Brookmill Finance Limited v Dawson

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-4254 [2015] NZHC 1682

IN THE MATTER	of the Companies Act 1993
BETWEEN	BROOKMILL FINANCE LIMITED Plaintiff
AND	AARON DAWSON Defendant

Hearing:	30 June 2015
Appearances:	Mr R B Hucker for plaintiff Ms A Fuiava for the Defendant
Judgment:	20 July 2015

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

This judgment was delivered by me on

20.07.15 at 4 p.m.., pursuant to

Rule 11.5  of the High Court Rules.

Registrar/Deputy Registrar

Date……………

BROOKMILL FINANCE LIMITED v AARON DAWSON [2015] NZHC 1682 [20 July 2015]

Introduction

[1]       This decision concerns an application under s 76(2) of the Insolvency Act

2006 (the Act) for leave to continue proceedings against the defendant, Mr Aaron

Dawson, notwithstanding his bankruptcy.

[2]       Prior to the defendant’s bankruptcy, the plaintiff, Brookmill Finance Limited, obtained judgment against the defendant under the first cause of action in the statement of claim.  It is not disputed that the defendant is indebted to the plaintiff for that amount.

[3]       The remaining cause of action (in respect of which leave is sought) deals with the security provided by the defendant.  The plaintiff has sought a declaration in the following terms:

a declaration that the plaintiff has a security interest in those shares held by the First Defendant in Wairahi Estate Holdings Ltd;

Background

[4]       The circumstances that bring the parties before the Court are as follows.  The defendant  is  the  principal  of  a  company  called  Eastern  Bays  Renovations  Ltd (Eastern Bays).  In 2012, Eastern Bays was experiencing what was described as cash flow pressures.  The defendant, who is a director of Eastern Bays, sought financing from the plaintiff, which is in the business of buying and discounting trade debtors. The plaintiff, on 12 December 2012, purported to enter into a discounting agreement with  Eastern  Bays.    Mr  Collins,  who  is  a  director  of  the  plaintiff,  signed  the agreement on behalf of the plaintiff and the defendant signed on behalf of Eastern Bays.

[5]       There were two documents which the parties entered into to give effect to the discounting  agreement.     The  first  document,  the  “Terms  and  conditions  for purchasing accounts receivable”, was on letterhead of the plaintiff and was addressed to  “Aaron  Dawson,  Eastern  Bays  Renovations  Limited”.    The  key  part  of  this

document was the section contained in the security agreement, which was to the following effect:

6.        SECURITY AGREEMENT

To secure all your present and future payment and performance obligations to us, however arising, you hereby grant us a continuing security interest in the Collateral by way of registration of a charge over the assets of the Seller.

In the event of default by the Seller you hereby grant:

A good registrable mortgage over any land owned by the Seller subject only to such prior mortgages and encumbrances as are in effect at the time of registration of the mortgage, such mortgage to secure all monies owing from time to time by the Seller to Brookmill Finance Limited and to be in such…