Bartercard Exchange Limited v De Vries
[2018] NZHC 854
•30 April 2018
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE
CIV-2016-485-428
[2018] NZHC 854
UNDER the Insolvency Act 2006 IN THE MATTER
of the bankruptcy of Anthony Harry de Vries
BETWEEN
BARTERCARD EXCHANGE LIMITED
Judgment Creditor
AND
ANTHONY HARRY DE VRIES
Judgment Debtor
Hearing: 7 November 2017 and 7 February 2018 Appearances:
M Anderson (7 November 2017) and Mr Dewar (7 February 2018) for the Judgment Creditor
Mr de Vries in Person
Mr Jefferies, Mr de Vries’ McKenzie Friend, in person (7 February 2018 only)Judgment:
30 April 2018
JUDGMENT OF ASSOCIATE JUDGE SMITH
[1] This is an application by the Judgment Creditor (Bartercard) for an order adjudicating the Judgment Debtor (Mr de Vries) bankrupt.
Background
[2] Mr de Vries’ relationship with Bartercard has a protracted history, which is set out in detail in three of my earlier judgments.1 The following is a brief summary of the history of the dispute:
1 Bartercard Exchange Ltd, ex parte de Vries [2016] NZHC 703 [the April 2016 Judgment]; De Vries v Bartercard Exchange Ltd [2016] NZHC 287 [the November 2016 Judgment] and Re de Vries, ex parte Bartercard Exchange Ltd [2017] NZHC 1851 [the Recusal Judgment]. See also
BARTERCARD EXCHANGE LIMITED v DE VRIES [2018] NZHC 854 [30 April 2018]
(1)Bartercard obtained two judgments against Mr de Vries in the Hutt Valley District Court in September 2011. One of them was for the sum of
$179,772.42 (the principal judgment), and a bankruptcy notice (the first notice) was issued in respect of that sum and served on Mr de Vries on 30 September 2015.
(2)Mr de Vries did not apply to set aside the first notice, and Bartercard filed an application to adjudicate him bankrupt on 5 November 2015. On 15 April 2016, I issued a judgment (the April 2016 Judgment) dismissing the application to adjudicate Mr de Vries bankrupt, on grounds that the amount claimed in the first notice was overstated, and there was insufficient evidence to determine the exact amount of the overstatement.
(3)Bartercard then filed a second bankruptcy notice for $140,644.91 on 5 July 2016 (the second notice). Mr de Vries applied to set aside the second notice. I dismissed that application in a judgment delivered on 30 November 2016 (the November 2016 Judgment).
(4)In the meantime, Mr de Vries had filed an application to set aside the 2011 judgments entered against him in the District Court. On 5 December 2016,
Judge Tompkins dismissed that application.2
(5)Mr de Vries then filed an appeal to this Court against the judgment of Judge Tompkins.
(6)On 23 December 2016, Mr de Vries filed an appeal against the November 2016 Judgment in the Court of Appeal.
(7)In April 2017, I adjourned Bartercard’s adjudication application to await the outcome of certain procedural matters affecting Mr de Vries’ appeal to the Court of Appeal. Bartercard’s adjudication application was subsequently adjourned on several occasions while procedural issues were being addressed by the Court of Appeal, including an application by Mr de Vries for waiver of security for Bartercard’s costs on the appeal, and whether Mr de Vries would obtain legal aid for the appeal.
the judgment of Ellis J, De Vries v Bartercard Exchange Ltd [2017] NZHC 2625 [Ellis J’s Judgment].
2 De Vries v Bartercard New Zealand Ltd [2016] NZDC 26160.
(8)Mr de Vries eventually withdrew his legal aid application, and he did not meet other procedural requirements for the prosecution of his appeal. On 9 September 2017 the Registrar of the Court of Appeal issued a notice advising that the appeal had expired, and was deemed abandoned as at 18 July 2017.
(9)In the meantime, Mr de Vries had applied for an order that I recuse myself from hearing Bartercard’s adjudication application. I dismissed Mr de Vries’ application for recusal in a judgment issued on 4 August 2017 (the Recusal Judgment).3
(10)A subsequent application by Mr de Vries for leave to appeal to the Supreme Court against the decisions that gave rise to the abandonment of his appeal to the Court of Appeal was dismissed by the Supreme Court in a judgment of that Court given on 11 December 2017.4 An application by Mr de Vries to recall that judgment was dismissed by the Supreme Court on 2 February 2018.5
(11)Mr de Vries’ appeal against the District Court decision not to set aside the 2011 judgments was heard and dismissed by Ellis J on 26 October 2017 (Ellis J’s Judgment).6
[3] Bartercard’s application for adjudication came for hearing before me on 7 November 2017, and I heard argument from counsel and Mr de Vries. Shortly before the hearing, Mr de Vries had filed an application for an order striking out the adjudication application. I reserved my decision on both matters.
[4] Subsequent to the hearing on 7 November 2017, Mr de Vries has purported to file a number of other documents. One of them was a “discovery application” filed on 10 November 2017. I heard brief further argument from Mr de Vries and counsel on 7 February 2018.
[5]On 20 February 2018 Mr de Vries purported to file a counterclaim, and an
“interlocutory application for counterclaim”, against Bartercard.
[6]I address these filings later in this judgment.
3 De Vries v Bartercard Exchange Ltd, above n 1.
4 De Vries v Bartercard Exchange Ltd [2017] NZSC 186
5 De Vries v Bartercard Exchange Ltd [2018] NZSC 2.
6 De Vries v Bartercard Exchange Ltd (Ellis J’s judgment), above n 1.
Ellis J’s judgment
[7] Before dealing with the parties’ submissions, I will first summarise Ellis J’s judgment, in which the learned Judge dismissed Mr de Vries’ appeal against the District Court’s decision to refuse to set aside the two judgments entered against him by default in 2011.
[8] Her Honour noted that there was a dispute as to the admissibility of certain “new” evidence Mr de Vries had presented. Her Honour took this to be evidence that had not been before Judge Tompkins. She said:7
… Mr de Vries was both focused and clear in his arguments on appeal before me… And he was able to show me parts of the material he had filed in the District Court that did bear some relationship to the points he now advances; for me to determine what was or was not before Judge Tompkins strikes me as an exercise in futility. So, I prefer to deal with the matter on the merits, as best I can. The issue is therefore whether Mr de Vries has managed to demonstrate that Judge Tompkins’ decision was wrong in some material respect.
[9] It is therefore clear that Her Honour took into account the “new” evidence that Mr de Vries put forward on appeal, in order to assess his case on its merits. Her Honour considered each of the factors normally considered on applications to set aside a judgment, namely whether the delay (in responding to the original claim) has been reasonably explained; whether a substantial ground of defence has been disclosed; and whether the plaintiffs will suffer irreparable injury if the judgment is set aside.8
[10]Her Honour dismissed the appeal, relying on the following factors.
[11] On the issue of delay, Her Honour considered that even if Mr de Vries’ mental state in 2011 was such that he could not take steps to challenge the debt proceedings, the subsequent four year delay was “hugely problematic”.9 Her Honour found it was “the threat of bankruptcy which galvanised Mr de Vries into action”.10
[12] As for the existence of a substantial ground of defence, Mr de Vries was unable to persuade her Honour that one existed. She found there was no cross-guarantee as alleged by Mr de Vries in relation to the debt, but personal guarantees given by Mr de Vries and Mr Rogers, who were jointly and severally liable. Her Honour could see nothing in the guarantee to present Bartercard pursuing the guarantors on it. Her Honour expressly rejected a defence
7 Ellis J’s Judgment, at [21].
8 Referring to r 15.10 of the District Court Rules and Russell v Cox [1983] NZLR 654 (CA) at 659.
9 At [22].
10 At [25].
Mr de Vries attempted to run that Bartercard’s claims against him had been discontinued at the time Bartercard unsuccessfully attempted to execute its judgments against a house property thought to be owned by Mr de Vries, which turned out to be owned by a family trust. Her Honour noted that even if Mr de Vries was (rightly) of the view that his house was immune he could not reasonably have thought that establishing that would make his personal debt disappear.11 Consistent with that, Her Honour also noted that Mr de Vries continued to make payments to Bartercard in the “post-discontinuance” period.12 Her Honour further noted that cl 3.4(b) of the Bartercard rules made it clear that a member’s Trade Dollars debit balance is payable to Bartercard in New Zealand dollars cash. Her Honour concluded that a valid debt had been owing for six years.
[13]Requiring Bartercard to “begin again” (which would be the effect of any setting aside)
would cause significant harm.
[14]Her Honour concluded that “[e]ven on the most charitable approach” she was unable
to discern any miscarriage of justice if the 2011 judgments were not set aside.13
The November Judgment stands
[15] The result of the deemed abandonment of Mr de Vries’ appeal to the Court of Appeal against the November Judgment (and his subsequent unsuccessful applications to the Supreme Court), is that the November Judgment is no longer open to challenge. Mr de Vries, having failed in his application to have the second notice set aside, committed an act of bankruptcy on which Bartercard was entitled to rely in its application for an order adjudicating him bankrupt.
Bartercard’s evidence on the adjudication application
[16] Mr Chetty confirmed that Bartercard had received no payment from Mr de Vries since the matter was previously before the Court.
[17] Mr Chetty noted that Mr de Vries’ company had continued operating during the course of the various proceedings, and had been “visibly active on the Companies Office register”. He referred to, and provided evidence of, the appointment of a new director on 16 May 2017, the reappointment of Mr de Vries on 24 July 2017, and the company having moved its premises on 19 July 2017.
11 At [24].
12 At [25].
13 At [28].
[18] On the issue of costs, Mr Chetty attached to his affidavit a judgment and costs order dated 8 May 2017, under which $7,582 remains owing by Mr de Vries for Bartercard’s costs on the November 2016 Judgment. Nor had Bartercard received any payment by way of security for its costs in the Court of Appeal. Security for costs in respect of Ellis J’s Judgment in the sum of $1,150 was to be sought.
[19]Bartercard tendered the usual solicitor’s certificate as to the debt remaining unpaid.
Bartercard’s submissions
[20] For Bartercard, Mr Anderson challenged the admissibility and/ or relevance of Mr de Vries’ 9 August 2017 affidavit on the basis that it “does not comprise a narrative of admissible, factual evidence”.14 It labelled the affidavit “a collateral attack” on solicitors and judges, and said that it was devoid of merit.
[21] On the merits of the adjudication application, Bartercard submitted that it has satisfied the four criteria for an adjudication order in s 13 of the Insolvency Act 2006 (the Act), and that there are no further grounds to refuse adjudication.
[22] Counsel referred to extensive steps Bartercard has taken to recover the debts, including extensive correspondence with Mr de Vries, a formal examination as to means in the District Court, and the attempt to obtain an order for a writ of sale of the property thought to be owned by Mr de Vries.15
[23] Mr de Vries’ payment obligations have continued since 2013, and at times he has been represented by solicitors. He has not provided information as to his assets and liabilities, and has not claimed that he is solvent.
[24] The debt cannot now be disputed, and Mr de Vries is plainly insolvent. As Mr de Vries remains the sole shareholder of a company, Anco Print Ltd, which continues to be active, Mr Anderson submitted that there would be utility in the making of an adjudication order.
[25] Mr Anderson submitted that the adjudication proceeding has gone on long enough, and adjudication should commence as soon as possible.
14 Referring to r 9.76 of the High Court Rules, and dicta in Donovan v Graham [1991] 4 PRNZ 311 (HC).
15 In a proceeding filed in this Court under No. CIV-2013-485-5180.
Mr de Vries’ position
[26]I will summarise Mr de Vries’ position under the following headings:
(1)further avenues for appeal;
(2)his substantive challenges to the adjudication application; and
(3)other submissions;
(4)his strike-out application.
Further avenues for appeal
[27] Two matters were brought to my attention during the 7 November 2017 hearing, relating to Mr de Vries filing further appeals against judgments issued thus far. One was his application for leave to appeal to the Supreme Court. That application has now been dismissed, and I am no longer concerned with it. Secondly, Mr de Vries indicated that he intends to appeal the judgment of Ellis J. A notice of appeal was subsequently filed (on 14 November 2017).
Substantive challenges to the adjudication application
[28] Before the November 2017 hearing Mr de Vries had filed numerous documents in opposition, including a 100 page document submitted with an affidavit and memorandum dated 9 August 2017.
[29] In addition, he filed his strike-out application shortly before the 7 November 2017 hearing. Mr de Vries relied primarily on his 9 August 2017 affidavit in support of the strike- out application, and he indicated what he considered to be his strongest arguments against the application for adjudication (and in support of his strike-out application). I summarise those arguments and the supporting evidence referred to by Mr de Vries, under three headings.
Bartercard failed to abide by its own rules and the Guarantee conditions
[30] Mr de Vries submitted that Bartercard failed to abide by its own rules, and the Guarantee conditions in obtaining the 2011 judgments against him. He submitted that Bartercard’s own rules had no time limit for Bartercard debt, and Bartercard “definitely had no right to claim Bartercard dollars in a conversion to New Zealand dollars”.
[31] Mr de Vries referred to “Appendix B” to his 9 August 2017 affidavit, showing that at least some major financial institutions do not consider Bartercard dollars to have a value, and
to “Appendix C”, providing illustrations of people offering Bartercard dollars at reduced rates. He relied on r 3.5 of the Bartercard rules to argue that Bartercard dollars do not equal New Zealand dollars.
[32] A related point was Mr de Vries’ submission that he should be able to re-pay the debt (if any debt is owed) through Bartercard trade dollars. He noted that Bartercard refused to allow Anco Print Ltd to offer goods for sale through Bartercard to repay any alleged debt, and he referred to s 256(b) of the Act16 in support of his submission that he should have been able to pay through alternative means.
The case against Mr de Vries was discontinued in 2014
[33] Mr de Vries contended that Bartercard failed to attend hearings in 2013, and “the case was dropped by all parties” on the basis that costs would lie where they fell. He provided with his memorandum dated 30 August 2017 an email from a solicitor then acting for him, recording that Bartercard’s barrister did not attend a hearing in February 2014. He also provided an email from his then-solicitor which was said to confirm that the Bartercard case and proceedings were over in 24 February 2014.
[34] Mr de Vries handed up at the November 2017 hearing a copy of a form of notice of discontinuance dated in February 2014. The notice was filed in the separate proceeding Bartercard had brought seeking a charging order.17
[35] Mr de Vries submitted that the case was unethically re-opened by Mr Dewar 18 months later, in 2015. He said that “under discovery” he would want to see how “Mr Dewar convinced Bartercard to reopen the case after it had been abandoned”.
Bartercard has never proven the debt
[36] During the November 2017 hearing Mr de Vries referred to two paragraphs from the April 2016 Judgment. It is convenient to set those out in full:
[83] On the evidence, it appears that Mr Rogers has probably made some payments in reduction of the principal judgment, and those payments have not been disclosed to Mr de Vries. I do not think it would be fair to adjudicate him bankrupt in those circumstances, where it cannot be said safely that he might not have acted
16 This provision relates to “a netting agreement” setting out obligations “whether those obligations are payable in New Zealand currency or in some other currency”.
17 Proceeding No CIV-2013-485-5180, above n 15.
differently. There is at least the possibility of unfairness to him in not having the full picture of what has been paid and when.
…
[84]I make the following findings and orders:
The amount stated in the bankruptcy notice served on Mr de Vries on 30 September 2015 was overstated.
…
[37]Mr de Vries submitted that the same position applies now.
[38] Mr de Vries maintained the view that he has been treated prejudicially when compared with Mr Rogers. He contended that Mr Rogers has not been pursued for the other outstanding amounts to date, and Bartercard had brought no proceedings to bankrupt Mr Rogers. Mr de Vries said: “it needs to be noted that Bartercard entered into a separate agreement with Mr Rogers for his portion of the alleged debt without [his] knowledge”. He also noted that Mr Rogers was allowed to continue trading in Bartercard dollars while he was blocked from continuing to trade.
[39] Mr de Vries submitted that Mr Dewar falsely got Mr Chetty to state in his affidavit that Bartercard would bankrupt Mr Rogers. He attached to his February 2017 submissions an email from Mr Rogers dated 18 February 2017, in which Mr Rogers stated:
In answer to your questions on Thursdays phone call. Bartercard have not sort to bankrupt me. Bartercard enabled me to continue operating my Pipers Bartercard account with the agreement that [I] make monthly Bartercard and cash payments.
[40] In alleging that Bartercard has never proven the amount owed, Mr de Vries also submitted that the amount is overstated by at least $64,000. He relied on financial statements from Zoom Zoom Ltd and Zoom Zoom Properties Ltd, attached as exhibits to his affidavit, in support of the alleged overcharge.
[41] Mr de Vries submitted that he has not received documents proving there is anything owed by himself to Bartercard, despite requests from him and his former solicitors. He suggested that the fact that Bartercard is claiming less than the amounts shown on the original judgments “shows that there were errors in the 2011 ruling”. He also stated that the fact that Bartercard’s first adjudication application was dismissed indicated “major inconsistencies” in
Bartercard’s case. Accordingly, he submitted that there has been a failure to quantify why the debt is owed.
[42] With his 30 August 2017 memorandum Mr de Vries attached requests for information as to fees and accumulated debt made in 2010. He also referred to a Privacy Act request made of Bartercard by email on 30 June 2017, for “all information you hold on myself and the companies Anco Print Ltd, Zoom Zoom Ltd and Zoom Zoom Properties Ltd”.
[43] On 14 July 2017 Bartercard (through its solicitors) declined to provide any information, pursuant to s 29 of the Privacy Act, on the ground that it was held by Mr de Vries. Mr Dewar (on behalf of Bartercard) explained:
As both Zoom Zoom Ltd and Zoom Zoom Properties Ltd are in liquidation, you have no standing to make a request for those entitles. …
As all of documentation and information Bartercard holds is from you, and therefore
is held by you, we have concluded that your request is vexatious…
[44] Finally, Mr de Vries produced a letter sent by his solicitor to Bartercard in August 2016, referring to requests made on three separate occasions for “a current statement of account”, which had not been received.
[45] Mr de Vries’ submitted that if there was anything owing, the amount needed to be adjusted, and Bartercard would need to prove how it:
(1)quantified the amount;
(2)ensured 100% accuracy;
(3)how according to its own rules it can justify chasing debt from a “good standing member”; and
(4)how Bartercard has the right to chase Bartercard dollars as New Zealand dollars.
Other submissions
[46] For completeness, I record that Mr de Vries has, throughout his submissions, also raised the following arguments:
(1)that Mr Dewar has a conflict of interest in these proceedings, has misled the Court, and ought to be held accountable for “unethical behaviour”; and
(2)that Bartercard members have questioned the legitimacy of the Bartercard scheme; and
(3)that 2011 judgments are “out of order” and ought to be set aside.
(4)I wrongly refused to hear argument on his notice of opposition to the adjudication application.
[47] There were further memoranda filed and submissions made by Mr de Vries which I addressed in the Recusal Judgment. I do not think it necessary to repeat those submissions here, as they have been dealt with, and the Recusal Judgment was not the subject of any application by Mr de Vries for review by a Justice of the Court.
Strike-out application
[48] On 1 November 2017, Mr de Vries filed an interlocutory application for an order striking out Bartercard’s adjudication application. Fourteen grounds were set out in that application, many of which overlap with the grounds Mr de Vries advanced in opposition to the application. The 14 grounds were:
1)There is now “hard evidence” on file to show the amounts were disputed as far back as 2009 despite the Court’s claim to the contrary.
2)The debt has not been proven to date.
3)The High Court has failed to ensure Bartercard proved the debt as mandated by the High Court Judge, and as highlighted as a problem in the first Bankruptcy case dismissed by the Court.
4)The case was “struck out” in [the April 2016 Judgment] and there are now further major discrepancies in invoicing and inconsistencies in the amounts claimed similar to the first strike-out.
5)[Bartercard] has failed and refused to provide full disclosure and proof of debt even when requested under Solicitor request, the Official Information Act request and the Privacy Act request.
6)The case was discontinued in 2014 and a settlement was reached in 2014.
7)The case is based on a non existent personal guarantee.
8)The intent of the cross guarantee was addressed in 2009, and Bartercard and the Court to date have ignored the intent of the guarantee, and Bartercard have breached its own rules and conditions in the cross guarantee.
9)Bartercard have lied under oath and misrepresented the case.
10)Bartercard are guilty of double dipping.
11)Bartercard have entered into reckless lending.
12)The High Court has failed to follow proper procedures.
13)Bartercard are deliberately attempting to deceive various parties and dupe the Court. Obstruction of Justice Crimes Act 1961.
14)The case to date is a miscarriage of justice and abuse of process.
[49] Mr de Vries relies on his 9 August 2017 affidavit in support of the strike-out application, and on an “urgent memorandum” dated 16 August 2017, in which he submitted the Court has an obligation, and it is in the public interest, to strike out the case as “otherwise the court has become complicit in the Ponzi Bartercard scheme”. He again raised an argument about Bartercard dollars having “no value” outside the Bartercard scheme.
[50] The grounds relied on in the strike-out application in essence replicated Mr de Vries’ opposition to adjudication, with the related contention that Bartercard has “misrepresented the cross-guarantee”, and that any agreement between Mr Rogers and the judgment creditor should be disclosed.
Legal principles
Bartercard’s application for adjudication
[51]Section 13 of the Insolvency Act provides:
When creditor may apply for debtor’s adjudication
A creditor may apply for a debtor to be adjudicated bankrupt if --
(a) the debtor owes the creditor $1,000 or more … 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.
[52] When the s 13 grounds are established, the court then has a discretion to refuse to make an adjudication order. Section 37 of the Act provides:
Court may refuse 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.
[53] The Court’s starting point in considering a creditor’s application for adjudication is that the judgment creditor, having satisfied the s 13 requirements, is prima facie entitled to an order for adjudication. The order is not to be refused on the grounds of expedience or convenience, but each case is to be considered on its own terms.18
[54] If the circumstances suggest that the bankruptcy process is being used oppressively, that might justify refusal of an order. The court is required to balance the various considerations relevant to the case and determine whether the debtor has made out a case that an order for adjudication should not be made.19
Mr de Vries’ strike out application
[55]Rule 15.1 of the High Court Rules provides:
Dismissing or staying all or part of proceeding
(1) The court may strike out all or part of a pleading if it --
(a) discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b) is likely to cause prejudice or delay; or
(c) is frivolous or vexatious; or
18 Baker v Westpac Banking Corporation CA212/92, 13 July 1993 at 4, and Strachan v Moodie
[2014] NZHC 3167 at 35.
19 Baker v Westpac Banking Corporation, above n 5, at 4; McHardy v Wilkins and Davies Marinas Ltd & Ors CA54/03.
(d) is otherwise an abuse of the process of the court.
(2) If the court strikes out a statement of claim or a counterclaim under subclause (1), it may be the same or a subsequent order dismissing the proceeding or the counterclaim.
(3) Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.
(4) This rule does not affect the court’s inherent jurisdiction.
[56] In this case, Mr de Vries appears to be arguing that the proceeding discloses no reasonably arguable cause of action, or is otherwise an abuse of the process of the Court.
[57] The correct approach to strike-out applications is set out in the commentary to r 15.1 in McGechan on Procedure, as follows:
The jurisdiction under r 15.1
The established criteria for striking out was summarised by the Court of Appeal in Attorney-General v Prince [1989] 1 NZLR 262… (CA) at 267, and endorsed by the Supreme Court in Couch v Attorney-General [2008] NZSC 45 at [33], per Elias CJ and Anderson J:
(a) Pleaded facts, whether or not admitted, are assumed to be true. This does not extend to pleaded allegations which are entirely speculative and without foundation.
(b) The cause of action or defence must be clearly untenable. In Couch, Elias CJ and Anderson J, at [33], said: “It is inappropriate to strike out a claim summarily unless the court can be certain that it cannot succeed.”
(c) The jurisdiction is to be exercised sparingly, and only in clear cases. This reflects
the Court’s reluctance to terminate a claim or defence short of trial.
(d) The jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument.
(e) The Court should be particularly slow to strike out a claim in any developing
area of law…
Discussion and conclusions
[58] I will address Mr de Vries’ submissions relating to further avenues of appeal first, and then address his substantive challenges to the application for adjudication, and his other submissions. I will then deal with Mr de Vries’ strike-out application.
Issue 1: should any further avenue for appeal alter the outcome of this decision?
[59] There is now only one appeal possibility that I understand might still be available to Mr de Vries, and that is the appeal he filed in this Court against Ellis J’s Judgment.
[60] Ellis J considered all the evidence, and Mr de Vries had ample opportunity to point to any evidence (including the “new” evidence that was apparently not before Judge Tompkins) he considered particularly important, and that might have suggested the 2011 District Court judgments had been wrongly entered. Having had his case for setting aside the 2011 judgments heard twice, both in the District Court and an appeal in the High Court, I am not prepared to consider any further deferral of the adjudication proceeding to an unknown future date, to allow Mr de Vries to mount a third attempt to have the 2011 judgments set aside.
[61] A number of adjournments have been granted while the Court and the parties have allowed Mr de Vries to pursue his rights of appeal, but he has either failed to pursue those rights in accordance with the relevant procedural requirements, or the appeals have been unsuccessful. I take into account also the conclusion of Ellis J that even on “the most charitable approach” the appeal had to be determined against Mr de Vries.
[62] For these reasons, I decline to halt or further adjourn the adjudication application to allow Mr de Vries to attempt to mount a further challenge to the 2011 judgments.
Issue 2: do Mr de Vries’ substantive challenges to the adjudication application provide a basis for the Court to refuse to make an adjudication order?
[63] I now address Mr de Vries’ substantive challenges to the application for an adjudication order.
Challenge (1): Bartercard failed to abide by its own rules and the Guarantee conditions
[64]I am satisfied that Ellis J adequately dealt with this issue. Her Honour said:20
… the guarantee document is clear on its face. It is not a cross-guarantee; it is a personal guarantee by Mr de Vries and Mr Rogers, who are jointly and severally liable under it. Notwithstanding the crossing out of the last clause … I am unable to see anything that precludes Bartercard pursuing the guarantors rather than the members.
[65] It is too late now for Mr de Vries to argue that Bartercard was not entitled to obtain judgment against him in New Zealand dollars. He has had ample opportunity to run that argument in the District Court and on appeal before Ellis J. Ellis J held clearly that there was nothing to prevent Bartercard pursuing Mr de Vries on his personal guarantee, and nor was
20 Ellis J’s Judgment at [26].
there anything to prevent it from obtaining judgment against Mr de Vries in New Zealand dollars.21
[66] There appears to be no rule that might have required Bartercard to accept trade dollars in satisfaction or partial satisfaction of a debt owed to it in New Zealand dollars by a member or guarantor.
[67] In summary, I do not consider that Mr de Vries has any remaining plausible argument that the judgment debts are not owing to Bartercard because of alleged failure by it to comply with its own rules, or because of any of the provisions of the guarantee. His challenge to the adjudication application under this heading fails.
Challenge (2): the case against Mr de Vries was discontinued
[68] Mr de Vries’ submissions on the discontinuance of proceeding CIV-2013-485-5180 can be dealt with relatively briefly. The simple answer is that the discontinuance was concerned only with Bartercard’s attempt to enforce its 2011 judgments by one particular means, namely the registration of a charging order over a property that turned out to be owned by a trust. Paragraph [11] of the April 2016 Judgment sets out the background to this proceeding:
Following the examination of Mr de Vries in the District Court, Bartercard took steps to register a charging order against a property in Lower Hutt registered in the name of Mr de Vries and his wife. Bartercard attempted to enforce that charging order in proceedings filed in this Court. In an affidavit filed in this proceeding, Mr Chetty, a credit controller for Bartercard, stated that no order for sale was made, as the property was held by Mr and Mrs de Vries as the trustees of a trust, and the debt owed by Mr de Vries to Bartercard is a debt owed by him personally. Although that attempt to recover the debts was unsuccessful, Mr Chetty says that there was no issue over the validity of the District Court judgments.
[69] I am satisfied the discontinuance of proceeding CIV-2013-485-5180 in 2013 was solely in relation to the charging order. It did not prevent Bartercard from pursuing bankruptcy proceedings against Mr de Vries two years later. As Ellis J noted, the discontinuance of the charging order could not have led Mr de Vries to reasonably believe that his personal debt would disappear.22 The challenge to the adjudication application under this heading also fails.
21 Referring to r 3.4(b) of Bartercard’s rules.
22 Ellis J’s Judgment at [24].
Challenge (3): Bartercard has not proven a debt
[70]There are three fundamental difficulties with Mr de Vries’ submission that Bartercard
has not proven a debt is owed by Mr de Vries:
(1)the debt is a judgment debt and is legally enforceable;
(2)Mr de Vries has twice failed to satisfy the court that the principal judgment entered in 2011 should be set aside; and
(3)it has been confirmed that Mr de Vries has not made, nor does he claim he has made, any further payments to reduce the debt.
[71] To the extent Mr de Vries says there were “discrepancies” in the amount claimed in the first notice, that was resolved by Bartercard issuing the second notice, the validity of which was upheld in the November 2017 judgment which is not now open to further appeal. And the present adjudication proceeding is not in any event concerned with the exact quantum of the debts owed by Mr de Vries to Bartercard – it is concerned with his solvency, and whether the Court should make an adjudication order based on the (now indisputable) fact that he committed an act of bankruptcy when he failed to comply with the second notice.
[72] Mr de Vries alleges prejudice when compared with the way Bartercard has treated Mr Rogers. The only evidence from Bartercard was Mr Chetty’s statement that bankruptcy proceedings against Mr Rogers would be pursued. It appears that has not happened, but I do not see that that could have prevented Bartercard from legally pursuing Mr de Vries. Neither party has brought to my attention evidence of further payments made by Mr Rogers to reduce the debt.
[73] Mr de Vries refers to a “discrepancy” of approximately $64,000 in the amounts claimed by Bartercard, but even if there were such a discrepancy (a point I do not need to decide) it is clear that at least the debt of $140,644.81 referred to in Bartercard’s application for an adjudication order would still be owing by Mr de Vries. It is obvious that he has been unable to pay that sum, or (apparently) the costs of $7,582.00 awarded against him on the November 2016 Judgment, although I note Mr de Vries filed an application on 9 November 2017 to set aside the costs award. Any further suggestion that Bartercard needed to extensively prove the debt, and/ or respond to information requests by Mr de Vries, is met by the existence of the judgments and the (obvious) fact that, on his own account, Mr de Vries has not discharged a very substantial part of his obligations under them. I repeat, the issue is not now one of precise quantification of the amount owed beyond the amount referred to in
the adjudication application; all that is necessary is that there be a debt exceeding the statutory minimum for bankruptcy of $1,000. Once that is established, as it has been, the only remaining issue is whether Mr de Vries has shown that some basis exists for the Court to exercise its discretion under s 37(c) or (d) of the Act to refuse to make the adjudication order to which Bartercard is prima facie entitled. In my view he has not.
[74]For those reasons, Mr de Vries’ challenges on the basis that Bartercard has not proven
a debt must also fail.
Issue 3 – Mr de Vries’ other submissions
[75] The allegations against Mr Dewar acting for Bartercard have been dealt with in the Recusal Judgment, and I do not need to deal with them again. So has Mr de Vries’ contention that I wrongly refused to hear argument on 24 April 2017 on his notice of opposition to the adjudication application.
[76] Following a number of adjournments, argument on the notice of opposition was heard on 7 November 2017, and Mr de Vries was given a further opportunity to be heard on 7 February 2018.
[77] It is neither necessary nor appropriate to revisit my findings and rulings made in the Recusal Judgment or in the November 2016 Judgment, in circumstances where those Judgments are not now subject to appeal or review and Bartercard is entitled to have them upheld. I have considered Mr de Vries’ other submissions, but in my view none of them raise issues which might suggest that grounds exist for the Court to exercise its discretion to refuse to make an adjudication order.
[78] The result is that Mr de Vries has not made out any of the grounds he advanced for the Court to refuse to make the adjudication order sought by Bartercard.
Issue 4 – the strike-out application
[79] Strike-out applications generally proceed on the basis that the various matters pleaded by the plaintiff or applicant in its claim or application are assumed to be capable of proof at the hearing of the substantive proceeding. Strike-out applications are therefore often appropriate where the Court is asked to conclude that, even if the plaintiff or applicant succeeded in proving at the trial or substantive hearing the various facts pleaded, it would still not be entitled to the relief it sought. Clearly there is nothing of that sort here, where
Bartercard’s application for adjudication sufficiently set out grounds which, if proved, would have prima facie entitled it to the adjudication order it sought.
[80] There are other limited circumstances where substantial issues of liability are sometimes raised by a defendant on a strike-out application (e.g. where the defendant contends it has a limitation defence). But again, there is nothing of that sort here.
[81] Any broader assertions of there being “an abuse of the process of the court”, in terms of the allegations about an allegedly fraudulent Bartercard scheme, cannot be sustained on the current application – issues of that sort would have involved detailed factual enquiries not suitable for a strike-out application, and in any event they have either been addressed in Ellis J’s Judgment or in this judgment, or they were matters to be raised and dealt with in the proceedings in which judgments were entered against Mr de Vries (and/or in Mr de Vries’ unsuccessful attempts to have those judgments set aside).
[82] In the end, the various matters raised by Mr de Vries in the strike-out application represent nothing more than a last-minute attempt to re-run afresh, under a “new procedure”, arguments which properly belonged in the earlier proceedings or in his opposition to the application for adjudication.
[83] Having concluded in favour of Bartercard on the adjudication issue, there was obviously an arguable case against Mr de Vries, and the strike-out application therefore cannot succeed. It will be dismissed accordingly.
Subsequent documents filed by Mr de Vries including the purported counterclaim (dated 20 February 2018) and the interlocutory application for counterclaim
[84]On 10 November 2017 Mr de Vries applied to the Court for the following orders:
(1)directing Bartercard to show the Court the time and date Bartercard
“advanced the monies it seeks in this bankruptcy proceeding”;
(2)directing Bartercard to supply the Court the contract(s) it has in relation to this matter; and
(3)directing Bartercard to supply the Court the agreement entered into between itself and the other director, Mr Rogers, under the cross-guarantee.
[85] I am not prepared to entertain this application. Bartercard is the holder of two judgments that have not been set aside, and I am not now concerned with the bases on which
those judgments were obtained (including whether any monies were “advanced’, and what contracts might have been relied upon). Nor is Bartercard seeking “monies” in this proceeding (it is seeking an order adjudicating Mr de Vries bankrupt). And as Ellis J has found, any agreement Bartercard may have entered into with Mr Rogers did not prevent it from pursuing its bankruptcy proceeding against Mr de Vries.
[86] Quite apart from those matters, Mr de Vries had months to file any discovery application, and it was too late after the hearing on 7 November 2017 (at which I reserved my decision on the strike-out and adjudication applications) for him to pursue the issue.
[87] On 20 February 2018 Mr de Vries filed a purported counterclaim and related interlocutory application. The purported counterclaim raises issues that appear to challenge the 2011 judgments, on the basis of Mr de Vries’ “cross-guarantee” argument. Those arguments have already been dealt with and rejected in Ellis J’s judgment. Secondly, the “counterclaim” raises issues as to alleged abandonment or settlement of Bartercard’s claims in 2014 – those arguments have also been considered and rejected, both in Ellis J’s Judgment and in this judgment. Thirdly, the purported counterclaim wrongly states that I “dismissed the Court case” in the April 2016 judgment. In fact, the April 2016 judgment expressly stated that it was open to Bartercard to pursue the matter further by the issue of a fresh bankruptcy notice (which would comply with the relevant requirements for such notices) if it chose to do so.
[88] The purported counterclaim then pleads that Mr de Vries relies on his affidavit of 9 August 2017 filed in this proceeding, and on further documents filed by him on 7 February 2018 and 12 February 2018. Broad references of that kind to affidavits and other documents filed in a proceeding do not clearly and sufficiently plead any counterclaim cause of action. Further, the affidavit of 9 August 2017 has been considered in this judgment, and I have found nothing in it or in documents subsequently filed by Mr de Vries that could provide a basis for the Court to exercise its discretion to refuse to make the adjudication order sought by Bartercard.
[89] Nor does Mr de Vries’ application filed on 9 November 2017 to set aside the costs award on the November 2016 Judgment affect the result of the adjudication application. Costs on a 2B basis were awarded against Mr de Vries in the November 2016 Judgment itself, with disbursements to be fixed by the Registrar, and he filed an appeal against that Judgment. In circumstances where all appeal rights in respect of the November 2016 Judgment have now been exhausted, there is no basis on which the costs as fixed by the registrar could be set aside.
Conclusions
[90] I am satisfied the requirements in s 13 of the Act have been met. Mr de Vries owed Bartercard a sum that exceeded $1,000, and he committed an act of bankruptcy when he failed to comply with the second notice. Bartercard filed its application for adjudication within three months of Mr de Vries’ failure to comply with the second notice.23 The debt was a certain amount (the amount stated in the bankruptcy adjudication application), and it was payable immediately. I am also satisfied that Mr de Vries, having put forward no evidence to the contrary, is presently unable to pay his debts.
[91] Nothing has been put forward to displace Bartercard’s prima facie entitlement to an adjudication order. Mr de Vries has been granted numerous adjournments and extensions, and he has had every opportunity to challenge the original judgments and the November 2016 Judgment. His challenges have either not been properly pursued by him or they have been unsuccessful. The second notice was issued as long ago as July 2016, and Mr de Vries has not made any further payments.
[92]I make the following orders:
1)dismissing the strike-out application, Mr de Vries’ “discovery” application dated 10 November 2017, and his February 2018 “interlocutory application for counterclaim”;
2)striking out the purported counterclaim filed in February 2018;
3)adjudicating Mr de Vries bankrupt;
4)directing that Bartercard is entitled to costs in the proceeding. As to the quantum of those costs, Bartercard may file and serve a costs memorandum within 15 working days if it seeks any increase over costs calculated on a ‘2B’ basis and its disbursements. If no such memorandum is filed within that period, costs are to be on a 2B basis, with disbursements as fixed by the registrar. If Bartercard does file and serve a costs memorandum, any reply memorandum is to be filed and served for Mr de Vries within 15 working days of service of Bartercard’s memorandum.
23 Under r 24.10 of the High Court Rules, the time for compliance with the second notice was automatically extended pending the Court’s determination of Mr de Vries’ application to set aside the second notice.
[93]The foregoing orders are made at 4.00 pm on 30 April 2018.
Associate Judge Smith
Solicitors: Thomas Dewar Sziranyi Letts, Lower Hutt for the Judgment Creditor
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