Goodwin v Copland - [2015] NZHC 213

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2013-412-000124 [2015] NZHC 213

BETWEEN
WAYNE ERNEST GOODWIN

Plaintiff

AND

BRIAN STEWART COPLAND Defendant

Judgment: 19 February 2015

JUDGMENT OF GENDALL J (Dealt with on the papers)

Issue

[1] Pursuant to a memorandum dated 19 January 2015 filed in this proceeding, the Official Assignee seeks a direction on the question of:

Whether, in light of s 102 of the [Insolvency] Act [2006], a claim that has vested in the Assignee pursuant to s 101 of the Act (being one that the Assignee could properly pursue for the benefit of creditors) could effectively be assigned to the bankrupt during his or her term of bankruptcy.

Background

[2] The facts giving rise to the claim are not important to the question itself but are summarised below to give context.

[3] Mr Goodwin, the plaintiff, was adjudicated bankrupt on 28 March 2013. The present question arises as a result of this bankruptcy.

[4] The bankruptcy arose, as I understand it, out of a signed memorandum settling a proceeding brought by a Mr Copland against Mr Goodwin. The memorandum required Mr Goodwin to pay Mr Copland two sums of money: US$465,000 due by 29 September 2006 and NZ$30,000, for costs, due by 31 August
2006. Failure to meet these obligations meant that an admission of claim signed by

GOODWIN v COPLAND [2015] NZHC 213 [19 February 2015]

Mr Goodwin would be filed in the High Court. In return, Mr Copland was required to cause a defamatory reference about Mr Goodwin to be removed from the website “fraudandscams.com”.

[5] On the 11 October 2006, due to failure on the part of Mr Goodwin to meet these obligations, the Court entered judgement against Mr Goodwin for both sums on the basis of the admission.

[6] Mr Copland then applied for the issue of a bankruptcy notice and brought a bankruptcy application. On 15 August, on the basis that Mr Goodwin failed to comply with the requirements of the bankruptcy notice, Mr Copland applied for an order adjudicated Mr Goodwin bankrupt.

[7] Mr Goodwin opposed the adjudication of bankruptcy. On 28 March 2013, Associate Judge Matthews declined this opposition and adjudicated Mr Goodwin Bankrupt.1

[8] Mr Goodwin claimed that the defamatory references on the website were only temporarily removed which breached an essential term of the contract or alternatively reduced the effect of the contract substantially. As a result, Mr Goodwin sought to cancel the contract on 30 April 2012, notice of which was given to Mr Copland’s solicitors.

[9] Mr Goodwin seeks a declaration that the contract was properly cancelled and cannot be enforced, a declaration that Mr Copland is not entitled to pursue this bankruptcy application on the basis of the admission of judgement signed as part of the settlement, and damages under four headings.

[10] It is this claim that is the subject of the above question.

Relevant Law

[11] The present question primarily deals with the function of s 102 of the

Insolvency Act…

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.

Continue reading Goodwin v Copland

Details

AGLC: Goodwin v Copland [2015] NZHC 213
Case: [2015] NZHC 213
Decision Date: 19 February 2015

CaseChat Overview and Summary

Goodwin v Copland was a case decided by the High Court of New Zealand in which the Official Assignee sought a direction on the question of whether a claim that had vested in the Assignee could be assigned to the bankrupt. The case arose out of a signed memorandum settling a proceeding brought by Mr Copland against Mr Goodwin, which required Mr Goodwin to pay Mr Copland two sums of money. The present question arose as a result of Mr Goodwin's bankruptcy. The court was required to decide whether an assignment of a right to sue to the bankrupt would be effective if an appropriate application on notice for Court approval was first made by the Assignee or the bankrupt and succeeded in terms of s 221 of the Act. Alternatively, the Assignee could disclaim the action and then the bankrupt could apply to the Court to have the disclaimed action vested in the bankrupt.

The court reasoned that the automatic vesting of property in the Assignee, as provided for in s 102 of the Insolvency Act 2006, was subject to certain exemptions, including the exemption for property vested in the bankrupt under an order made pursuant to s 119(3) of the Act. The court noted that the circular process of automatic re-vesting was specifically contemplated during the legislative process and Parliament only saw fit to include the exemption for disclaimed property. The court also considered Australian case law, which highlighted the policy issues of preventing the dissipation of estate property and avoiding further risk and irrecoverable costs for defendants. However, the court noted that Parliament had made clear when an assignment would be effective in New Zealand. The court concluded that an assignment of a right to sue to the bankrupt would be effective if an appropriate application on notice for Court approval was first made by the Assignee or the bankrupt and succeeded in terms of s 221 of the Act. Alternatively, the Assignee could disclaim the action and then the bankrupt could apply to the Court to have the disclaimed action vested in the bankrupt.

The court's decision provided clarity on the issue of assigning a right to sue to a bankrupt during their term of bankruptcy. It provided two potential avenues for the Assignee to assign a right to sue to the bankrupt: either by making an appropriate application on notice for Court approval in terms of s 221 of the Act, or by disclaiming the action and then allowing the bankrupt to apply to the Court to have the disclaimed action vested in the bankrupt. This decision provided guidance to practitioners dealing with similar issues in the future.

Orders