Aluminium Plus Wellington Limited (in liquidation) v Shaw
[2018] NZHC 281
•21 March 2018
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE
CIV-2016-485-546
CIV-2016-485-547 [2018] NZHC 281
UNDER the Insolvency Act 2006 IN THE MATTER OF
the bankruptcy of Angela Claire Shaw and Ian Alexander Shaw
BETWEEN
ALUMINIUM PLUS WELLINGTON LIMITED (IN LIQUIDATION)
Judgment Creditor
AND
ANGELA CLAIRE SHAW and IAN ALEXANDER SHAW
Judgment Debtors
Hearing: 15 February 2018 Appearances:
J G Cole for judgment creditor Ian Shaw in person
No appearance for Angela Shaw
Judgment:
21 March 2018
RESERVED JUDGMENT OF ASSOCIATE JUDGE SMITH
[1] The judgment creditor (Aluminium Plus) applies for orders adjudicating the judgment debtors bankrupt. Mr Shaw has filed a notice of opposition to the application, but Mrs Shaw, although served with the application on 27 November 2017, has taken no step to oppose it.
ALUMINIUM PLUS WELLINGTON LIMITED (IN LIQUIDATION) v SHAW [2018] NZHC 281 [21 March 2018]
Background
[2] Aluminium Plus obtained a judgment in this Court against Mr and Mrs Shaw on 24 June 2016, in the sum of $125,884.59.1 Mr and Mrs Shaw filed an appeal against that judgment, and in a judgment delivered on 25 July 2017 the amount of the judgment against the Shaws was reduced to $106,505.03.2
[3] Bankruptcy notices had been issued by Aluminium Plus shortly after the High Court judgment, but amended bankruptcy notices were issued following the delivery of the Court of Appeal judgment. With further interest, the amount claimed in the amended bankruptcy notices was $152,154.20. The amended bankruptcy notices were served on 28 August 2017.
[4] Mr and Mrs Shaw promptly filed applications to set aside the amended bankruptcy notices. I heard their applications to set aside on 12 October 2017 and, in a reserved judgment given on 25 October 2017, the Shaws’ applications were dismissed.3
[5] Aluminium Plus moved promptly to file adjudication proceedings against both Mr Shaw and Mrs Shaw. The adjudication proceedings were filed on 27 October 2017.4 Service of the adjudication applications and summonses to debtor were served by email on Mr and Mrs Shaw on 27 November 2017, in accordance with their agreement to accept service at their nominated email addresses given to the Court and to Aluminium Plus in the course of a hearing in this Court on 12 September 2017.
[6] Mr Shaw raised only one issue in his notice of opposition and supporting affidavit filed on 15 February 2018. He contended that Mr Sumner, the solicitor for Aluminium Plus, had committed perjury in the course of a District Court proceeding in which judgment had been obtained by Viridian Glass Ltd Partnership (Viridian) against Aluminium Plus in the sum of $87,468.82.
1 Owens v Shaw [2016] NZHC 1400.
2 Shaw v Owens [2017] NZCA 315.
3 Aluminium Plus Wellington Ltd (in liq) v Shaw [2017] NZHC 2607.
4 The acts of bankruptcy committed by Mr and Mrs Shaw having occurred the day after the delivery of the judgment dismissing their applications to set aside the bankruptcy notices on 25 October 2017 – see Malley & Co v Burgess [2017] NZHC 950.
[7] At the time of that judgment Mr and Mrs Shaw were the directors of Aluminium Plus but they elected not to defend Viridian’s claim, or to pursue a counterclaim that they advised the District Court they considered was available to Aluminium Plus.
[8] Mr and Mrs Shaw did initially file a notice of counterclaim in the District Court proceeding, but they failed to file and serve the “information capsule” which was required by the relevant District Court Rules then in force. Judgment was subsequently entered against Aluminium Plus by default. Aluminium Plus did not appeal the default judgment, or apply to have it set aside, and it was eventually put into liquidation (on Viridian’s application) on 14 October 2014.
[9]In my judgment on the Shaws’ application to set aside the bankruptcy notices,
I described what then happened, in the following terms:5
[7] Notwithstanding their failure to take steps to oppose Viridian’s claim, and to oppose the liquidation proceeding against Aluminium Plus, Mr and Mrs Shaw maintained the belief that Aluminium Plus did have a valid claim against Viridian for late supplies and/or defects in the product supplied. Their solicitors advised the liquidators of their views in that respect, by letter dated 27 January 2015.
[8] The liquidators [of Aluminium Plus] elected not to pursue the claims against Viridian which Mr and Mrs Shaw thought were available to Aluminium Plus, and they elected not to take any steps to have Viridian’s judgment set aside. Instead, they commenced a proceeding in this Court against Mr and Mrs Shaw, first in their capacities as trustees of a family trust known as the I & A Shaw Family Trust (the Trust), and secondly in their capacities as directors of Aluminium Plus. The claim against the Trust was based on alleged breach by the Trust of contractual obligations owed by the Trust to Aluminium Plus to fund purchases of glass made by Aluminium Plus on the Trust’s behalf. The claims against Mr and Mrs Shaw in their personal capacities pleaded breaches by them of their duties as directors of Aluminium Plus, under ss 135, 136 and 137 of the Companies Act 1993 (the Companies Act).
[9] The claims in contract and under s 136 of the Companies Act were dismissed in a judgment given by Brown J on 24 June 2016. However, the claims under ss 135 and 137 of the Companies Act were upheld, and judgment was entered against Mr and Mrs Shaw on those claims in the total sum of
$125,884.59 (which sum included an amount of $26,879.56 for the costs and disbursements of the liquidation to that time).
5 Aluminium Plus Wellington Ltd (in liq) v Shaw, above n 3 (citations omitted).
[10] In his judgment given in the High Court proceeding commenced by Aluminium Plus against the Shaws, Brown J did refer to the Shaws’ contention that Aluminium Plus had a good counterclaim against Viridian which had never been resolved. His Honour accepted in his judgment that there had been some history of supply of defective glass from time to time, but noted that the supplier’s position was that any defective products supplied, of which it had notice, had been identified and replaced.
[11] In its judgment on the appeal, the Court of Appeal recorded that the Shaws’ original ground of appeal against the liability finding was that the trial Judge had erred by failing to take into account the counterclaim by Aluminium Plus against Viridian. However, the Court noted that counsel appearing for the Shaws in the Court of Appeal accepted that the counterclaim defence had not been raised or pleaded by the Shaws, and that the Court should not grant leave to raise a new ground on appeal. The Court of Appeal also noted that there was no certainty that the counterclaim would equal the claim made against Aluminium Plus in the District Court.
[12] In his argument in support of his application to set aside the bankruptcy notice, Mr Shaw contended that Viridian’s information capsule filed in the District Court, sworn by its solicitor Mr Sumner on its behalf, misled Aluminium Plus into believing that terms and conditions were in place between Viridian and Aluminium Plus, which included a provision requiring that any claims be notified within seven days of delivery. Any such terms would likely have precluded any counterclaim against Viridian by Aluminium Plus, because it could not show that it had complied with the seven days’ notice requirement. Mr Shaw contended that, in fact, no such terms and conditions had been agreed between Aluminium Plus and Viridian.
[13] Mr Shaw stated in his evidence that the misapprehension over the correct terms and conditions as between Viridian and Aluminium Plus led directly to the decision by Aluminium Plus not to pursue its counterclaim in the District Court. He produced a copy of an email dated 16 June 2014 from a solicitor then advising him, in which the solicitor noted that the principal reason for the dispute was the supply by Viridian of allegedly faulty product. Relying on the terms and conditions of trade which Viridian had submitted with its information capsule in the District Court proceeding, the solicitor advised that any counterclaim would only have validity if the product
supplied by Viridian was faulty and brought to the attention of Viridian within seven days of delivery.
[14] Mr Shaw contended at the hearing of the application to set aside the bankruptcy notice that he did not see the correct credit application form (with the correct terms and conditions) until a few days before the High Court trial in May 2016. He said in his affidavit that the credit application form was referred to Brown J, but his belief was that the Judge ruled at the time that the issue could not be heard along with all the other issues within the time allocated for the trial, and that the trial should proceed, with any argument over the credit application forms to be argued separately at another time if necessary.
[15] In my judgment given on 25 October 2017, I referred to some of the evidence which had been given before Brown J in the trial in the High Court.6
[16] I concluded that, at the time of the trial in the High Court, Mr Shaw was clearly alert to the argument that Viridian’s information capsule filed in the District Court was incorrect on the issue of which terms and conditions of trade were applicable to Viridian’s supplies; Viridian’s, CSR’s (a predecessor of Viridian with whom Aluminium Plus had been dealing), or neither company’s.7 I referred specifically to a passage in the notes of evidence taken at the trial in which Mr Shaw said in cross- examination:
… Same as this judgment which I brought up with the costs and disbursements and the interest like there’s a statement from you to the District Court that you’ve signed [counsel cross-examining Mr Shaw was Mr Sumner, who had also represented Viridian in the District Court, and had signed Viridian’s information capsule] saying that an account application had been signed allowing them to do this, and that was done by yourself, which is not the case and incorrect evidence.
[17] In my judgment, I concluded that even if Mr and Mrs Shaw did not fully appreciate the possible extent and ramifications of the “terms and conditions argument”, any late knowledge and appreciation of the issue could have been corrected by the Court of Appeal. I concluded that the place for correcting any injustice which
6 Aluminium Plus Wellington Ltd (in liq) v Shaw, above n 3, at [60]–[66].
7 At [66].
may have occurred in the entry of the judgments against Mr and Mrs Shaw was the Court of Appeal, and not in this Court on an application to set aside the bankruptcy notices. I also took the view that it was not for this Court to purport to decide whether the Court of Appeal had misconceived what appeared to be a concession made in that Court by counsel appearing for the Shaws, namely that the “counterclaim argument” was not being run on appeal.
[18] I noted also that, in a judgment given on 20 October 2017, the Supreme Court had refused leave to appeal the Court of Appeal decision.8 In refusing leave, the Supreme Court found that nothing raised by the Shaws suggested that there had been a miscarriage of justice.
Mr Shaw’s opposition to the bankruptcy adjudication application
[19] In his notice of opposition to the bankruptcy adjudication application, Mr Shaw pleaded the following ground:
That the judgment was obtained through perjury and falsifying of evidence by [Mr Sumner] on behalf and with the knowledge of the creditor …
[20] In a supporting affidavit, he contended that if the original perjury had not taken place, then judgment would not have been given against Aluminium Plus in the District Court. Mr Shaw went on to say:
The process has started by [Mr Shaw] to file a Private Prosecution with the Courts against [Mr Sumner] plus actions of CSR Viridian in 2014 in regards, to said falsified evidence. Firstly though an official complaint was filed with the NZ Police as per the attached response from them dated 12/12/2017 … Evidence has been discussed with a QC hence the reason for the Private Prosecution as a criminal act has been done by Mr Sumner and he has financially benefited also from this act.
[21] Mr Shaw attached a letter from the New Zealand Police dated 12 December 2017, in which the Police advised that they would take no further action on his complaint that an affidavit sworn by Mr Sumner in 2014 contained false or misleading information. The Police letter stated:
In his affidavit Mr Sumner refers to a Credit Account application and its terms and conditions. You allege that the Credit Account application referred to is
8 Shaw v Owens [2017] NZSC 160.
false or misleading on the basis that the document is not complete, the agreement was under a different company name and related to a one off commercial job in 2010. It’s also your belief that Mr Sumner knew that the document was false and misleading.
[22] The letter from the Police also noted that Mr Shaw had lodged a complaint against Mr Sumner in September 2016 with the New Zealand Law Society, on the same grounds. The Society had declined to take further action, on the basis that the appropriate avenue to advance the matters raised was by way of the court appeals process.
[23] The Police concluded in their letter that the circumstances of the case had been subject to comprehensive examination by the Courts over a number of years, with Mr Sumner acting for the liquidators in all of the proceedings. Their assessment was that the matters raised by Mr Sumner did not constitute the criminal offence of perjury.
The submissions
Mr Shaw
[24] In his submissions, Mr Shaw confirmed that he wishes to proceed with a private prosecution. He contended that the issue of whether perjury was committed in the affidavit filed in the District Court has not been tested in any of the courts. With particular reference to the Court of Appeal concession made by counsel for the Shaws, Mr Shaw submitted that the lawyer then acting for him and Mrs Shaw had acted against his instructions. He said that the issue had not been addressed by the Supreme Court.
[25] Mr Shaw was critical of Mr Sumner for not appearing, and being able to answer questions, in recent hearings of the claims against the Shaws.
[26] Mr Shaw asked for a stay of the bankruptcy proceeding to enable justice to be done, with his perjury allegation not “pushed to one side”.
Submissions for Aluminium Plus
[27] Mr Cole submitted that it is too late now for Mr Shaw to try to recast previous judgments of the Court. He referred to the Law Society’s dismissal of Mr Shaw’s complaint on the basis that the matters were before the Court.
[28] More generally, Mr Cole submitted that Mr Shaw has raised nothing new. As the Supreme Court found, there has been no miscarriage of justice. He submitted that there is no basis for not making orders for adjudication.
Discussion and conclusions
[29]Section 13 of the Insolvency Act 2006 (the Act) provides:
A creditor may apply for a debtor to be adjudicated bankrupt if—
(a)the debtor owes the creditor $1,000 or more or, if 2 or more creditors join in the application, the debtor owes a total of $1,000 or more to those creditors between them; and
(b)the debtor has committed an act of bankruptcy within the period of 3 months before the filing of the application; and
(c)the debt is a certain amount; and
(d)the debt is payable either immediately or at a date in the future that is certain.
[30]Section 37 of the Act provides:
13 When creditor may apply for debtor’s adjudication
The court may, at its discretion, refuse to adjudicate the debtor bankrupt if—
(a)the applicant creditor has not established the requirements set out in section 13; or
(b)the debtor is able to pay his or her debts; or
(c)it is just and equitable that the court does not make an order of adjudication; or
(d)for any other reason an order of adjudication should not be made.
[31]Section 38 of the Act provides:
38 Court may halt application
(1)The court may at any time halt the creditor’s application for adjudication.
(2)The court may halt the application on the terms and conditions (if any), and for the period, that the court thinks appropriate.
[32] Aluminium Plus holds a judgment for the amount of its claim, which has been confirmed by the Court of Appeal. The Supreme Court has found that there was no miscarriage of justice in the entry of that judgment. There can be no doubt that the four elements of s 13 of the Act are prima facie established: there is a judgment under which Mr and Mrs Shaw owe Aluminium Plus a certain amount which is in excess of
$1,000, and that judgment debt is payable immediately. The Shaws committed acts of bankruptcy on 26 October 2017 when they failed to comply with the bankruptcy notices,9 and the adjudication proceedings were commenced within the period of three months following the acts of bankruptcy.
[33] So, on the face of it there is jurisdiction to make adjudication orders. And Mr and Mrs Shaw have not contended that they are able to pay their debts.
[34] In those circumstances, the creditor is prima facie entitled to an order of adjudication,10 and the onus is on the judgment debtor to persuade the Court that an adjudication order should not be made.
[35] In my view, Mr Shaw has failed to discharge the onus of showing cause that an adjudication order should not be made. I consider the following factors tell against Mr Shaw’s position.
[36] In the recent High Court of Australia case of Ramsay Health Care Australia v Compton,11 the majority considered that a court sitting in its bankruptcy jurisdication can, in an appropriate case, look behind the judgment on which a bankruptcy notice was based to see if a debt is in fact owing. That was considered to be the case even where the judgment followed a defended hearing in which the debtor’s defence was
9 Under s 17 of the Act, failure to comply with a bankruptcy notice constitutes an act of bankruptcy for the purposes of s 13.
10 Baker v Westpac Banking Corporation CA 212/92, 13 July 1993 at 4.
11 Ramsay Health Care Australia v Compton [2017] HCA 28.
unsuccessful, or where the debtor had failed to run an available defence to the creditor’s claim. (The reason a bankruptcy court might take that approach is that it is concerned not just with the position as between the creditor and the debtor, but with the debtor’s position vis-à-vis all his or her creditors.)
[37] In Ramsay the majority noted that “there was evidence before the primary judge which, while it remained uncontradicted, was apt to suggest that the debt was not truly owing.”12 The primary judge had not formed the view that that evidence had been adduced other than in good faith.
[38] In a separate (concurring) judgment in Ramsay, Edelman J considered the question as being whether “substantial reasons” had been given to the Court hearing the bankruptcy application for questioning whether behind the judgment on which the bankruptcy application was based “there was in truth and reality a debt due to the petitioner”.13 His Honour went on to say:14
Whether a matter will amount to substantial reasons so as to permit the exercise of the discretion will depend on the particular circumstances. But as the history shows, where a judgment debt has been obtained after the testing of the merits in adversarial litigation then in the absence of some evidence of fraud collusion or miscarriage of justice, a court exercising bankruptcy jurisdiction will rarely have substantial reasons to investigate whether the debt which merged in the judgment was truly owed.
[39] In this case, there appears to have been no issue as to the fact that the goods were supplied by Viridian to Aluminium Plus, nor as to the price payable for them. The question raised by Mr Shaw’s opposition is whether Aluminium Plus had a counterclaim that it wrongly elected not to pursue in the District Court. In the context of the Companies Act claims made by Aluminium Plus against Mr and Mrs Shaw, any counterclaim Aluminium Plus might have had against Viridian would have been a contingent asset held by Aluminium Plus, and the existence of that asset might have reduced, if not eliminated, the amount for which Mr and Mrs Shaw could have been liable to Aluminium Plus.
12 At [71].
13 At [110].
14 At [110]-[111].
[40] That is the theory. But both Brown J and the Court of Appeal noted that it was by no means certain that any counterclaim Aluminium Plus might have made against Viridian would have exceeded the amount for which Viridian had obtained judgment against Aluminium Plus. In its notice of counterclaim filed in the District Court, Aluminium Plus had referred to a claimed credit for $13,340, while more credits were “being worked on”. It had contended that the final credit “could be as high as the
$61,000 claimed”.
[41] In his judgment, Brown J did refer to some history of supply of defective glass from time to time, but His Honour noted that the supplier’s position was that any defective products, of which it had notice had been identified and replaced. His Honour clearly had the very point now in issue before him, but it appears that he had insufficient evidence to conclude that Aluminium Plus might have had an asset in the form of a viable claim against Viridian, the existence of which might have been sufficient to eliminate or reduce Mr and Mrs Shaw’s liability on the Companies Act claims made against them. No further evidence has been provided in the present proceedings on the merits of the possible claim against Viridian.
[42] The evidence given at the trial before Brown J was produced at the hearing of the Shaws’ applications to set aside the bankruptcy notices. The first point to note from that evidence is that Aluminium Plus’ claimed counterclaim for faulty glass supplies was traversed at some length before Brown J. It appears that the counterclaim was primarily concerned with time and labour allegedly spent by Aluminium Plus replacing allegedly defective glass supplied by Viridian or its predecessor CSR. But Mr Shaw frankly acknowledged in his evidence that he had no records to substantiate the time said to have been spent on the rectification work.15
[43] There also appears to have been a question over whether some of the credits claimed by Aluminium Plus from Viridian may have been paid by Viridian. In the course of his cross-examination at the trial Mr Shaw said:16
15 See for example Mr Shaw’s Brief of Evidence at [44], where he said:
Unfortunately I did not keep a written record of the consequential losses as they accrued. For that reason, I cannot say precisely how much is owed by Viridian in credits. …
16 Notes of Evidence taken before Brown J, at 58, lines 6-11.
… there’s evidence here that some credits have been paid and to tell you the truth it had to be worked out at a running total which I presume Duane [of Viridian] was doing so I can’t tell of the credits owed to [Aluminium Plus] which is then owed to the Trust what has been paid and what hasn’t been paid. So any quantum has not been confirmed as to the total amount that’s owing.
[44] Mr Shaw did refer in his evidence to faulty glass supplies going back to at least 2009, and he reproduced for the High Court trial a breakdown of credits Aluminium Plus had initially claimed in the District Court proceeding brought against it by Viridian. The total amount claimed was $59,651 plus GST, although only $13,340 of that amount ever appears to have been invoiced by Aluminium Plus to Viridian. Of the remaining claims, a total of approximately $19,000 relate to an earlier period, before April 2012, when the various invoices provided in evidence show that the supplier would not have been Viridian, but its predecessor CSR. On Mr Shaw’s own argument, CSR was a different legal entity from Viridian, so any counterclaim in respect of those earlier supplies would presumably have been against CSR, not Viridian.
[45] The next difficulty for the Shaws in that right up to February 2014, Mr Shaw appears to have made promises to make payments to Viridian. On 12 February 2014, Mr Shaw sent an email to Mr Fulgoni of Viridian advising:
…
I also have other assets currently trying to sell which would allow a large payment to be made and again just waiting for a buyer. In the meantime, I would like to suggest that we again start using Viridian but do cash payments before delivery for the glass. … and at the same time, I would start paying whatever extra I can at the time so the amount is starting to reduce.
...
[46] Finally, on the issue of the strength of the Viridian counterclaim, I note that the debts of Aluminium Plus with which Brown J and the Court of Appeal were concerned were not just debts owed to Viridian. There was a debt of $3,795 owed by Aluminium Plus to Yellow Pages, in respect of which no defence appears to have been raised by the Shaws, and there was $6,395.49 owing to a company called Dynex Extrusions Ltd (Dynex). Dynex held a Disputes Tribunal award for the amount owed to it, and while Mr Shaw initially challenged Dynex’s claim he did appear to acknowledge in his evidence at the trial in the High Court that “… [Aluminium Plus] may have been liable
for Dynex’s accounts, because of the law of agency …”. (Mr Shaw’s position at the trial in the High Court appears to have been that neither he nor Mrs Shaw had personally ordered the relevant goods from Dynex, and that it was not a liability of Aluminium Plus that they had deliberately incurred.)17
[47] It was for Mr Shaw to put forward at least some credible evidence in these proceedings establishing that Aluminium Plus had a substantial and genuine counterclaim against Viridian that was wrongly left out of account. In my view, he has not done that. Even if some credits were due to Aluminium Plus by Viridian, on the evidence produced Aluminium Plus would probably still have had a substantial liability to creditors, and that liability would have been reflected in the judgments entered against the Shaws on the claims under the Companies Act.
[48] It is clear from Mr Shaw’s own evidence given in cross-examination at the High Court trial that he was then aware of the issue that he now raises about Mr Sumner allegedly supplying incorrect evidence to the District Court on the issue of Viridian’s terms and conditions. But even if the wrong terms and conditions were provided to the District Court, the weaknesses in the counterclaim to which I have referred would still have existed, quite apart from any exclusions or liability limitations that may have been in Viridian’s terms and conditions of sale. It therefore appears that any incorrect evidence given in the District Court about those terms and conditions would likely have made no difference to the judgment ultimately entered against the Shaws.
[49] I think some regard can also be had to Mr and Mrs Shaw’s apparent attitude to the counterclaim while they had control of Aluminium Plus as its directors. The counterclaim does not appear to have been pursued with any vigour in the early stages, and as directors of Aluminium Plus it should have been within the knowledge of Mr and Mrs Shaw what particular terms of trade were in force as between Aluminium Plus and Viridian. Mr Shaw says that he was denied access to a copy of the correct terms and conditions, but that does not appear to be so: the Shaws did complete a Viridian credit application form on behalf of the Trust, and would presumably have become
17 Mr Shaw’s Brief of Evidence, at [27].
aware of Viridian’s trading terms and conditions at that time. But in any event, if there was any doubt in the Shaws’ minds as to whether the terms and conditions put forward by Viridian in its information capsule were binding on Aluminium Plus, the matter could have been put in issue by filing appropriate documents in the District Court, and thereafter obtaining any necessary discovery.
[50] Taking into account all of these factors, I am not satisfied that Mr Shaw has produced enough to displace the prima facie entitlement of Aluminium Plus to the adjudication orders it seeks.
[51] Mr Shaw’s proposed private prosecution does not affect that analysis. What was required, and what has not been produced, was sufficient evidence to show a genuine and substantial case that Aluminium Plus had a counterclaim that might have extinguished all or most of Viridian’s claim, so that in truth nothing was owed by Mr Shaw to Aluminium Plus.
[52] I have considered whether Mr Shaw might nevertheless be entitled to an order halting the adjudication proceeding under s 38, in order to pursue his proposed private prosecution for perjury against Mr Sumner. I conclude that a halt order is not justified in this case.
[53] In a private prosecution, Mr Shaw would face the task of proving beyond reasonable doubt that Mr Sumner acted deliberately and dishonestly, with intent to mislead Aluminium Plus and the District Court,18 in circumstances where it appears that Mr Shaw had a copy of (or at least had seen) the respective terms and conditions of both CSR and Viridian. But even if he succeeded in doing that (an issue on which it is unnecessary for me to comment), the facts would remain that the merits of the counterclaim appear to have been traversed at some length at the trial in the High Court, and that (without apparent reference to any particular conditions of trade Viridian might have relied upon in defence to the counterclaim) the Court was not
18 Section 108 of the Crimes Act 1961, dealing with perjury, requires that the assertion be “known to the witness to be false” and that it is “intended by him or her to mislead the tribunal holding the proceeding.”
persuaded that the debts in question were not in fact owed to Viridian, Dynex and Yellow Pages.
[54] In Waitomo Adventures Ltd v O’Hagan, the judgment creditor had applied for an adjudication order against Mr O’Hagan on the basis of an Employment Court judgment.19 Mr O’Hagan argued that the judgment had been obtained with false evidence. He had complained to the police that the director of the judgment debtor had committed perjury, and he also complained to the New Zealand Law Society that counsel for the judgment debtor in the Employment Court had connived in that perjury. As in the present case, the police had declined to lay a perjury charge, and the complaint against the lawyer was dismissed by the New Zealand Law Society Standards Committee (Standards Committee). At the time of the hearing before Associate Judge Doogue, Mr O’Hagan was pursuing a review of the Standards Committee decision by the Legal Complaints Review Officer (LCRO). With reference to the LCRO review, his Honour said:20
[37] In my view that matter is irrelevant to the present bankruptcy proceedings. The Court cannot regard such proceedings as having the potential to displace the order for costs which was made in the Employment Court. It is therefore irrelevant for the present purposes.
[55] Similar considerations apply in this case. On the evidence before me, the proposed private prosecution does not have the potential to displace what is clearly a substantial debt owed by Mr and Mrs Shaw to Aluminium Plus.
[56] The question on the stay issue, identified by Associate Judge Doogue in Waitomo, is whether there is “a matter of substance that ought first to be heard in [another proceeding]”.21 In the circumstances just described, I do not think there is.
[57] For the foregoing reasons, I am not prepared to stay the adjudication applications while Mr Shaw pursues the proposed private prosecution.
19 Waitomo Adventures Ltd v O’Hagan [2014] NZHC 247.
20 At [37].
21 At [32].
Result
[58]I decline to make an order staying the adjudication proceedings.
[59] Aluminium Plus having produced the appropriate certificates of non-payment of the debt by the Shaws, and nothing having been advanced by them that would displace Aluminium Plus’ prima facie entitlement to the adjudication orders it seeks, I make orders for adjudication in the cases of both Mr Shaw and Mrs Shaw, with costs to Aluminium Plus in each case on a 2B basis, and disbursements to be fixed by the Registrar.
[60]The foregoing orders are timed at 4pm on 21 March 2018.
Associate Judge Smith
Solicitors:
Ford Sumner Lawyers, Wellington for the Judgment Creditor
Copy to:
The Judgment Debtors
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