De Vries v Bartercard Exchange Limited
[2017] NZHC 2625
•26 October 2017
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE WHANGANUI-Ā-TARA ROHE
CIV 2017-485-425 [2017] NZHC 2625
BETWEEN ANTHONY HARRY DE VRIES
Appellant
AND
BARTERCARD EXCHANGE LIMITED Respondent
Hearing: 24 October 2017 Counsel:
Appellant in Person
D G Dewar for RespondentJudgment:
26 October 2017
JUDGMENT OF ELLIS J
[1] Mr de Vries appeals Judge Tompkins’ December 2016 decision declining his
application to set aside two judgments entered against him by default in 2011.1
Background
[2] On 22 September 2011 Bartercard Exchange Ltd (Bartercard) obtained two debt judgments against Mr de Vries in the Hutt Valley District Court. The first was for was for $179,772.42, and the second was for $170,308.56.2 Mr de Vries had taken
no steps to oppose the claims. Hence judgment was entered on each by default.
1 de Vries v Bartercard New Zealand Ltd [2016] NZDC 24811.
2 Respectively, Bartercard New Zealand Ltd v de Vries DC Auckland CIV-2011-32-396, 22
September 2011; and Bartercard New Zealand Ltd v de Vries DC Auckland CIV-2011-32-387,
22 September 2011.
DE VRIES v BARTERCARD EXCHANGE LTD [2017] NZHC 2625 [26 October 2017]
[3] The former judgment related to obligations incurred by Mr de Vries as guarantor of a company called Zoom Zoom Properties Ltd, which was put into liquidation on 12 July 2011. The latter related to Mr de Vries’ indebtedness as guarantor of a related company, Zoom Zoom Ltd, which was also put into liquidation in July 2011.
[4] Following entry of the judgments, Bartercard applied for an order for examination of Mr de Vries as to his means. That examination was conducted before a deputy registrar in the Lower Hutt District Court on 28 May 2012. In a formal report dated 30 May 2012, the Deputy Registrar recorded that, after assessing Mr de Vries’ income, expenditure, assets and liabilities, no order would be made. Mr de Vries was said to be unemployed and living on redundancy pay, and it was determined that he would be unable to meet any order for payment of the debt by instalments as he did not then have any income.3
[5] Since 2011 Mr de Vries has made a number of payments on account of the debts, although an offer by Bartercard to establish a formal monthly repayment arrangement had been declined by him on 12 April 2011. His co-guarantor, Mr Rogers, did agree to enter such an arrangement and payments were made by him pursuant to it until (as I understand it) sometime in 2015.4 Steps have subsequently been taken by Bartercard to have Mr Rogers adjudicated bankrupt, too.
[6] In 2013, Bartercard registered a charging order against a property in Lower Hutt registered in the name of Mr de Vries and his wife. Bartercard attempted to enforce that charging order in proceedings filed in this Court. Those proceedings were subsequently discontinued without an order for sale being made, as it was learned that that property was held by Mr and Mrs de Vries as trustees. The debt
owed by Mr de Vries to Bartercard is owed by him personally.
3 Mr de Vries asserted at a hearing before Smith AJ in December 2015 that the deputy registrar also accepted that the amount of the District Court judgment entered against Mr de Vries was incorrect. However, that was not accepted by Bartercard, and no record of it was produced before Smith AJ. There was no suggestion that Mr de Vries had ever taken any step to have the alleged error or errors in the judgment corrected: Bartercard Exchange Ltd v de Vries [2016] NZHC 703 at [9].
4 See de Vries v Bartercard Exchange Ltd [2016] NZHC 2874 at [54]–[55].
[7] On 24 February 2014 Mr de Vries and his wife were advised by his (then) lawyer that the notice of discontinuance had been received and that he was awaiting confirmation that the charging order had been taken off the title to the trust property. He also said that he had been advised that Bartercard “have agreed to our current proposal to settle this claim”.5 No settlement eventuated.
[8] For whatever reason, Bartercard appears to have taken no steps against Mr de Vries for another 18 months until, on 30 September 2015, Mr de Vries was served with a bankruptcy notice. The unpaid debt upon which the bankruptcy notice was predicated was said to be in the amount of $179,630.72.
[9] Mr de Vries did not pay the amount claimed in the bankruptcy notice. He did not secure it or enter into any formal agreement with Bartercard. He did not seek the High Court’s approval for terms of payment. Nor did he file any application to set aside the bankruptcy notice. And so, on 5 November 2015, Bartercard filed an application for an adjudication order.
[10] When Bartercard’s application for adjudication was called on 1 December
2015, Body Corporate 68792 (with whom Mr de Vries has been engaged in a longstanding but separate dispute) appeared to support it. The Body Corporate claimed that Mr de Vries owes it approximately $167,000. Associate Judge Smith subsequently noted, however, that:6
At this stage, I am not concerned with the claims of the Body Corporate, as it
has not been substituted as creditor under s 44 of the Insolvency Act 2006…
[11] On 9 December 2015, the application for adjudication was heard by the Associate Judge. The application was opposed by Mr de Vries on the grounds (inter alia) that the 2011 District Court default judgments should be set aside or stayed. On
15 April 2016, the Associate Judge issued a decision in which he declined
jurisdiction in relation to those matters, saying:7
5 This email was included in a bundle of “new evidence” which Mr de Vries wished to adduce in this appeal. Notwithstanding Mr Dewar’s objection to that evidence, I am prepared to take it into account.
6 Bartercard Exchange Ltd v de Vries, above n 3, at [7].
7 At [22]-[26].
[22] It is not possible for this Court, sitting in its bankruptcy jurisdiction, to set aside the judgments made in the District Court. If Mr de Vries was unhappy with those judgments, he could have filed an appeal or appeals, or applied to the District Court to have the judgments set aside if he considered that the circumstances justified such an application. He has had over four years to take one of those steps, and has not done so. In those circumstances there is no basis for the orders which Mr de Vries seeks under the High Court Rules, setting aside the District Court judgments.
[23] Nor am I prepared to make orders under r 17.29 or r 17.30 of the High Court Rules, staying enforcement of the District Court judgments, or staying any enforcement process. First, an “enforcement process” is defined in the High Court Rules as including various orders. An application for an adjudication order does not come within the definition.
[24] In any event, it would not be appropriate for this Court to make any order staying enforcement of the District Court judgments. While this Court has jurisdiction to stay, or “halt”, a bankruptcy adjudication proceeding in an appropriate case, any application to stay the District Court judgments should have been made to the District Court.
[25] Even if r 17.29 did permit this Court to direct a stay by enforcement of a judgment of the District Court, the rule requires the judgment debtor to show that a “substantial miscarriage of justice” would be likely to result if the judgment were enforced. In this case Mr de Vries has had over four years to appeal the District Court judgments, or attempt to have them set aside. He has not taken any such steps, and he has not offered any credible explanation for his failure to do so. On the contrary, he has made a number of instalment payments to Bartercard, presumably on the basis that there are valid debts owing.
[26] The combination of (i) over four years’ delay since the judgments were entered and (ii) the making of payments on account, persuades me that there is no basis for the Court to halt or adjourn this proceeding to permit Mr de Vries to challenge the merits of the District Court judgments. The result is that Mr de Vries’ arguments based on matters in dispute between himself and Bartercard prior to the District Court judgments cannot now be entertained in this proceeding.
[12] But the Judge did nonetheless decline the application for adjudication, on the grounds that that the amount claimed in the bankruptcy notice was overstated and that the notice was therefore invalid (and could not be rectified under s 418 of the Insolvency Act 2006). At the conclusion of his judgment the Associate Judge said:8
Finally, I record that Mr de Vries’ liability under the two judgments entered against him in 2011 remains unaffected: nothing in this judgment precludes Bartercard from issuing a further bankruptcy notice against Mr de Vries based on one of those judgments if it wishes to do so.
8 At [85].
[13] A chronology of what then followed is:
(a) on 17 June 2016 Bartercard filed and served another bankruptcy notice;
(b)on 15 July 2016 Mr de Vries’ lawyer telephoned and wrote to Bartercard’s barrister (Mr St John) saying that Mr de Vries had a settlement proposal to discuss. No reply was received to that or to subsequent follow up communications;
(c) on 19 July 2016 Mr de Vries applied to have the bankruptcy notice set aside;
(d)on 21 July 2016 Judge Tompkins granted Mr de Vries a stay of execution of the 2011 judgments in the District Court. The stay was expressed to expire on 22 August 2016 (a point subsequently reaffirmed by the Judge);
(e) on 5 September 2016 Mr de Vries filed an application in the District
Court to have the 2011 judgments set aside;
(f) on 25 November 2016 Bartercard notified that it had changed its solicitors to Messrs Dewar and Anderson of Thomas Dewar Sziranyi Letts;9
(g) on 30 November 2016 Associate Judge Smith dismissed Mr de Vries’
application to have to the bankruptcy notice set aside;10
(h) on 5 December 2016 Judge Tompkins declined Mr de Vries’
application to set aside the 2011 judgments;
(i) on 9 December 2016, a second application for adjudication was filed;
9 Mr Anderson had appeared for Bartercard at the October 2016 hearing before Associate
Judge Smith.
10 Bartercard New Zealand Ltd v de Vries, above n 4.
(j) on 23 December 2016 Mr de Vries filed an appeal against Associate
Judge Smith’s 30 November decision;
(k)on 24 April 2017, the High Court adjourned the bankruptcy proceeding pending determination of that appeal and on 19 May 2017 the High Court vacated the fixture;
(l)on 28 April 2017 Miller J in the Court of Appeal dismissed Mr de Vries’ application for a review of the Deputy Registrar’s refusal to waive the filing fee for his appeal but allowed him further to time to apply for a dispensation of security for costs;
(m)on 30 May 2017, the Court of Appeal granted Mr de Vries an extension of time for paying security for costs in the appeal;
(n)in August 2017, there were two further adjournments of the bankruptcy matter;
(o)on 6 September 2017 Asher J for the Court of Appeal refused to review Miller J’s earlier fee waiver decision for want of jurisdiction; and
(p) on 9 September 2017 Mr de Vries’ appeal to the Court of Appeal was
deemed abandoned due to his non-payment of security for costs.
The application to set aside
[14] In determining whether to set aside the 2011 judgments Judge Tompkins identified and then considered the factors routinely regarded as relevant to the exercise of discretion to set aside or vary a judgment under r 15.10 of the District Court Rules, namely whether:11
(a) the delay (in responding to the original claim) has been reasonably explained;
11 As set out in Russell v Cox [1983] NZLR 654 (CA) at 659.
(b) a substantial ground of defence has been disclosed; and
(c) the plaintiffs will suffer irreparable injury if the judgment is set aside. [15] The Judge’s conclusions on all three matters can usefully set out in full. He
said:
[9] I have concluded that Mr De Vries fails on all three grounds. I cannot discern, just as Smith J could not discern, that there is a substantial ground of defence to the original two judgments. There is no challenge to the original contract of guarantee, nor indeed is the challenge to the fact of the debts owed by the two companies whose indebtedness Mr De Vries guaranteed and indeed, who were put into voluntary liquidation on Mr De Vries’ own application. The repeated but unsupported assertion simply that Mr De Vries was under substantial stress at the time of the initial judgments is no ground of defence, nor indeed does it explain the substantial delay that followed.12
[10] As Mr Anderson noted in his submissions, after the entry of judgments, Mr De Vries both attended an examination as to his means and was able successfully to rebuff an attempt by Bartercard to enforce its judgments against the residential property owned, as it turned out, by a family trust. There was no assertion during any of those enforcement steps that there was a reasonable explanation for the omission at any time during those years to challenge the original entry of the two judgments.
[11] Lastly, I am satisfied that if the judgments are now set aside, that Bartercard will suffer irreparable injury given both the long history of this matter and, as confirmed in very recent days by the High Court and after, as Mr Anderson put it, every conceivable credit has been allowed, there has been an act of bankruptcy committed by Mr De Vries. The irreparable injury is clearly that if the judgments are now set aside, that committing of an act of bankruptcy, as confirmed by the High Court, will have been a waste of time and cost on the part of the judgment creditor.
The appeal
[16] As far as delay is concerned, Mr de Vries maintained his position on appeal that it was stress that had caused his initial failure to contest the debt proceedings or to recognise their significance. But in terms of any later failure to act, he also said
that:
12 Mr De Vries’ assertion of inaction due to stress had been noted by Associate Judge Smith in his
April 2016 judgment, above n 3, when he said (at [17]):
Mr de Vries did not defend either of the District Court proceedings. He says that he was under severe stress at the time dealing with a number of unrelated problems, and that he did not realise at the time that Bartercard would claim the full amount for which it obtained judgment. He also says that he did not fully understand afterwards that Bartercard had obtained two judgments against him.
(a) he believed that the discontinuance of the 2013 proceedings
(concerning the house) had brought all matters to an end; and
(b) he felt affirmed in that view by the fact that Bartercard took no further steps against him for 18 months following that discontinuance.
[17] Next, and in terms of any defence to the debt proceedings, he submitted that he did challenge the validity of the guarantees (or at least their effect) and that Judge Tompkins had wrongly failed to appreciate that. More particularly, he said that the guarantee was a “cross guarantee” (rather than a personal guarantee) that required Bartercard to make every attempt to recover the amounts owing from the member companies in default, before pursuing the guarantors. This was supported (he said) by his (undisputed) crossing out of the last clause of the guarantee, which stated “THAT Bartercard shall be entitled to recover from the Guarantor/s without first taking any steps of proceedings against the Members”. He also said that he and his wife had disputed the quantum of the debt on numerous occasions with Bartercard prior to 2015 and continued to do so.
[18] And lastly, he submitted that Bartercard had suffered no irreparable damage because Bartercard’s lending credits (which gave rise to the debt) have no cost to them and that Bartercard was attempting to “double dip”. As well as casting aspersions on the Bartercard system more generally he relied, in particular, to the “overcharging” miscalculation of the debt owed which had led to Associate Judge Smith declining the first application for adjudication.
Discussion
[19] There is a dispute about whether some or all of the points I have summarised above can properly be considered on appeal. Mr Dewar says that they were not (as a matter of fact and/or law) put before the District Court. Objection is also taken to any attempt by Mr de Vries to refer to “new” evidence, by which I mean evidence that was not before Judge Tompkins, although some of that evidence related to matters which are matters of public record (such as judgments of this Court).
[20] But I do not propose to deal with the matter on that basis. As Judge Tompkins decision made clear, he was presented with “voluminous” and “tangential” arguments made by Mr de Vries and a large amount of irrelevant material relating (amongst other things) to the Body Corporate dispute and Mr de Vries’ resulting personal animus against Mr Dewar, who is the Body Corporate’s legal advisor.
[21] By contrast, Mr de Vries was both focused and clear in his arguments on appeal before me. In his oral submissions, he largely managed to steer clear of potentially confusing and inflammatory side issues. And he was able to show me parts of the material he had filed in the District Court that did bear some relationship to the points he now advances; for me to determine what was or was not before Judge Tompkins strikes me as an exercise in futility. So, I prefer to deal with the matter on the merits, as best I can. The issue is, therefore, whether Mr de Vries has managed to demonstrate that Judge Tompkins decision was wrong in some material respect.
[22] As far as delay is concerned Mr de Vries faces real difficulty. Even if I were to accept (without substantiating evidence) that Mr de Vries’ mental state in 2011 was such that he did not have the wherewithal to takes steps to defend the debt proceedings, the subsequent four year delay is hugely problematic for him.
[23] First, the undeniable reality is that he took no steps to challenge the judgments even when he must have known that enforcement steps were being taken. That was evidenced at an early stage (for example) by the examination process.
[24] Secondly, even if he was (rightly) of the view that his house was immune he cannot reasonably have thought that establishing that would make his personal debt disappear. The fact that it would not was made quite clear by his lawyer’s letter to which I have referred at [7] above and which refers in clear terms to a potential settlement of the “claim” against him, notwithstanding that discontinuance.
[25] Thirdly, as the schedule of payments annexed to Mr Chetty’s affidavit shows, these continued to be made by Mr de Vries (or one of his companies) in the post discontinuance period. Although Mr de Vries has disputed and continues to dispute the precise quantification of the debt that dispute relates primarily to the extent to which the repayments he has made have been properly recognised. Putting to one side his wider complaints about the Bartercard business, he has never (until now) disputed the fact of his indebtedness. The chronology I have outlined above gives rise to a reasonable inference that it was the threat of bankruptcy which galvanised Mr de Vries into action, not some late realisation that he had a defence to the underlying debt proceedings.
[26] As far as the existence of a substantial ground of defence is concerned Mr de Vries has been unable to persuade me that one exists. Despite what he says, the guarantee document is clear on its face. It is not a cross-guarantee; it is a personal guarantee by Mr de Vries and Mr Rogers, who are jointly and severally liable under it. Notwithstanding the crossing out of the last clause noted above I am unable to see anything that precludes Bartercard pursuing the guarantors rather than the members. As Mr Dewar submitted, Mr de Vries would, in any event, have subrogation rights, at least as against those members who remain solvent. And as both Associate Judge Smith and Judge Tompkins have noted, the fact that Mr de Vries and/or his companies have in fact made payments until late 2015 strongly suggests that until recently they, too, have accepted their indebtedness. The record makes it clear that for much of that period Mr de Vries has had advice from able commercial lawyers.
[27] Lastly, there is the issue of irreparable damage. That point is, in many ways, inseparable from the first two. If Bartercard has a valid judgment debt to which there is no clear basis for challenge, there is obvious prejudice in the fact that it remains outstanding after so long. The Bartercard rules (a copy of which were provided to me by Mr de Vries) provide at cl 3.1 a “Trade Dollar” is equivalent to one New Zealand dollar but are not “legal tender, securities, debentures, or commodities.” But cl 3.4(b) of the rules also makes it clear that a member’s Trade Dollars debit balance is payable to Bartercard in New Zealand dollar cash. But in any event, it is simply not possible, in the present limited context and on the
available evidence, to engage with Mr de Vries’ wider submission that the whole Bartercard operation is some kind of scam. On the face of the documents before me, a valid debt is owed and that debt has been owing for six years. Requiring Bartercard to “begin again” (which would be the effect of any setting aside) would, by definition, cause significant harm.
Conclusion
[28] As noted earlier, Mr de Vries’ submissions before me were lucid and to the point. But they did not disclose any basis upon which I could interfere with Judge Tompkins’ decision. Even on the most charitable approach (which is the approach I have attempted to take) I am unable to discern that any miscarriage or possible miscarriage of justice is likely if the 2011 judgments are not set aside.
[29] The appeal is dismissed accordingly. Bartercard is entitled to 2B costs.
Rebecca Ellis J
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