Oceanic Seafoods Limited v Silla Co Limited

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV2013-404-003949 [2014] NZHC 78

BETWEEN OCEANIC SEAFOODS LIMITED Applicant

ANDSILLA CO LIMITED Respondent

Hearing: 7 February 2014

Appearances: M N Edwards on record for applicant, seeking leave to withdraw
J K Goodall for respondent

Judgment: 7 February 2014

(ORAL) JUDGMENT OF ASSOCIATE JUDGE ABBOTT

Solicitors:
Wynyard Wood, Auckland
Veritas Law, Auckland

Counsel:
J K Goodall, Auckland

OCEANIC SEAFOODS LIMITED v SILLA CO LIMITED [2014] NZHC 78 [7 February 2014]

[1] Oceanic Seafoods Ltd applied to this Court on 22 August 2013 to set aside a statutory demand issued by the respondent, Silla Co Ltd, seeking payment of the sum of US$2,409,945.37. This sum represents amounts unpaid on two invoices rendered for the sale of tuna by the respondent to the applicant.

[2] The essence of the application to set aside the demand was that the debt was owed by another party. The respondent opposed the application on the grounds that the underlying contract was in fact between the parties in this proceeding.

[3] The application was allocated a defended hearing today. On the last working day (yesterday was a public holiday) Mr Edwards, as solicitor for the applicant, informed the Court that it had been placed into liquidation, and that the appointed liquidator had disclaimed this proceeding.

[4] The disclaimer is sufficient to excuse any appearance on behalf of the liquidator, but it does not necessarily determine this application. Mr Edwards is on the record as solicitor for the applicant, but has no instructions. The applicant is clearly not in a position to proceed. I accept the submission of counsel for the respondent that the appropriate course is to strike out the application.

[5] That leaves an issue of costs as a consequence of the striking out of the application. The respondent seeks costs on a scale 2B basis (together with disbursements), by analogy with the provisions for costs following discontinuance.1

[6] It is well established that the Court has control of all proceedings by or against a company once the company has gone into liquidation.2 This includes a determination of costs in the proceeding.3

[7] I make the following orders:

1      Rule 15.23 of the High Court Rules.
2      Steel & Tube Co of New Zealand Ltd v JBL Construction Ltd [1973] 2 NZLR 30 at 32.
3      Applying the general principles under r 14.1, but also in applying Orakei Group (2007) Ltd v Doherty (No 2) (2008) ERNZ 505 (which dealt with an issue over costs following liquidation in the absence of a notice of discontinuance, albeit in the course of determining a different point). See too Krukziener v Commissioner of Inland Revenue (2011) NZTC 20-055.

(a) The application is struck out.

(b)The applicant is to pay costs to the respondent on a scale 2B basis together with disbursements as fixed by the Registrar.

[8] It now will be for the respondent to prove these costs together with the original debt in the liquidation of the applicant.

Associate Judge Abbott

CaseChat Overview and Summary

Oceanic Seafoods Limited sought to set aside a statutory demand issued by Silla Co Limited, which sought payment of an amount of US$2,409,945.37, representing unpaid invoices for tuna sales. The applicant argued that the debt was owed by another party, while the respondent maintained that the underlying contract was between the parties in the proceedings. However, the applicant was placed into liquidation, and the appointed liquidator disclaimed the proceeding. Although the disclaimer excused any appearance on behalf of the liquidator, it did not necessarily determine the application. The court accepted the submission of the respondent's counsel that the appropriate course was to strike out the application. The issue of costs remained as a consequence of the striking out of the application. The respondent sought costs on a scale 2B basis, by analogy with the provisions for costs following discontinuance.

The court found that it had control of all proceedings by or against a company once the company had gone into liquidation, including a determination of costs in the proceeding. The court made the following orders: (a) the application was struck out, and (b) the applicant was to pay costs to the respondent on a scale 2B basis together with disbursements as fixed by the Registrar. The respondent would now need to prove these costs together with the original debt in the liquidation of the applicant.

This case highlights the importance of properly assessing the status of a company in proceedings, as well as the need for careful consideration of costs in such cases. The court's decision to strike out the application and order costs on a scale 2B basis demonstrates the importance of the respondent's position and the need for the applicant to properly assess its position before proceeding with litigation. The case also highlights the potential consequences of a company's liquidation on ongoing proceedings, and the importance of properly managing those proceedings in such circumstances.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established