Ellis v Johnson - [2017] NZHC 348

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-2389 [2017] NZHC 348

IN THE MATTER of the Insolvency Act 2006

IN THE MATTER

of the Bankruptcy of Richard Owen
Johnson

BETWEEN

TAMARIE VELVET ELLIS Judgment Creditor

AND

RICHARD OWEN JOHNSON Judgment Debtor

Hearing: 10 February 2017

Appearances:

R C Knight and T Chubb for Judgment Creditor
J B Murray for Judgment Debtor

Judgment:

7 March 2017

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE [Interim judgment]

This judgment was delivered by me on
07.03.17 at 10 a.m, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

ELLIS v JOHNSON [2017] NZHC 348 [7 March 2017]

[1] The plaintiff is a New Zealand citizen who resides in New Zealand. The defendant was born in the United States of America, and is a citizen and resident of that country. After marrying and living in the United States, the parties lived in New Zealand until their relationship ended. Mr Johnson, the defendant, then returned to the United States. The parties have been engaged in lengthy and rancorous disputes concerning relationship property and other matters. There have already been a number of decisions given by the High Court.

[2] The decision of Courtney J in Re Ellis, ex parte Johnson was the first.1 This was an application for an order pursuant to s 55 of the Judicature Act 1908 for an order to arrest and imprison a defendant. Mr Johnson came to New Zealand for the primary purpose of visiting the couple’s children in September 2016. Shortly before Mr Johnson returned to the United States in late September, an application was made for his arrest. It was declined. While it is relevant background, it needs to be remembered that the material matters that an applicant for an arrest order in such a case has are quite different from those which are engaged when considering whether or not the departure of the party to the civil proceeding committed an act of bankruptcy by leaving New Zealand. The differences are so apparent that I do not intend to spend time discussing them further. The judgment of Courtney J therefore does not provide any assistance in the context of this case.

[3] The next judgment was that of Asher J in Johnson v Johnson.2 In that case, the Court was concerned with an application that Ms Ellis had filed for orders relating to matrimonial property. Mr Johnson applied for an order staying those proceedings. In essence, the parties had assets both in New Zealand and Oregon. If determined by a New Zealand Court, the Property (Relationships) Act 1976 (“PRA”) would govern those assets. Mr Johnson argued that the New Zealand Court should not determine issues relating to most of the PRA assets because the parties’ claims to those assets had already been determined by the Circuit Court of the State of Oregon. He claimed issue estoppel applied.

[4] The Judge did not accept the arguments put forward by Mr Johnson. His conclusion…

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: [2017] NZHC 348
Decision Date: 7 March 2017

CaseChat Overview and Summary

Ellis v Johnson [2017] NZHC 348 involved a case where Tamarie Ellis, a New Zealand citizen, sought to enforce a judgment against Richard Owen Johnson, an American citizen who had previously resided in New Zealand. The primary dispute centred on whether Johnson's departure from New Zealand constituted an act of bankruptcy, as defined under the Insolvency Act 2006. Johnson left New Zealand on 27 September 2016, shortly after being served with a bankruptcy notice on 26 September 2016, which demanded payment of a debt Ellis was owed by Johnson. The legal issues before the court were whether Johnson's departure from New Zealand constituted an act of bankruptcy, and if the impending appeal against the judgment affecting Johnson's debtor status should affect the adjudication proceedings.

The court found that Johnson's departure, even if intended to return to his home in the United States, had the effect of delaying or defeating Ellis's creditor rights. Despite Johnson's counsel arguing that his client's intent was not to defeat or delay creditors, the court considered the evidence showing Johnson's past actions to obstruct Ellis's claims and hide assets. The court held that Johnson's knowledge of the impending legal processes and his failure to take steps to address his obligations meant that he must have known his departure would hinder Ellis's execution of the judgment. This was sufficient to establish the necessary intent under the Insolvency Act 2006. However, given the impending appeal against the underlying judgment, the court decided to stay the adjudication proceedings to protect Johnson's rights in case the appeal reversed the debt. The stay order was set to take effect from the date of the judgment.

Orders