understood that Mt Grey was detaining the truck (and other vehicles) pursuant to a lien claim under, as it was stated, the Wages Protection and

Contractors Liens Repeal Act 1987.8

[46]	As Geotech on 20 July 2018 immediately forbade Mt Grey from undertaking work on the truck, Geotech took the position that no lien existed as there was no work for it to attach to. In any event, such a lien could cover at the most, the value of the work which was requested to be performed, namely to fix a diesel leak.

[47]	Mt Grey’s barrister in subsequent correspondence stated that Mt Grey was retaining the truck in reliance on the security provisions of the credit contract discussed above, at [25].

[48]	In his affidavit in support of this application, Mr Currie identified a number of issues with Mt Grey’s reliance on the credit contract:

(a)	Ms Cameron had no authority to enter such a contract;

(b)	Geotech did not accept the terms of the credit contract and would not have accepted them;

(c)	the security provisions are expressed to relate to the Personal Property Securities Act 1999 and Mt Grey never registered a security interest against any of the retained vehicles; and

(d)	the truck was already the subject of two previously registered and perfected securities, registered in September and November 2017.

[49]	For Geotech, Mr Riches also submitted that, at least arguably, Mt Grey could not establish that Ms Cameron had ostensible authority to enter into a contract such as the credit contract on behalf of Geotech.

8	The current lien provision is contained in s 341 Contract and Commercial Law Act 2017 (previously s 3 of the Wages Protection and Contractors Liens Repeal Act 1987).

Mt Grey’s position

[50]	In its notice of opposition, Mt Grey relied on the security provisions of the credit contract. Those rights, it asserted, entitled Mt Grey to retain the truck (and other vehicles).

[51]	Through Mr Ballantyne’s submissions (although not in its notice of opposition), Mt Grey sought to rely on the alternative on the worker’s lien entitlement under the statutory provisions. Mr Ballantyne recorded in his written synopsis:

25. In my submission it is not necessary  for  the Court  to  determine whether Ms Cameron had authority to bind Geotech to its terms & conditions of trade. Either she had authority to bind in which case the allegations fall away or she didn’t, in which case MGDL was entitled, in common law, to rely on an unpaid worker’s specific lien to retain possession of the vehicles.

[52]	Following on from that submission, Mr Ballantyne did not seek to develop further the submission based on the proposition that Geotech had entered into the credit contract through either actual or ostensible authority of Ms Cameron. His oral submissions focussed on the lien claim.

Discussion

[53]	The proposition that Ms Cameron had actual or ostensible authority to enter into the credit contract on behalf of Geotech is at most arguable. The evidence does not conclusively establish either actual or ostensible authority. The determination of those matters would require a trial. That leaves Mt Grey’s assertion of a lien, a response resuscitated in Mr Ballantyne’s submissions. The right to claim a lien is based on the claimant having undertaken contracted work on the chattel.9 The lien covers the value of work undertaken on the chattel on this occasion and does not cover any other debt owed by the owner to the lien claimant whether in relation to other chattels or the same chattel for earlier work.10 On this basis, the entitlement of Mt Grey to claim a lien over the truck is also the subject of a genuine and substantial dispute. First, Mt Grey has not provided any evidence that it, in fact, undertook work

9	Maurice Casey Laws of New Zealand Lien (online ed) at [22] fn 1 citing Bevan v Waters (1828) 3 C & P 520; 172 ER 529.
10	Maurice Casey Laws of New Zealand Lien (online ed) at [22] fn 3 citing Leeward Holdings Ltd v Douglas [1982] 2 NZLR 532 (HC) at 537.

on the truck in the period 19-20 July 2018 before Geotech expressly forbade it to do work on the truck. Secondly, Mt Grey’s initial assertion of a lien appears to involve retention of the truck as security for Geotech’s entire indebtedness, not just any costs associated with work on the truck. By retaining the truck on that basis from mid-July 2018 to 3 October 2018, Mt Grey was doing so at least arguably on an unlawful basis.

[54]	Through Mr Nel, Geotech has provided a comprehensible and reasonably detailed explanation of the losses it allegedly incurred in the period Mt Grey retained possession of the truck. Mt Grey has not adduced evidence to critique Mr Nel’s calculations. That may be explained in part by the fact that Mr Nel’s affidavit was filed on 23 November 2018, the working day before this hearing. Nonetheless, the Court must deal with the issue on such evidence as has been filed.

[55]	Mr Ballantyne identified two particular issues with aspects of Mr Nel’s items of loss. The first related to Geotech’s claim of incurring charges around the same time in five disparate centres when only one particular truck could have been available at the time in one centre. The second involves an assertion that one group of the invoices from T Croft Ltd is for mostly Hiab crane truck jobs which Mr Ballantyne states do not require a truck of this nature and would or may have been on-chargeable to Geotech’s client or incurred in any event.

[56]	Mr Ballantyne’s second point not having been the subject of evidence cannot be taken further in this setting. The first point – as to the location of jobs – appears to have some cogency as a matter of logic but may be capable of explanation if full evidence is given in relation to the asserted counterclaim. I find, as matters stand, that Geotech’s assertion of a counterclaim meets the threshold identified by Master Faire in Trenchless Utility Services Ltd v Nixon in that there is material short of proof to justify the cross-claim.11 It would be inappropriate to explore the detail of the counterclaim in a way that is properly for a trial court.

11	Trenchless Utility Services Ltd v Nixon, above at 3.

Outcome

[57]	Geotech has a genuine and substantial dispute as to $24,954.01 (being the charge for interest) out of the total sum of $446,109.16 claimed in Mt Grey’s demand. Geotech has established that it has arguable cross-claims to the extent of $146,666.21. In these circumstances, Mt Grey’s demand will be set aside except as to $274,548.94.

Orders

[58]	I order:

(a)	The statutory demand issued by the respondent on 23 July 2018 is set aside except as to $274,548.94.

(b)	The applicant has until 10 December 2018 to pay to the respondent the sum of $274,548.94 failing payment of which the respondent may apply for an order liquidating the applicant.

Costs

[59]	Having delivered this judgment, I heard from counsel as to costs. Mr Riches referred me to an offer made by Geotech through counsel on 28 August 2018 which was an offer of a significant payment without prejudice save as to costs. I have viewed the offer. Mr Ballantyne nevertheless seeks an award of costs upon the basis that his client has been successful in establishing to a substantial degree the validity of the demand. To that extent, the situation of Mr Ballantyne’s client may be likened to the successful claimant in ordinary civil proceedings where it succeeds for any sum of money. I am satisfied that the just order is that costs should follow the event on a 2B basis.12

12	High Court Rules, Category 2 under r 14.3(1) and band B under r 14.5(2).

[60]	I accordingly order that the applicant pays to the respondent the costs of the application on a 2B basis together with disbursements to be fixed by the Registrar.

Associate Judge Osborne

Solicitors:
Saunders & Co, Christchurch
D Ballantyne, Solicitor, Christchurch