Baker v Libeau - [2023] NZHC 2426

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2023-425-83

[2023] NZHC 2426

IN THE MATTER of the bankruptcy of JEAN-MICHEL LIBEAU

BETWEEN

ROBERT DARCY BAKER

Judgment Creditor

AND

JEAN-MICHEL LIBEAU

Judgment Debtor

Hearing: On the papers

Counsel:

Mr Baker appears in person Mr Libeau appears in person

Judgment:

18 December 2023

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 18 December 2023 at 4.15 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

BAKER v LIBEAU [2023] NZHC 2426 [18 December 2023]

[1] This is an application pursuant to s 17 of the Insolvency Act 2006 (the Act) to set aside a bankruptcy notice.

[2] The judgment debtor (Mr Libeau) says he has a cross-claim against the judgment creditor (Mr Baker) that is equal to, or greater than, the judgment debt in respect of which the bankruptcy notice was issued, and that he could not have used the cross-claim as a defence in the proceeding in which Mr Baker’s judgment was obtained.1

[3]The issues that arise are whether:

(a)Mr Libeau has a genuine and triable claim against Mr Baker that is equal to or greater than the judgment debt; and

(b)Mr Libeau could not have used the claim as a defence in the proceeding in which the judgment was obtained.

Background

[4] The parties have been engaged in litigation in the Invercargill High Court under CIV 2021-425-017 (the Invercargill proceeding). The background to that litigation was summarised in a judgment of Nation J where he said:2
[1] The first defendant (Mr Libeau) is a director and shareholder of a number of companies that have an interest in a yarn and fabric manufacturing technology (the Lincspun technology) which they licence to spinning mills and other manufacturers of yarn and fabric-based products. In 2015, the plaintiff (Mr Baker) and Mr Libeau discussed the potential value of Mr Libeau’s companies being USD 10 million. Mr Libeau planned on setting up a holding company which would own all the Lincspun technology intellectual property. Mr Baker agreed to invest USD 150,000 and receive a 20 per cent shareholding in the company. Mr Libeau owned the other 80 per cent of shares, which he transferred to the third defendant (Libeau Ltd). In 2016, the shares were reallocated so that Mr Baker owned 26 per cent of them. He paid an additional USD 10,000 in consideration. The relationship between Mr Baker and Mr Libeau ultimately broke down.

[2] In 2021, Mr Baker filed proceedings against Mr Libeau and the defendant companies associated with him, seeking damages and relief for breach of contract and misrepresentation under the Contract and Commercial

1 Insolvency Act 2006, s 17(7)(a) and (b).
2 Baker v Libeau [2022] NZHC 3137.

Law Act 2017, and for oppressive and unfairly discriminatory conduct under the Companies Act 1993.

[5] The defendant companies associated with Mr Libeau to which Nation J referred were LincSpun Ltd and Libeau Ltd. On…

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.

Continue reading Baker v Libeau

Details

AGLC: Baker v Libeau [2023] NZHC 2426
Case: [2023] NZHC 2426
Decision Date: 18 December 2023

CaseChat Overview and Summary

This case involves an application by Jean-Michel Libeau to set aside a bankruptcy notice issued by Robert Darcy Baker, the judgment creditor, pursuant to section 17 of the Insolvency Act 2006. The application was heard by Associate Judge Paulsen in the High Court of New Zealand, Invercargill Registry. The key issues before the court were whether Mr Libeau had a genuine and triable claim against Mr Baker that was equal to or greater than the judgment debt, and whether Mr Libeau could not have used the cross-claim as a defence in the proceeding in which the judgment was obtained.

The court found that Mr Libeau had not established that he had a genuine and triable cross-claim against Mr Baker. The claim was said to be for royalties due to LincSpun Ltd, which is not owned by Mr Libeau but by interests related to him. The court held that Mr Libeau had no right to assert a claim for royalty payments due to another entity and could not use such a claim to challenge the bankruptcy notice. Additionally, the claim had been stayed for over a year, and Mr Libeau had taken no steps to lift the stay, indicating a lack of genuine intention to pursue the cross-claim.

Furthermore, the court ruled that Mr Libeau could have used the cross-claim as a defence in the proceeding in which the judgment was obtained. The cross-claim was raised in the Invercargill proceeding, although it was not ultimately heard when the proceeding went to trial. The court held that the inability to use the cross-claim as a defence referred to a legal opportunity, not a factual one, and Mr Libeau had the legal opportunity to raise the cross-claim.

In conclusion, the court dismissed Mr Libeau's application to set aside the bankruptcy notice. The court also invited Mr Baker to file a memorandum if he had incurred legal costs in relation to the application or wished to claim for disbursements reasonably and necessarily incurred.

Orders