Clayton v Clayton - [2014] NZHC 2275

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

CIV-2014-463-000068 [2014] NZHC 2275

IN THE MATTER of the Insolvency Act 2006

AND

IN THE MATTER

of the bankruptcy of MARK ARNOLD CLAYTON

BETWEEN

MELANIE ANN CLAYTON Judgment Creditor

AND

MARK ARNOLD CLAYTON Judgment Debtor

Hearing: 12 September 2014

Appearances:

J R Hosking for Judgment Creditor
S R G Judd for Judgment Debtor

Judgment:

18 September 2014

INTERIM JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

This interim judgment was delivered by me at 4.30 pm on 18 September 2014
Pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar

CLAYTON v CLAYTON [2014] NZHC 2275 [18 September 2014]

[1] The judgment creditor and the judgment debtor were formerly husband and wife. Resolution of issues relating to their relationship property, property held in a number of trusts, and whether some of the latter is properly classified as the former were considered by the Family Court and a judgment was issued on 2 December
2011. After an appeal to the High Court, the Family Court Judge fixed and ordered the payment of costs by Mr Clayton to Mrs Clayton in the sum of $212,471. An application for a stay of this order has been declined.

[2] Mrs Clayton says that no part of this sum has been paid to her. On 6 May

2014 she issued a bankruptcy notice against Mr Clayton and served it. He has not complied with the notice. Mrs Clayton says he has committed an act of bankruptcy, and now applies to have him adjudicated bankrupt.

[3] On 19 May 2014 Mr Clayton filed a document titled “Application to Set Aside Bankruptcy Notice”. It set out five grounds on which it sought an order setting the notice aside. A sixth ground was referenced to an “affidavit to be sworn in support”.

[4] It is common ground that this document was filed within a period of

10 working days of service of the bankruptcy notice. However, no affidavit was filed in support of it until 12 June 2014, outside that period. Neither the application nor, later, the affidavit were served on the firm of solicitors who acted for Mrs Clayton on matters other than relationship property and who are named as the solicitors who issued the notice. They were, however, served on a different firm of solicitors in which Ms Hosking, who acts for Mrs Clayton on her relationship property dispute, is a partner.

[5] It seems the firm of solicitors which issued the bankruptcy notice was unaware of service of the documents to which I have referred. There not having been any response to the bankruptcy notice, it filed a creditor’s application for an adjudication order on 26 May 2014, and served it. This case was called before an Associate Judge in the High Court at Rotorua on 7 July 2014. The Minute issued by the Judge refers to “the defended adjudication application”, and “this adjudication

application” but makes no reference to the document upon which Mr Clayton relies

as…

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.

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Details

Case: [2014] NZHC 2275
Decision Date: 18 September 2014

CaseChat Overview and Summary

Clayton v Clayton is an interim decision by Associate Judge Matthews of the High Court at Rotorua. The matter concerns a bankruptcy notice issued by Melanie Clayton, the judgment creditor, against Mark Arnold Clayton, the judgment debtor. The Claytons were formerly husband and wife. The Family Court had decided on the division of their relationship property and ordered Mark Clayton to pay Melanie Clayton $212,471 in costs. Melanie Clayton issued a bankruptcy notice to Mark Clayton who failed to comply with it. She now seeks an order of adjudication of bankruptcy against him. Mark Clayton filed an application to set aside the bankruptcy notice, but he failed to file the supporting affidavit within the required period, and did not serve a copy of the application or affidavit on the firm of solicitors who issued the bankruptcy notice. The Associate Judge found that there was no valid application to set aside the bankruptcy notice, and that Mark Clayton had therefore committed an act of bankruptcy. The matter was adjourned to allow Mark Clayton to pay the outstanding judgments. If he was unable to do so, the Court would adjudicate him bankrupt.

Orders