De Lage Landen Limited v Vasanthan
[2025] NZHC 2140
•13 August 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-001031
[2025] NZHC 2140
UNDER the Insolvency Act 2006 IN THE MATTER
of the bankruptcy of Siva Vasanthan and Seetha Vasanthan
BETWEEN
DE LAGE LANDEN LIMITED
Plaintiff / Judgment Creditor
AND
SIVA VASANTHAN
Defendant / Judgment Debtor
CIV-2024-404-001030 BETWEEN
DE LAGE LANDEN LIMITED
Judgment CreditorAND
SEETHA VASANTHAN
Judgment Debtor
Hearing: 21 July 2025 Appearances:
J B Fletcher / J Taylor for the Judgment Creditor G J Thwaite for the Judgment Debtors
Judgment:
13 August 2025
JUDGMENT OF ASSOCIATE JUDGE COGSWELL
Solicitors:
This judgment was delivered by me on 13 August 2025 at 3.00 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Wynn Williams, Christchurch G J Thwaite, Auckland
DE LAGE LANDEN LTD v VASANTHAN [2025] NZHC 2140 [13 August 2025]
Introduction
[1] Siva Vasanthan and Seetha Vasanthan apply to set aside bankruptcy notices issued by De Lage Landen Ltd.
[2] It is agreed by counsel that the same issues arise in both applications. This judgment deals with both applications.
Background
[3] The judgment creditor issued bankruptcy notices against the judgment debtors on 6 May 2024.
[4] The bankruptcy notices relied on a default judgment of the District Court entered on 16 September 2021. The total amount of the default judgment was
$334,161.73.
[5] Default judgment was entered because neither the judgment debtors nor the company related to them, Vasanthan & Co Ltd (VCL), filed a defence.
[6] The liability arose from VCL’s breach of a hire purchase agreement to acquire a piece of specialised hair restoration equipment. The purchase price was $648,840.00 and was to be paid by instalments under the hire purchase agreement.
[7] Payments totalling $310,366.44 were made under the hire purchase agreement before VCL defaulted.
[8] Proceedings were issued seeking the balance of the unpaid purchase price together with other losses, costs and interest. The proceedings were against VCL and the judgment debtors, who were the guarantors of VCL’s obligations under the hire purchase agreement.
[9] Two challenges to the District Court judgment were made by the judgment debtors and both were unsuccessful.
[10] The first application to set aside the judgment was dismissed orally by the District Court on 24 March 2023 with full reasons given on 28 April 2023.1 All grounds of challenge to the default judgment were rejected by the District Court.
[11] Between the dates of the oral dismissal of the application and the release of the written reasons, the judgment debtors filed an application to set aside the oral judgment of 24 March 2023. That application was declined by the Court on 26 June 2023.
[12]The judgment creditor then issued a statutory demand to VCL.
[13] That was unsuccessfully challenged by way of an application to set the statutory demand aside. The application to set aside argued:
(a)the statement of claim did not plead a liquidated amount; and
(b)the judgment creditor failed to disclose substantial payments made by VCL so the District Court was misled and issued an incorrect judgment.
[14]The High Court, in dismissing the application, noted:2
(a)VCL’s submission as to misstatement of quantum reflected a failure to understand the nature of the judgment creditor’s claim in the District Court;
(b)there was no challenge to the mathematical accuracy of the judgment debtor’s calculations for the amount owing;
(c)VCL’s submissions in substance were a collateral attack on the decision; and
(d)there was no dispute as to whether the amount claimed was due and owing: it is due and owing by virtue of the District Court judgment.
1 Vasanthan & Co Ltd v De Lage Landen Ltd [2023] NZDC 7053.
2 Vasanthan & Co Ltd v De Lage Landen Ltd [2025] NZHC 1177.
[15] The judgment debtors have now responded to the judgment creditor’s bankruptcy notices by applying to set them aside. The debtors’ grounds for challenging the bankruptcy notices are similar to those previously relied upon.
Application to set aside—approach
[16] The Court may adjudicate a debtor bankrupt if a creditor of the debtor has applied under s 13 of the Insolvency Act 2006 (Act) for the debtor's adjudication and the debtor has committed an act of bankruptcy.3 The requirements for a bankruptcy application are as follows:
13 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 or, if 2 or more creditors join in the application, the debtor owes a total of $1,000 or more to those creditors between them; 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.
[17] An "act of bankruptcy" includes a failure to comply with a bankruptcy notice, which is dealt with under s 17 of the Act. Section 17(1) provides:
(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
(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.
3 Insolvency Act 2006, s 11.
[18] Other than this express statutory provision, the Court has an inherent jurisdiction to set aside a bankruptcy notice.4 This jurisdiction stems from the Court’s ability to control the abuse of its process; the grounds for the exercise of this jurisdiction being:5
(a)procedural defects in the obtaining of the judgment on which the bankruptcy notice is based; and/or
(b)the existence of arguable grounds of defence to the claim for which judgment was given.
[19] The jurisdiction of the Court may also extend to any ground on which the Court feels it necessary to intervene to prevent injustice.6 However, a debtor who cannot rely on the grounds specified in s 17, who is seeking to have the Court exercise its inherent jurisdiction without impugning the underlying judgment debt, must show very special circumstances.7 Even if the Court is minded to intervene as a matter of inherent jurisdiction, it would generally do so by adjourning the debtor’s application to check the progress of any relevant appeal or review procedure.8
[20] In the present case, the challenge for the debtors is that the courts have already reviewed the default judgment, twice, and upheld it. The judgment creditor says that these applications are an offense to both res judicata and issue estoppel and are an abuse of process.
The applications to set aside the bankruptcy notices
[21] The applications to set aside the bankruptcy notices are brought under r 24.10 of the High Court Rules 2016 (HCR). They are based on three grounds, expressed as:
4 Mainzeal Property and Construction Ltd (in liq) v Yan [2019] NZHC 3145 at [11]
5 Re Wise, ex parte Benecke HC Auckland B227/95, 21 June 1995.
6 Above n 5, at 6.
7 Re Krukziener, ex parte Hanover Finance Ltd HC Auckland CIV-2007-404-2896, 12 August 2008 at [36] referring to the equivalent provision under the previous legislation Insolvency Act 1967, s 19(1)(d).
8 Weston v Ayers [2017] NZHC 3000 at [10]; and Senior Trust Capital Ltd v Holmes [2024] NZHC 2060 .
(a)the bankruptcy notices do not contain the information required by s 29(1)(b) of the Act;
(b)the bankruptcy notices are defective, in that the statement of claim did not justify a default judgment and misled the Court as to the amount of the debt; and
(c)the proposal made by the judgment debtor is a fair and reasonable one.
Ground one—the bankruptcy notices are defective for form
[22] Section 29(1) of the Act provides for the requirements of a bankruptcy notice as follows:
(1) The bankruptcy notice must—
(a)be in the prescribed form; and
(b)require the debtor, in relation to the judgment debt or the sum ordered to be paid under a final order,—
(i)to pay the amount owing, plus costs; or
(ii)to give security for the amount owing that satisfies the court or the creditor; or
(iii)to compromise the amount owing on terms that satisfy the court or the creditor; and
(c)state what are the consequences if the debtor does not comply with the notice; and
(d)be served on the debtor in the prescribed manner.
[23] The judgment debtors say that the judgment creditor’s bankruptcy notices advised them that they could:
(i)secure…with the judgment creditor;
(ii)or enter into a new formal agreement with the creditor;
(iii)or alternatively, obtain the High Court’s approval of terms of payment.
[24] The judgment debtors say that the bankruptcy notices are defective because they omitted to “advise the debtor of the prospect of a security for an amount that satisfies the Court.” They say this omission makes the bankruptcy notices defective and invalid.
[25] Section 29(1)(a) of the Act states that a bankruptcy notice must be in the prescribed form.
[26] Rule 24.8 of the HCR states that a bankruptcy notice must be in Form B 2. Form B 2 is therefore the prescribed form.
[27] The bankruptcy notices issued by the judgment creditor are in Form B 2. They comply with the Act and the HCR.
[28] The bankruptcy notices are not invalid for form. They make it clear that the Court could approve security.
[29] I decline the judgment debtors’ first ground of challenge to the bankruptcy notices.
Ground two—the bankruptcy notices are defective
[30] The judgment debtors then seek to challenge the bankruptcy notices by way of a collateral attack on the validity of the default judgment. They argue that the way the claim is pleaded could not reasonably have led to judgment in the terms granted. These arguments were rejected twice by the District Court and once by this Court.
[31] The judgment debtors say that the claim as pleaded fails to satisfy the pleading requirements to set the claim out with sufficient detail for the Court and the defendants to understand the allegations. The judgment debtors expand on that argument by making a number of criticisms of the pleading alleging that it; fails to state the amount paid by the debtors prior to the date of termination, fails to state the legal or factual basis of the damages claimed, fails to identify the relevant clauses in the hire purchase agreement and purports to import terms into the pleading by incorporation, which they allege is impermissible.
[32] I do not accept that the statement of claim fails to properly particularise the claim or contains some other defect that jeopardises its validity.
[33]There are two reasons why this argument does not succeed.
[34] First, the pleading is a claim for breach of contract under which the plaintiff seeks to recover the balance of agreed payments falling due following termination, together with other losses including costs and interest.
[35]The pleading clearly and simply sets out:
(a)the identity of the parties;
(b)the key terms of the hire purchase agreement;
(c)the liability of the judgment debtors to the judgment creditor under the hire purchase agreement;
(d)the breach by VCL;
(e)the enforcement steps taken by the judgment creditor;
(f)the consequences of breach by VCL; and
(g)the amount outstanding at the date the proceedings were commenced as a result of the breach of contract.
[36] The pleading sought damages for breach of the hire purchase agreement. The basis of the claim is an orthodox breach of contract claim seeking to recover the losses following termination. The sum sought was a liquidated sum, determined by reference to the termination value, which is the balance due under the hire purchase agreement following termination of the hire purchase agreement.
[37] The judgment creditor says the statement of claim was clear that it was “forward-looking”, meaning that it sought judgment for the remaining sum owed by VCL following termination of the hire purchase agreement.
[38] The claim seeks damages for breach of the hire purchase agreement which are calculated as the unpaid amounts due on termination, with other losses as provided for by the hire purchase agreement. That is how the parties agreed the termination value would be calculated following termination. The parties agreed that the termination value was a liquidated sum.
[39] The judgment debtors seek to propose an alternative way of articulating the judgment creditor’s claim by arguing that the amount claimed could only have been calculated as the difference between payments made and those due up to termination. They argue that there was no claim for money due upon or after termination.
[40]That is not accepted.
[41] It is apparent from the pleading that the claim sought judgment for the loss arising from the breach of contract following termination of the hire purchase agreement. The earlier payments are not relevant to that pleading other than in establishing the amount of the “termination value”.
[42] Another criticism the judgment debtors make is that the judgment creditor failed to disclose to the Court the payments made by VCL, and that the pleadings suggest only $20,000 was ever paid by VCL under the hire purchase agreement. This is incorrect.
[43] Paragraph [9] of the statement of claim makes it clear that the amount sought took into account the amount owing at termination date and gave credit to the judgment debtors (and VCL) for the subsequent payment of $20,000.
[44] For completeness I also reject a claim by the judgment debtors that the failure to account for the proceeds of sale of the equipment means that the bankruptcy notices are invalid. The judgment was correct at the time it was entered as the equipment had
not been sold. It has now been sold and the judgment creditor will need to account for that amount. It will reduce the amount outstanding. Nonetheless, that sum will still be significantly in excess of the $1000 minimum and the bankruptcy notice amount can be amended accordingly.9 This is not a reason to set aside the bankruptcy notices.
[45] The second and more significant reason why these arguments about the alleged inadequacies in the District Court pleadings do not support the application to set aside the bankruptcy notices is that the issue has been fully aired in the two previous applications to the District Court and this Court.
[46] There is a valid District Court judgment before this Court. There is no procedural irregularity.
[47] The judgment creditors submit that unless the judgment is stayed, there cannot be a substantial dispute over the debt it establishes. In Bristol Forestry Venture Ltd v Commissioner of Inland Revenue the Court stated:10
Unless a judgment of a court is set aside on further appeal, or otherwise set aside or amended according to law, it is conclusive as to the legal consequences it decides. If it were not to do so, the principle of legality would be undermined.
[48] The judgment creditor argues that by continuing to challenge the legitimacy of the judgment, the judgment debtors are committing an abuse of process by way of collateral attack on a judgment of the Court.
[49] I decline to revisit or go behind the reasoning of the District Court. The appropriate challenge to the District Court judgment was appeal or judicial review, not attacking the judgment through the vehicle of an application to set aside the bankruptcy notices.
[50]The second ground of challenge to the bankruptcy notices is declined.
9 Insolvency Act 2006, s 418.
10 Bristol Forestry Venture Ltd v Commissioner of Inland Revenue [2013] NZHC 2384 at [37]; citing
R v Smith [2003] 3 NZLR 617 (CA).
Third ground—should the Court approve a proposal by the judgment debtors as to payment which would compromise the debt?
[51] The final ground of challenge to the bankruptcy notices is that the Court should approve a proposal by the judgment debtors to pay the sum of $35,000 to the judgment creditor, which would satisfy the amount of the claim in full.
[52] This submission and the offer itself is based on a misapprehension that from the sum of $320,973.17 the judgment debtors had paid the amount of $286,850.41, and that an offer in the amount of $35,000 is reasonable.
[53] Counsel for the judgment debtors suggested that the amount outstanding was the difference between the outstanding amount following termination of $320,973.17, less the amount the judgment debtors had paid of $286,850.41. That is clearly not correct.
[54] First, the judgment debtors did not pay the sum of $286,850.41 in payment of or in satisfaction towards the payout amount sought following termination of the hire purchase agreement. That amount was paid during the life of the hire purchase agreement until its termination, not after. It did not need to be taken into account as it did not form a part of the termination value.
[55] The amount claimed by the judgment creditor following termination (the sum of $320,973.17) has not been, nor ever was paid by VCL or the judgment debtors.
[56] Secondly, the Court of Appeal made it clear in Commissioner of Inland Revenue v Wilson that the Court did not have the power to approve a compromise against the wishes of the judgment creditor.11
[57] In seeking to approve such a compromise the views of the creditors would be taken into account. Here, the judgment creditor disapproves and does not accept
$35,000 in full satisfaction of the amount outstanding. There is therefore no
11 Commissioner of Inland Revenue v Wilson [2017] NZCA 100, [2017] NZCCLR 12 at [30].
jurisdiction to impose on the judgment creditors an unsatisfactory compromise, and this ground of opposition to the bankruptcy notices also fails.
Decision
[58]The application to set aside the bankruptcy notices is declined.
[59] The judgment creditor is entitled to seek to bankrupt the judgment debtors upon filing of the necessary bankruptcy proceedings.
Costs
[60] The judgment creditor has indicated an intention to seek indemnity costs and costs against counsel. The judgment debtors seek to be heard on that issue.
[61] I direct that the judgment creditor’s memorandum as to costs is to be filed and served within 10 working days of the date of this judgment.
[62] The judgment debtors’ response to that claim for costs is to be filed and served within a further 10 working days of receipt of the judgment creditor’s submissions on costs.
[63] Both parties’ submissions as to costs are to be set out in memoranda of no more than five pages (including attachments).
[64]A decision on costs will be made on the papers.
Associate Judge Cogswell
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