Brkic v White

[2025] NZHC 2598

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2025-404-415

[2025] NZHC 2598

IN THE MATTER

of the Insolvency Act 2006

BETWEEN

GORDON BRKIC

Judgment Creditor

AND

CAROLINE RUTH WHITE

Judgment Debtor

Hearing:	2 September 2025
Appearances:	P L Rice for Judgment Creditor W C Pyke for Judgment Debtor
Judgment:	9 September 2025

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 9 September 2025 at 10.00 am pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

BRKIC v WHITE [2025] NZHC 2598 [9 September 2025]

[1]    Gordon Brkic and the other trustees of the Madeg Trust obtained a judgment against Caroline White and the other trustee of the Grafton Road Trust on 18 June 2018.1 Mr Brkic has served Ms White with a bankruptcy notice in respect to the judgment.

[2]Ms White applies to set the bankruptcy notice aside on the grounds that:

(a)the bankruptcy notice is invalid because it overstates the amount claimed by including interest to the date of issue of the bankruptcy notice when part of that interest is time barred;2 and

(b)she has a set-off or cross-claim that equals or exceeds the amount claimed in the bankruptcy notice.

[3]The issues addressed by counsel in their written submissions were:

(a)Is the claim to interest in the bankruptcy notice overstated?

(b)If so, can the defect be corrected under s 418 of the Insolvency Act 2006?

(c)Does Ms White have a genuine triable set-off or cross-claim that equals or exceeds the debt claimed in the bankruptcy notice that she could not set up in the proceeding in which the judgment was obtained?3

[4]    The first two of these issues no longer need to be determined. I understand it is agreed the bankruptcy notice does overstate the interest claimed to the extent that no more than six years of interest can be claimed on the judgment debt,4 and that the Court may amend the defect under s 418 of the Insolvency Act in the manner proposed by Mr Brkic’s counsel. That leaves only the third issue to consider.

1      Brkic v White [2018] NZHC 1458.

2      Limitation Act 2010, ss 11, 12, 16(1)(a) and 51.

3      Insolvency Act 2006, s 17.

4      Benecke v Wise (1997) 11 PRNZ 440 at 444.

Background

[5]    There is a history of litigation between the parties that provides the relevant background.

[6]    The trustees of the Madeg Trust (the Madeg trustees) made advances to the trustees of the Grafton Road Trust which were not repaid. On 18 June 2018, Moore J entered judgment in favour of the Madeg trustees in the sum of $109,820 with interest calculated at the rate of 22 per cent per annum from 10 May 2012.5

[7]    On 3 July 2019 the Madeg trustees registered a charging order over a property at Boiler Gully (the Boiler Gully property) which was registered in Ms White’s name. On 6 August 2019 the Madeg trustees obtained a sale order in respect to the property.

[8]    Ms White applied to set aside the charging and sale orders on the basis that she owned the Boiler Gully property as trustee of the Awhitu Trust and therefore it could not properly be charged or sold. In response, the Madeg trustees argued that the extensive powers accorded to Ms White as settlor of the Awhitu Trust were tantamount to ownership of the land, relying upon the principles in Clayton v Clayton and Webb v Webb.6

[9]    The matter was heard by Woolford J and on 28 April 2021 he issued a judgment setting aside the charging and sale orders.7 While expressing sympathy for the position of the Madeg trustees, he considered it had been shown on the balance of probabilities that Ms White owned the land as a trustee of the Awhitu Trust. As the Awhitu Trust was not an objective nullity and remained on foot as a properly functioning trust, the Boiler Gully property could not be subject to enforcement proceedings in respect to the judgment against Ms White personally.8

5      Brkic v White, above n 1. It is accepted that Ms White is personally liable for the judgment, although she says she has a right of indemnity from the assets of the Grafton Road Trust.

6      Clayton v Clayton [2016] NZSC 29, [2016] 1 NZLR 551; and Webb v Webb [2020] UKPC 22, [2021] 2 NZLR 376.

7      White v Brkic [2021] NZHC 919, [2021] 3 NZLR 490.

8 At [19].

[10]   Following receipt of that High Court judgment the charging order was removed but the Madeg trustees appealed to the Court of Appeal. On appeal, the judgment of Woolford J was upheld and the appeal dismissed.9

[11]   Subsequently the Madeg trustees obtained the issue of a bankruptcy notice against Ms White. Ms White applied to set that bankruptcy notice aside on the basis that it was invalid and a nullity because it overstated the amount of the alleged judgment debt by including post-judgment interest at the contractual rate.

[12]   In a judgment of 12 February 2025, Associate Judge Cogswell set aside the bankruptcy notice.10 He held that the Madeg trustees were entitled to contractual interest only up to the date of judgment and thereafter at the rate of five per cent under the Judicature Act 1908. As a result, the amount claimed in the bankruptcy notice was overstated to an extent that it was invalid.11

[13]   On 13 February 2025 Mr Brkic issued the bankruptcy notice that is the subject of this application.

The law

[14]Section 17 of the Insolvency Act relevantly provides:

17       Failure to comply with bankruptcy notice

(1)A debtor commits an act of bankruptcy if—

(a)a creditor has obtained a final judgment or a final order against the debtor for any amount; and

(b)execution of the judgment or order has not been halted by a court; and

(c)the debtor has been served with a bankruptcy notice; and

9      Brkic v White [2021] NZCA 670, [2021] NZFLR 840.

10     Re White, ex parte Brkic [2025] NZHC 127.

11     At [49]–[51].

(d)the debtor has not, within the time limit specified in subsection (4),—

(i)complied with the requirements of the notice; or

(ii)satisfied the court that he or she has a cross claim against the creditor.

…

(7)In subsection (1)(d)(ii), cross claim means a counterclaim, set-off, or cross demand that—

(a)is equal to, or greater than, the judgment debt or the amount that the debtor has been ordered to pay; and

(b)the debtor could not use as a defence in the action or proceedings in which the judgment or the order, as the case may be, was obtained.

[15]   The relevant principles have been set out by the Court of Appeal. As applied to this case they are:12

(a)The onus is upon Ms White to show she has a genuine triable set-off or counterclaim. The words “genuine” and “triable” mean the set-off or counterclaim is of “true substance” and that she genuinely proposes to pursue it.

(b)Ms White must show a genuine triable set-off or counterclaim in terms of both liability and quantum.

(c)Not only must the existence of the set-off or counterclaim be established but it must be equal to or greater than the judgment debt and could not have been used as a defence in the proceeding in which judgment was entered.

(d)If Ms White satisfies the Court that she has such a set-off or counterclaim then the result is that there is no act of bankruptcy and the Court has no discretion to allow the bankruptcy notice to stand.

12     Sharma v ANZ Banking Group (NZ) Ltd (1992) 6 PRNZ 386 (CA); Robertson v ASB Bank Ltd

[2014] NZCA 597 at [14]; Wikeley v Jacomb [2014] NZCA 146 at [37]–[40].

(e)The summary nature of the present procedure is generally unsuitable for the determination of disputed questions of fact.

(f)The Court need not accept uncritically evidence that is inherently lacking in credibility.

[16]   In Robertson v ASB Bank Ltd the Court of Appeal described the approach to applications to set aside bankruptcy notices:13

… as akin to that taken when affidavit evidence is considered on an application for summary judgment or when continuation (or otherwise) of a caveat is in issue. As with those types of applications, the summary nature of the procedure “is wholly unsuitable for the determination of disputed questions of fact”. However, in assessing the strength of a claim the Court need not accept uncritically evidence that is inherently lacking in credibility; for example, where it is inconsistent with contemporary documents or inherently improbable.

[17]   In addition, it has been held that for the operation of a counterclaim or cross- demand under s 17 there must be a degree of mutuality or some coincidence or correlation between the circumstances out of which the opposing claims arise, such that it would be unjust to enforce a bankruptcy notice without reference to a related claim which might substantially reduce the debtor’s obligation to pay. It is a question of fact and degree whether there is a sufficient correlation between the claims in any given case.14

[18]   The facts of Re Elvin, ex parte Sandilands are instructive. The debtors operated a business which employed casual labour. The Inspector of Factories, as an officer of the Department of Labour, successfully made a claim on behalf of some of the employees against the debtors for underpaid wages. The debtors brought a counterclaim, alleging that wages paid to the employees had been calculated on the basis of negligent advice given to them by officers of the Department. In the Labour Court the Judge declined to hear the counterclaim. The debtors refused to pay the judgment debt and a bankruptcy notice was issued by the Department. The debtors

13     Robertson v ASB Bank Ltd, above n 12, at [32] (footnotes omitted)

14     Re Elvin, ex parte Sandilands [1990] 3 NZLR 124 (HC).

argued that they had a counterclaim or cross-demand which equalled or exceeded the amount of the judgment debt and applied to set the bankruptcy notice aside.

[19]   Gallen J refused to set aside the bankruptcy notice as there was insufficient correlation between the claims. He found that the debtors’ claim was against the Department in respect to the actions of the Department’s employees whereas the claim against the debtors was brought by an officer of the Department acting on behalf of the debtors’ employees, each of whom could themselves have brought claims.  Gallen J said:15

While I accept that there may be cases where it would be appropriate for a counter-claim, set-off or cross-claim to be made and taken into account between parties in different capacities, this is not in my view one of those cases. The involvement of the Department in the collection of the sums now held to be outstanding is a machinery involvement. The Department is acting on behalf of the workers for reasons of convenience. It does not seem to me that in those circumstances it would be right for the rights of the workers concerned to be considered as against the entirely different claim which the debtors seek to establish against the Department in an entirely different capacity.

The counterclaim

[20]   Ms White has sworn an affidavit in support of her application to set aside the bankruptcy notice in which she explains the basis of the counterclaim against the Madeg trustees. Since then, she and her co-trustee of the Awhitu Trust (the Awhitu trustees) have filed proceedings against the Madeg trustees and the statement of claim is before the Court.

Ms White’s evidence

[21]   Ms White says in her affidavit that the Grafton Road Trust advanced funds to the Awhitu Trust to enable it to complete the development of the Boiler Gully property and “other property development”, and that the invalid registration of the charging order meant the Awhitu Trust could not borrow and offer the Boiler Gully property as mortgage security to a lender. She asserts that had it not been for the charging order the Awhitu Trust could have paid the Grafton Road Trust, and she would have had a

15     At 127.

right of indemnity from the Grafton Road Trust and could have exercised that to pay the judgment.

[22]   Ms White then says that in September 2020 the Awhitu Trust agreed to buy a relocatable dwelling to move on to land at Orua Bay in respect to which an offer to purchase had been made on behalf of the Awhitu Trust for $375,000. A copy of the sale and purchase agreement is annexed to her affidavit which shows that the purchaser is the Waiuku Trust Ltd.

[23]   Ms White says the Awhitu Trust obtained an offer of mortgage finance to purchase the Orua Bay property and refinance existing debt with the ASB Bank Ltd (ASB). That loan offer is annexed to her affidavit and is dated 25 September 2020. It is unsigned. The loan offer is from Midlands Mortgage Trust and says the facility limit was to be $650,000 and the loan purpose was “to refinance existing indebtedness between Awhitu Trust and the ASB and facilitate the purchase of the property at Orpheus Road, Orua Bay”. The securities for the facility were to include first ranking registered mortgages over the Boiler Gully and Orua Bay properties. Ms White says:

It was a condition of the loan offer that I guarantee the loan and that the Grafton Road Trust provide security in the form of a first mortgage over the Boiler Gully property: this would have enabled the Grafton Road Trust to participate in the development and obtain funds to pay the creditor’s debt. Refinancing of ASB lending would have enabled the Awhitu Trust to settle its debt with Grafton Road Trust. The charging order prevented Awhitu Trust from uplifting this finance because it could not grant the required first mortgage over the Boiler Gully property. As a result, the Awhitu Trust could not complete the development of either the Boiler Gully property or the Orua Bay property. All development work by both trusts stalled.

[24]   Ms White says the Awhitu Trust’s losses will amount to $1 million and annexes valuations of the Boiler Gully and Orua Bay properties without further explanation, other than that the Awhitu Trust’s accountants will prepare financial evidence to support this claim. No such evidence has been filed.

[25]Ms White summarises the position as:

By the time the charging order was discharged in 2021 the Awhitu Trust had lost the option to complete either development; moreover a removeable house it purchased had burned down uninsured – it was uninsured because it could not be relocated to the Orua Bay land, which was required before the insurer

would provide cover. I do not know at present if this loss is also recoverable against the creditor, but counsel is considering it.

[26]Ms White’s evidence then is that:

(a)the charging order prevented the Awhitu Trust from raising finance to repay a debt owed by it to the Grafton Road Trust;

(b)the Grafton Road Trust could not participate in the development of the Orua Bay property, its participation being enabled by it providing a mortgage over the Boiler Gully property;

(c)as a result, she could not exercise her right to be indemnified by the Grafton Road Trust to pay the judgment; and

(d)the Awhitu Trust has suffered loss in being unable to complete the purchase and development of the Orua Bay property.

The statement of claim

[27]   The statement of claim that has been filed by the Awhitu trustees against the Madeg trustees pleads two causes of action. The first is for abuse of legal process for a collateral purpose. The second is negligence.

[28]The Awhitu trustees’ losses have been quantified in the statement of claim as:

(a)the difference between the developed value of the Orua Bay property of $1,275,000 less the purchase price of $375,000, being $900,000;

(b)the loss of a deposit on the purchase price of the relocatable house, being $15,000;

(c)the brokerage fee and interest on finance that could not be uplifted, being $18,193; and

(d)legal costs of the High Court and Court of Appeal proceedings, being

$4,268.

[29]   Mr Pyke submits that Ms White has provided sufficient evidence of a sound and credible counterclaim. He also argues that the requirement for mutuality between the competing claims exists because the charging order was intended to reach into the assets of the Awhitu Trust, with the Madeg trustees (wrongly) seeing those assets as part of the holdings of Ms White. He emphasises that with the filing of the proceeding by the Awhitu trustees the counterclaim is now actual rather than pending and the Court ought to take the pleadings at face value and, in any event, they are adequately supported by the affidavit of Ms White.

My analysis

[30]   I am satisfied that Ms White, in her personal capacity or as a trustee of the Awhitu Trust, does not have a genuine triable counterclaim against the Madeg trustees that can be raised in opposition to the bankruptcy notice for the following reasons.

[31]   The first reason is that I do not consider that either cause of action which the Awhitu trustees rely upon is tenable as a matter of law.

[32]   As far as the first cause of action alleging abuse of legal process for a collateral purpose is concerned, the relevant paragraphs of the statement of claim plead:

23.The defendants’ purpose in registering the charging order against the title to the Boiler Gully property and obtaining a sale order thereafter was to obtain an advantage over the Awhitu Trust, and/or against Caroline White as a trustee of the Awhitu Trust, namely to use the charging order as a means to reach into the assets of the Awhitu Trust, in respect of which the defendants had no legitimate legal or equitable interest.

…

28.The defendants’ persistent use of the charging order and sale order    was carried out to obtain an advantage over the Awhitu Trust, and/or against Caroline White as a trustee of the Awhitu Trust, namely to use the charging order and sale order as the means to reach into the assets of the Awhitu Trust, in respect of which the defendants had no legitimate legal or equitable interest.

[33]   The tort of abuse of process has been recognised in this country. In Gordon v Treadwell Stacey Smith Blanchard J described the requirements of the tort in this way:16

The tort of abuse of process is rarely encountered although there has been an upsurge of cases in recent years. It had its beginnings in Grainger v Hill … where the defendant mortgagees had called on the plaintiff mortgagor under a ship’s mortgage to pay the mortgage debt well before it fell due. Their motive was to obtain the ship’s register without which the ship (their security) could not sail away. They issued legal proceedings in debt and sent sheriff’s officers to the plaintiff with a writ of capias, thereby causing him to hand over the register. He claimed damages for the loss of voyages which could not be undertaken without the register. The claim was successful. The abuse of process was not the commencement of proceedings for a debt which the defendant knew was not owing, but the extortion of the register by use of the writ of capias, an object not within the scope of that process and wholly collateral: Speed Seal Products Ltd v Paddington …

The tort is not committed merely by the issuance of proceedings on a false basis or for an improper purpose:

“The action will not lie where the claim is that a party has instituted proceedings, whether principal or ancillary, in order to effect an object within the scope of the proceedings. This is so even if the proceedings have been irregularly or maliciously instituted” (Hanrahan v Ainsworth …).”

The accounts of the tort given in Clarke JA’s judgment at pp 107-122 and by Priestley JA in Spautz v Gibbs … are of particular value, as is the judgment of the English Court of Appeal in Metall und Rohstoff AG v Donaldson Lujkin & Jenrette Inc … At p 470 that Court said:

“Relief in tort under the principle of Grainger v Hill is not, in our judgment, available against a party who, however dishonestly, presents a false case for the purpose of advancing or sustaining his claim or defence in civil proceedings.”

[34]   Counsel referred me to Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd, where the Privy Council confirmed that the tort will be committed where civil proceedings are initiated or conducted for a predominant purpose other than that for which they are designed so as to obtain an extraneous benefit other than and not reasonably connected to the relief sought.17 As to what is

16     Gordon v Treadwell Stacey Smith [1996] 3 NZLR 281 (CA) at 292.

17     Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2013] UKPC 17, [2014] AC 366.

an improper purpose, Lord Wilson referred to the metaphor expressed by Isaacs J in the High Court of Australia in Varawa v Howard Smith Co Ltd of a stalking horse:18

… if the proceedings are merely a stalking-horse to coerce the Defendant in some way entirely outside the ambit of the legal claim upon which the court is asked to adjudicate they are regarded as an abuse of process for this purpose

…

[35]   The learned authors of Todd on Torts describe the tort of abuse of process as follows:19

To fall within the Grainger principle the process must be used for a predominant purpose outside the ambit of the legal claim upon which the court is asked to adjudicate. Proceedings whether criminal or civil, thus constitute an abuse of process where the purpose of bringing them is not to prosecute them to a conclusion, but to use them as a means of obtaining some advantage for which they are not designed or some collateral advantage beyond what the law offers.

[36]   Ms White’s pleading in respect to this cause of action is immediately problematic insofar as she asserts the Madeg trustees registered the charging order to obtain advantage over the Awhitu Trust. That allegation cannot be upheld in circumstances where there is no dispute that the Boiler Gully property was registered in Ms White’s sole name and the existence of the Awhitu Trust was not known to the Madeg trustees until after the charging order was registered.

[37]   Before me the case was advanced by Mr Pyke on the basis that, upon being advised that Ms White held the property as a trustee of the Awhitu Trust, the Madeg trustees should not have attempted to maintain the charging order but agreed to its discharge. He submits that by no later than the date that the challenge to the charging order was filed in the High Court the Madeg trustees’ attempt to sustain the charging order was abusive of the enforcement process and it ought to have been removed, and in that sense the charging order must be considered a “stalking-horse”.

[38]   I do not accept this argument. There can be no suggestion that the Madeg trustees opposed Ms White’s application to discharge the charging order for any reason other than to maintain it. They did not issue enforcement proceedings with no

18     At [63], citing Varawa v Howard Smith Co Ltd (1911) 13 CLR 35 at 91.

19     Stephen Todd (ed) Todd on Torts (9th ed, Thomson Reuters, Wellington, 2023) at [17.5.2] (footnote omitted).

intention to pursue them to conclusion, nor were they seeking any extraneous benefit other than that available to them in the proceedings. Their ultimate intention was to obtain payment of the judgment debt, being the very thing the enforcement procedures are designed to facilitate.

[39]   Furthermore, it is not the case that upon learning that Ms White asserted she held the property in trust the Madeg trustees were required to accept that was the case. A reading of the High Court and Court of Appeal judgments relating to the application to discharge the charging order can leave no doubt that while they were unsuccessful the Madeg trustees had arguable grounds to maintain the charging order, and having received the High Court’s judgment they responsibly removed it notwithstanding their appeal had not been heard.20

[40]   The second cause of action in negligence is based on the assertion that before registering the charging order the Madeg trustees had a duty to check with Ms White as to the capacity in which she held the property, and by failing to do so and then registering and maintaining the charging order they “wilfully or negligently overlooked or disregarded the Awhitu trustees’ ownership of the Boiler Gully property”. Mr Pyke submitted this cause of action is orthodox and analogous to a claim for wrongful registration of a caveat.

[41]   In my understanding there is no duty of care owed by one litigant to an opposing party. It is also unrealistic to think that in hostile litigation a successful party should not be able to take steps to enforce its judgment without first consulting with its opponent. There are good reasons why litigants do not owe a common law duty of care to each other, including that people should not be deterred from seeking legal redress in the courts for fear that they may be sued if they fail.21

[42]   The ability to obtain compensation in respect to the lodging of a caveat against land without reasonable cause is not analogous to obtaining a charging order after

20     White v Brkic, above n 7; Brkic v White, above n 9.

21     Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd, above n 17, at [82].

judgment. That ability arises under statute and is not based on the existence of a duty of care at common law.22

[43]   Ms White’s cause of action in negligence is novel and no authority has been cited recognising a duty of care between litigants. I cannot foresee the courts giving recognition to any such duty which would have significant adverse consequences for the operation of the legal system and cut across and render otiose existing principles of civil liability, including those relating to the cause of action for abuse of process.23

[44]   The second reason I do not accept that Ms White has a triable counterclaim is her unsatisfactory evidence, its implausibility, and the absence of corroborating evidence supporting the existence of the counterclaim. In arriving at my conclusions I have reminded myself that it is generally not appropriate to attempt to resolve disputed questions of fact on an application of this kind. However, that does not require the Court to accept evidence uncritically (or, as Mr Pyke submits, at face value) when it is equivocal, imprecise, unsupported by contemporary documents, or inherently improbable.

[45]   Ms White provides no corroborating evidence of a debt owed by the Awhitu Trust to the Grafton Road Trust. There is also no evidence of any agreement between the respective trustees whereby in exchange for providing security over the Boiler Gully property the Grafton Road Trust was to participate in the development of the Orua Bay property. This is not surprising because Ms White’s evidence that the Grafton Road Trust was to provide a mortgage over the Boiler Gully property cannot be correct when it is her position that the property is owned by the Awhitu Trust.

[46]   The next difficulty is that the offer of finance from Midlands Mortgage Trust did not allow the funds to be used to repay a debt owed to the Grafton Road Trust or pursue development opportunities. Its purpose was to discharge the existing mortgage and to purchase the Orua Bay property. Mr Rice argues, correctly in my view, there

22 Land Transfer Act 2007, s 148.

23   Stephen Todd (ed) Todd on Torts, above n 19, at [4.4.5]; and South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR 282 (CA) at 298 per Cooke P. For a discussion of the policy considerations in respect to the tort of abuse of process see Emerson Hynard and Aiden Lerch The Tort of Collateral Abuse of Process (2021) 44(2) UNSW Law Journal 714 at 730–733.

could not have been any surplus funds remaining from the $650,000 facility after refinancing the existing ASB mortgage and purchasing the Orua Bay property with which to repay any debt owing to the Grafton Road Trust or the judgment.

[47]   Turning to the losses claimed in the statement of claim, these too do not bear scrutiny. The amounts claimed total $937,461, of which $900,000 relates to the difference between the developed value of the Orua Bay property and its purchase price.   There are no claims made in respect to other developments referred to in    Ms White’s evidence.

[48]   To support the $900,000 claim Ms White has produced a valuation report obtained in June 2025 on the basis of a hypothetical development of the property involving the relocation of a large dwelling from St Mary’s Bay to Orua Bay, substantial renovations to the dwelling, the installation of services, excavation and other earthworks. There is no detail of any of the costs associated with that work, but the valuer does note that the dwelling will overcapitalise the property. It is unsound to suggest that the Awhitu Trust suffered any loss without taking into account the costs of undertaking the development. Here, what evidence there is suggests that those costs will exceed the benefit resulting from them, such that there would be no claimable loss.

[49]   Similarly, I cannot see any bases for the other amounts claimed. The loss of a deposit on the purchase price of the relocatable house is unexplained. It is difficult to see how a brokerage fee could have been incurred when the offer of finance was not accepted, and there is no explanation why Ms White would have agreed to incur such a cost when she was aware the charging order had been registered which was an impediment to the Boiler Gully property being used as security for an advance. It is not clear either how a claim can be made for costs of the earlier proceedings as damages when issues of costs were determined in those proceedings. In any event, even if any or all of these other amounts are recoverable from the Madeg trustees they are not equal to or greater than the judgment debt by a wide margin.

[50]   There are other matters also which suggest the Awhitu trustees’ claim is not genuine. Mr Rice submits, and again I agree, there is no explanation of why the

Awhitu Trust was unable to pursue development opportunities once the charging order was lifted, other than that the relocatable house had burned down which could not possibly have been the responsibility of the Madeg trustees. Further, there is no explanation why the Awhitu trustees have pursued these claims more than four years after the charging order was removed except as a response to the bankruptcy notice.

[51]   The third reason I do not accept that Ms White has a genuine triable counterclaim that can be raised in opposition to the bankruptcy notice is the lack of mutuality between the competing claims. The judgment in issue was obtained against Ms White and the other trustees of the Grafton Road Trust. The claims that Ms White is setting up in opposition to the bankruptcy notice are brought by the Awhitu trustees and on behalf of the beneficiaries of the Awhitu Trust. The claims are not therefore between the same parties acting in the same capacities.

[52]   Furthermore, the subject matter of the competing claims is not sufficiently related. The circumstances in which the claims have arisen are distinctly different. While I accept there is some linkage to the extent the Awhitu trustees claim to have suffered loss as result of steps taken to enforce the judgment, that is tenuous and does not make it unjust to allow enforcement of the bankruptcy notice as the Awhitu trustees’ claim will not reduce the obligation of Ms White to pay the judgment, or affect the rights of the Madeg trustees to have access to Ms White’s assets and the assets of the Grafton Road Trust for that purpose.

Result

[53]The application to set aside the bankruptcy notice is dismissed.

[54]   It has been accepted that the bankruptcy notice contains a defect which should be corrected under s 418 of the Insolvency Act. I order that Mr Brkic shall file an amended bankruptcy notice and serve that upon Ms White forthwith. Ms White shall have 10 working days to comply with the notice or otherwise exercise any rights in respect to it.

[55]   I reserve costs. There is an argument that both sides have had a degree of success. Counsel should confer on costs and if they cannot agree on costs then

memoranda are to be filed within 15 working days with five working days for any replies. The memoranda shall be no longer than five pages and costs will be determined on the papers.

O G Paulsen Associate Judge

Solicitors:

Sneddon Law, Manukau St Mark Law, Auckland