Carters a Division of Carter Holt Harvey Limited v McGuigan HC WN CIV 2007-485-1746

[2008] NZHC 2402

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2007-485-1746

BETWEEN  CARTERS A DIVISION OF CARTER HOLT HARVEY LIMITED

Judgment Creditor

ANDLINDA ANN MCGUIGAN Judgment Debtor

Decision:        7 July 2008

DECISION OF ASSOCIATE JUDGE D.I. GENDALL

Solicitors:           Edmund Lawler & Associates, PO Box 25931, St Heliers, Auckland

CARTERS A DIVISION OF CARTER HOLT HARVEY LIMITED V LINDA ANN MCGUIGAN HC WN CIV 2007-485-1746  7 July 2008

[1]      On 26 January 2007 the judgment creditor obtained judgment against the judgment debtor in the Upper Hutt District Court for $13,084.02, a judgment which was subsequently removed into this Court.

[2]      On 27 June 2008 the judgment creditor filed an Ex Parte Application seeking an order for examination of the judgment debtor in relation to this judgment pursuant to r 621 High Court Rules.

[3]      Rule 621 High Court Rules states:

“621 Order for examination of judgment debtor or defendant

(1)  Whether or not a notice and form of statement has been served under rule 620, a party to a proceeding for the recovery or payment of money may apply for an order under this rule—

(a) At any time after he has commenced the proceeding, if he desires to obtain a charging order under rules 567 to 587; and

(b) In all other cases, at any time after he has sealed judgment.

(2)  Such a party may apply to the Court for an order that the other party or, if the party is a corporation, an officer thereof, do attend before the Court, or any person whom the Court may appoint, and be orally examined as to his income and expenditure, his assets and liabilities, and generally as to his means for satisfying the judgment, or, if judgment has not been obtained, as to such matters as are relevant to the issue of a charging order.

(3)  Upon granting the application, the Court may order the production at the examination of any books or other documents and may impose such terms and conditions as it shall think proper in respect of the conduct of the examination or otherwise.”

[4]      At  the  outset,  it  is  clear  that  the  ability  to  bring  an  application  for  an examination order under r 621 exists irrespective of whether the judgment creditor concerned may have applied for an order requiring the judgment debtor to complete a financial statement under r 620.

[5]      Rule 620 High Court Rules states:

“620 Notice to judgment debtor to complete financial statement

(1)  Where a judgment is for the recovery or payment of a sum of money, the party entitled to enforce it may serve on the debtor a notice in form 49 requiring him to complete and return to that party, within 14 days after the date on which the notice is served on the debtor, a statement in form

50 of—

(a) The debtor's receipts and payments for the preceding 52 weeks; and

(b) The debtor's assets and liabilities.

(2) An additional copy of form 50, for the debtor's own use, shall be served with the notice.

[6]      In  considering  an  application  under  r  621,  Barker  J.  in  First  Fishing Company Limited v Wairau Energy Centre Limited High Court, Auckland, CP2939/88, 25 March 1991 stated that:

“… an examination is not to be ordered mechanically and should be granted in the exercise of the Court’s discretion.”

[7]      In   First   Fishing   Company   Limited,   the   Judge   considered   that   the circumstances prevailing there, which included a large debt at issue ($200,600.00 plus interest), the defendant having no assets of any kind and considerable other debts (said to amount to some $225,000.00) alone would justify the creditor in seeking to cross-examine the directors as to how that situation arose.

[8]      That needs to be compared, however, with the comments in AMP Finance

Limited v Linecorp Investments Limited & Ors High Court, Auckland CP351/90, 14

June 1991 also of Barker J.  There, the Judge described the plaintiff’s claim in the following way:

“The plaintiff claims that it is entitled to ascertain particulars of the assets and liabilities in the estate of Mr Morton for various reasons advanced, including the plaintiff’s need to know whether it is worthwhile to continue with the present proceedings.”

On this His Honour commented:

“However, such considerations cannot find weight with the Court unless there is jurisdiction to make the orders sought … There has just been no basis alleged which would justify the issue of a charging order before judgment.   There is no suggestion in evidence that the defendants, in their capacity as trustees, are making away with the estate property or that they are absent from or about to quit New Zealand.   Although r 621(1) is of apparently wide compass, I do not think that the Court should countenance any attempt to obtain an order for examination of a defendant pre-judgment in the hope of obtaining a charging order unless there is some evidence that a charging order is likely to be granted.  The fact that a plaintiff would like to know whether a defendant is worth suing, is not in my view sufficient justification for requiring a defendant to undergo the potentially oppressive process of this rule.”

However, His Honour also went on to say:

“The position is of course different once judgment has been entered.   The plaintiff then has a cast iron justification for wanting to know the defendant’s assets …”.

[9]      It is also relevant to note that, when applying for an order for examination after a judgment has been sealed, r 621 does not require an applicant to be seeking a charging order.  With this in mind then generally speaking, an applicant will have a reasonable  justification  for  seeking  an  order  for  examination  where,  as  here, judgment has already been entered against the other party.  Against that, however, in my view a relevant factor in the exercise of the discretion must always be the amount of the debt in question bearing in mind the detailed and involved process required to carry out an examination.

[10]     On these aspects, in the present case, the judgment which has been obtained against the judgment debtor is for the sum of $13,084.02.  This must be contrasted with the amounts involved in AMP Finance Limited v Linecorp Investments Limited

(namely $1.041 million dollars) and in First Fishing Company Limited v Wairau

Energy Centre Limited (namely $200,600.00 plus interest in 1991).

[11]     As I have noted above, the present application before the Court is bought on an ex parte basis.   And there is no evidence before the Court that the judgment creditor has endeavoured here to utilise the process provided for in r 620 High Court Rules.   Accordingly the position of the judgment debtor and her reaction to the approach that has been taken by the judgment creditor to recover this debt, are quite unknown.

[12]     Notwithstanding the comments made earlier in this judgment at para. [4], there can be little argument that the alternative r 620 procedure must be regarded as less oppressive or involved when contrasted with the detailed r 621 examination process.  Where the sum of money at stake is small which, in my view, is the case here, a reasonable first step to be considered prior to bringing an application under r

621 is to issue a notice to the judgment debtor under r 620 to ascertain any response that may be forthcoming.  This is particularly the case, in my view, where as here the judgment creditor wishes to proceed with a r 621 application ex parte.

[13]     Thus, despite the express statement in r 621 that an application for an order for examination of a judgment debtor may be made whether or not the r 620 process has been undertaken, I am of the view that in circumstances such as the present where the debt involved is small and the judgment creditor endeavours to proceed ex parte, the proper course in exercising the Court’s discretion under r 621 is first, to decline the application at this stage secondly, to recommend that a r 620 Notice is served upon the judgment debtor  and  thirdly to  reserve  leave  for  the  judgment creditor to bring a fresh application under r 621 if thought appropriate at a later time.

[14]     On this basis the judgment creditor’s application under r 621 is refused.

[15]     Leave  is  reserved  however  for  the  judgment  creditor  to  bring  a  fresh application under r 621 against the judgment debtor.

‘Associate Judge D.I. Gendall’