Anysley Developments Ltd v Three60Degrees Ltd

JurisdictionNew Zealand
CourtHigh Court
JudgeLester
Judgment Date25 February 2021
Neutral Citation[2021] NZHC 280
Docket NumberCIV-2020-409-498
Date25 February 2021

UNDER Section 290 of the Companies Act 1993

IN THE MATTER of an application to set aside a statutory demand

Between
Anysley Developments Limited
Applicant
and
Three60Degrees Limited
Respondent

[2021] NZHC 280

JUDGE Lester

CIV-2020-409-498

IN THE HIGH COURT OF NEW ZEALAND

CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA

ŌTAUTAHI ROHE

Companies — application to set aside a statutory demand — statutory demand issued for the balance owing under a success fee arrangement — a company related to the plaintiff had paid the respondent company for work undertaken managing the building site — which entity was entitled to a credit for that amount — general principles for setting aside a statutory demand — mistaken payment — set off, mutuality and equitable assignment — Companies Act 1993

Appearances:

R A Hearn for the Applicant

A N Riches for the Respondent

JUDGMENT OF ASSOCIATE JUDGE Lester

This judgment was delivered by me on 25 February 2021 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

25

February 2021

1

This application concerns a statutory demand for $5,748.12. The applicant, Anysley Developments Ltd (Anysley), was incorporated by Christopher Swann to carry out a development at Aynsley Terrace in Christchurch. The land on which the development was to occur had been identified by a Mr Josh Stevenson. Mr Stevenson is the director of the respondent, Three60Degrees Limited (360 Degrees).

2

It is necessary to refer to two other companies. The first is First Design and Build Ltd (First Design). This company holds a number of David Reid Homes franchises in the Canterbury area. First Design is another company of Mr Swann's.

3

In 2018, Mr Swann engaged Mr Stevenson as a manager of First Design. The terms of that management agreement are in dispute, but that dispute is not relevant to this application.

4

The second company, DRH4 Investments Ltd (DRH4), was a single purpose company that Mr Swann was simultaneously using to carry out a development in Bishop Street, Christchurch. The Bishop Street development was managed by First Design.

5

Mr Stevenson, having identified the Aynsley Tce opportunity, entered into an agreement for sale and purchase with the vendor. He assigned that contract to Anysley by an undated Deed of Assignment (the Deed).

6

Under the Deed, Anysley was to repay to Mr Stevenson the deposit he had paid on the purchase, together with a success fee of $50,000 plus GST. This success fee was to be paid firstly by $20,000 plus GST over six equal monthly instalments, with the first payment to be made one month after settlement. The balance of the success fee of $30,000 plus GST was to be paid on the completion of the development, that is, when new titles issued.

7

Anysley settled the purchase of the properties and Mr Stevenson nominated 360 Degrees to receive the payments under the Deed.

8

360 Degrees was not a party to the Deed and it being nominated to receive the payments, would not make it a party to the Deed. Nonetheless, both parties proceeded on the basis that amounts payable under the Deed were properly payable to 360 Degrees. Mr Stevenson, in his affidavit, refers to the incorporation of 360 Degrees and says, after its incorporation Mr Swann consented to an arrangement in which all dealings with Mr Swann were treated as being between 360 Degrees and whatever entity it was dealing with. Mr Swann does not take issue with that.

9

Anysley paid the first four of the six instalments of $3,833.32 including GST.

10

360 Degrees raised invoices for those first four payments. It then raised invoices for the two remaining monthly instalments in May and June 2019. The statutory demand relates to the two last invoices.

11

The applicant does not dispute that under the Deed it was obliged to pay $20,000 plus GST in six equal instalments to 360 Degrees. It claims, however, to have in substance paid the remaining two instalments.

12

When this claim was first raised, the applicant accepted a further $1,918.52 was due. It paid that amount having reconciled the payments it says it made or the credits to which it says it is entitled.

13

The issue in this proceeding is whether it is arguable that the applicant is entitled to a credit for the sum of $5,750 paid by one of Mr Swann's companies to 360 Degrees. If so, it follows that the statutory demand will be set aside.

General principles for setting aside a statutory demand
14

The principles governing a decision to set aside a statutory demand were summarised in Confident Trustee Ltd v Garden and Trees Ltd as follows: 1

  • (a) The onus is on the applicant seeking to set aside the statutory demand to show that there is arguably a genuine and substantial dispute as to

    the existence of the debt. The Court's task is not to resolve the dispute but to determine whether there is a substantial dispute that the debt is due.
  • (b) The mere assertion that a dispute exists is not sufficient. Material short of proof is required to support the claim that the debt is disputed.

  • (c) If such material is available, the dispute should normally be resolved first in ordinary civil proceedings before any statutory demand is issued.

  • (d) If a counterclaim, cross-demand or set-off is suggested an applicant must establish that this is reasonably arguable in all the circumstances.

  • (e) It is not usually possible to resolve disputed questions of fact on affidavit evidence alone, particularly when issues of credibility arise unless such evidence is contrary to the available documents or earlier statements made by the parties.

Payment $5,750 on 14 May 2019
15

Much of the following is disputed by 360 Degrees.

16

On 13 May 2019, 360 Degrees issued an invoice for $10,000 plus GST to DRH4. Mr Swann says Mr Stevenson issued this invoice as he believed he was entitled to management fees for work DRH4's Bishop Street project. Mr Swann says he explained to Mr Stevenson that the management work for DRH4's project was being provided by First Design. Mr Swann's position is that Mr Stevenson was working for First Design and that entity was undertaking the management of the work at Bishop Street, not 360 Degrees or Mr Stevenson personally.

17

Mr Swann says the invoice was issued without consultation to him. DRH4 then made a part payment from its bank account, of the 13 May 2019 invoice of $5,750.

18

Anysley submits that DRH4 paid the $5,750 by mistake and was entitled to have that sum refunded by 360 Degrees. Mr Swann, in his first affidavit, says that whilst 360 Degrees was not owed any money by DRH4, it was owed money by Anysley pursuant to the monthly instalments of the $20,000 success fee payable under the Deed. In his first affidavit, Mr Swann said he and Mr Stevenson agreed that the money said to have been incorrectly paid by DHR4 would be credited to Anysley's outstanding debt.

19

Mr Swann said, in his first affidavit, that he could not exactly remember when that discussion occurred, but it was likely to have been in June 2019.

20

Mr Stevenson, in his second affidavit, denies that any such arrangement was made.

21

In the face of that denial, Mr Swann replied frankly with the following:

14. In my first affidavit I said we agreed that the payment made in relation to the DRH4 invoice would be treated as being paid to ADL for the amounts owed to it. On reflection, saying it was “agreed” is too strong. He did agree that DRH4 was not owed anything, but I can't recall specifically discussing how the payment already made would be treated. I can't recall when the discussion occurred, but it was at FDB's offices, and I pointed out he should not be invoicing for the Bishop Street project. He said something to the effect of “surely we're taking some management fees out of DRH4”. I explained that we were not, because DRH4 was using FDB to undertake the project and paying FDB, and the profit would sit in FDB. I said he was working for FDB and there was no fees (for either of us) out of DRH4. He was happy with my explanation and stopped invoicing.

15. As I've noted, the disputed payment which was already made wasn't expressly discussed. Although he had previously credited it to DRH4, I assumed he would treat it as being paid by ADL because there was nothing else owing to 360 at that point (by any of my companies), and in any case at my end it had been paid by ADL (via DRH4). He didn't issue any more invoices or statements from DRH4 and did not issue any more statements from ADL until earlier this year when he had left FDB and the other disputes between us started to materialise.

22

The above evidence from Mr Swann paints quite a different picture from that in his first affidavit.

23

The above amounts to an acceptance by Mr Swann that Mr Stevenson did not agree to credit to Anysley the $5,750, which Mr Swann says was incorrectly invoiced by 360 Degrees and repayable to DRH4. Mr Swann says he assumed Mr Stevenson would treat it as a credit to Anysley.

What is reasonably arguable on the evidence?
24

While Mr Swann's evidence that 360 Degrees was not entitled to charge fees in relation to the Bishop Street project is disputed, I am not in a position to dismiss his sworn evidence in that regard.

25

Mr Swann's evidence is supported by the fact that, after June 2019 (when he says he spoke to Mr Stevenson about 360 Degrees mistakenly invoicing for the Bishop Street project), 360 Degrees did not pursue payment of a second invoice it issued for Bishop Street on 2 June 2019 for $10,000 plus GST. Nor did 360 Degrees issue any further invoices for the Bishop Street project to DRH4 (albeit there is a confusing invoice issued by 360 Degrees to First Design on 20 June 2019 said to also be for Bishop Street —...

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