AMG Nominees Limited v Kelly - [2017] NZHC 2725

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2016-404-1385 [2017] NZHC 2725

UNDER the Insolvency Act 2006

IN THE MATTER OF

the bankruptcy of STEPHEN ROBERT KELLY

BETWEEN

AMG NOMINEES LIMITED Judgment Creditor

AND

STEPHEN ROBERT KELLY Judgment Debtor

Hearing: 31 October 2017

Appearances:

T Cunningham-Adams for the Judgment Creditor
N J Bell-Booth for the Judgment Debtor

Judgment:

31 October 2017

ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL

Solicitors:
Evolution Lawyers (T Cunningham-Adams), Glenfield, Auckland, for the Judgment Creditor
Ponsonby Law Ltd (N J Bell-Booth), Grey Lynn, Auckland, for the Judgment Debtor

AMG NOMINEES LIMITED v KELLY [2017] NZHC 2725 [31 October 2017]

[1] AMG Nominees Ltd applies for an order adjudicating Mr Kelly bankrupt. This proceeding has been running for some time. The bankruptcy application was filed on
27 July 2016. In other words, this proceeding is approximately 1 year 4 months old. The history of the proceeding is relevant.

[2] On the eve of the hearing, Mr Kelly instructed Mr Bell-Booth. Mr Bell-Booth sought an adjournment on the basis that the development at Birkenhead in which Mr Kelly is involved will result in sales of properties from which funds will flow and allow Mr Kelly to meet the debt the subject of this proceeding. The creditor advises that it does not oppose the application for an adjournment, but it indicates that the matter remains for me to decide in my discretion whether I should grant an adjournment. By the creditor not opposing, I take it that the creditor abides the decision of the court. It is neither vigorously opposing the application nor on the other hand consenting.

[3] AMG Nominees Ltd obtained judgment against Mr Kelly in the District Court at Auckland in April 2015 for $154,039.12. A bankruptcy notice was issued in June
2016. The amount claimed in the bankruptcy notice was $120,957.73. The creditor had taken into account payments that Mr Kelly had made in December 2015 and had also charged interest on the balance.

[4] Mr Kelly was served with the bankruptcy notice on 4 July 2016. He applied to set aside the notice on 19 July 2016. In his affidavit in support of the application he indicated that he did not dispute the judgment debt, maintained that he had negotiated an arrangement with Mr Thomas, the director of the creditor, and that he would pay instalments of $5,000 per month. He contended that he had prepaid up to the end of August 2016, and he had offered a property trade with Mr Thomas. The amount for which judgment was entered had not allowed for some payments he had made before judgment. He said that the correct amount owing under the judgment was about $83,000.

[5] His setting aside application failed. Associate Judge Doogue dismissed his application in a minute of 26 October 2016. On 21 October 2016 Mr Kelly filed a memorandum, seeking leave to withdraw his application. Associate Judge Doogue

ordered Mr…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NZHC 2725
Decision Date: 31 October 2017

CaseChat Overview and Summary

AMG Nominees Limited applied for an order to adjudicate Mr. Kelly bankrupt, a matter which has been ongoing for approximately 1 year and 4 months. The creditor, AMG Nominees Limited, had obtained a judgment against Mr. Kelly in the District Court in April 2015 for $154,039.12. Following this, a bankruptcy notice was issued in June 2016, claiming $120,957.73, taking into account payments made by Mr. Kelly and interest charged on the balance. Despite Mr. Kelly's application to set aside the bankruptcy notice, which was dismissed, he had committed an act of bankruptcy by not complying with the notice by the specified deadline. The creditor subsequently filed the application for adjudication of bankruptcy on 27 July 2016. The primary legal issue the court needed to decide was whether Mr. Kelly should be adjudicated bankrupt despite his claims of solvency and ability to meet his debts through future property sales.

The court considered Mr. Kelly's arguments that he was solvent and had made arrangements to pay off his debts through property sales. However, the court was skeptical of Mr. Kelly's reliability, given his history of making similar promises that he failed to keep. The court also noted other insolvency proceedings involving Mr. Kelly and his company, Chelsea View Estate Trust Ltd, which further indicated his chronic insolvency. The court found that all matters pointed towards Mr. Kelly's insolvency being addressed by an adjudication of bankruptcy. It was in the best interest of his creditors that his state of insolvency be redressed.

The court concluded that Mr. Kelly should be adjudicated bankrupt, given his chronic instability, inability to deal with his creditors collectively, and his history of unreliability. The order was made at 11:05am, with costs to be determined by the creditor and disbursements approved by the Registrar.

Orders