In Ebert Construction Ltd v Sanson [2016] NZHC 472, the High Court awarded costs to liquidators after a statutory demand issued by the liquidators had been set aside by consent.  The reasons were as follows:

  • The liquidators had used the statutory demand process properly.  They were seeking payment of a judgment sum.  They were entitled to seek payment of the judgment sum at any early stage in the absence of an order staying enforcement. 
  • The ultimate outcome was that sought by the liquidators.  The liquidators initially suggested that the judgment debtor (Ebert) pay the judgment sum into the liquidators' solicitors' trust account, to be held pending determination of the appeal that Ebert intended to file.  The liquidators later suggested that the judgment sum be paid into Ebert's solicitors' trust account.  Ebert did not respond substantively to either of those suggestions, but before the first call for the application (after the liquidators had filed a notice of opposition), Ebert advised that it had paid the judgment sum into its solicitors' trust account.
  • After the statutory demand was issued, Ebert had paid the judgment sum into another account.  Ebert failed to respond to the liquidators' legitimate concern that the funds in that account were subject to the GSA in favour of a bank.  It also failed to provide an explanation for why the funds were not paid into its solicitors' trust account until later.  In those respects, Ebert was the author of its own misfortune.

However, each case will turn on its own facts.  In the recent costs decision of Waiwera Water Ltd v Link International Ltd (in liq), the liquidator withdrew his statutory demand following the making of an application to set aside the statutory demand.  The issue of costs remained in dispute.  The High Court determined that it was improper for a liquidator to issue a statutory demand with full knowledge that the debt was genuinely disputed, making clear that liquidators are officers of the Court and should not issue statutory demands in such circumstances without taking advice.  Link International Ltd (in liq) and its liquidator were found jointly and severally liable for costs.

See Court decisions here and here.