Gough Gough & Hamer Limited v Taylor

[2015] NZHC 270

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV2014-404-002045 [2015] NZHC 270

BETWEEN

GOUGH GOUGH & HAMER LIMITED

Judgment Creditor

AND

MARK CLAYTON LENNOX TAYLOR Judgment Debtor

Hearing:	25 February 2015
Appearances:	BMK Pamatatau for the Judgment Creditor Mark Taylor in person the Judgment Debtor
Judgment:	25 February 2015

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on

25.02.15 at 4:30pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

GOUGH GOUGH & HAMER LIMITED v MCL TAYLOR [2015] NZHC 270 [25 February 2015]

[1]      Mr Taylor applies to set aside the bankruptcy notice served upon him.  The application is opposed.

[2]      On 5 May 2014 the judgment creditor obtained judgment against Mr Taylor in the sum of $8,662.04 inclusive of interest and collection costs.

[3]      Since then the judgment creditor has served a bankruptcy notice upon Mr

Taylor.

[4]      Substituted service was required and an order of the Court permitted service to be effected upon an adult occupant at 5/36 Polygon Road, St Heliers, Auckland.

[5]      Substituted service was effected by delivery of the documents to Mr Taylor’s

mother.

[6]      In his application to set aside Mr Taylor deposes that the debt was not his but that of his company Quick Express Logics Limited (the company) and he says he provided no personal guarantee of the indebtedness.

[7]      He also says that the amount owed by the company was subject to a formal creditors compromise passed at a meeting on 28 February 2013 in accordance with schedule 5 of the Companies Act 1993 and was approved by a vote of 83.5 per cent, reducing the judgment creditor’s debt to 40 cents in the dollar to $1,824.90.

[8]      In opposition to the setting aside application Mr Clapp the group creditor manager of the judgment creditor has sworn an affidavit.

[9]      Mr Clapp confirms the debt was incurred by Mr Taylor’s company.  He said it was personally guaranteed by Mr Taylor.   The copy of the guarantee in question dated 18 September 2012 is attached to Mr Clapp’s affidavit.

[10]     Mr Clapp deposes that when the company fell behind with payments an arrangement was agreed to enable arrears to be paid over time.  That arrangement, recorded in writing, was signed by Mr Taylor.

[11]     Mr Clapp says the sum of $4,000 was received pursuant to that arrangement leaving just $826.08 outstanding but that since then the company incurred further

debt in the sum of $3,736.17.  The total debt owing of $4,562.25 was the amount

owing when the company’s creditor scheme of arrangement was established.

[12]     The  judgment  creditor  abstained  from  voting  at  the  creditor’s  meeting

preferring to pursue recovery under Mr Taylor’s guarantee.

[13]     Although advised the company scheme of arrangement would return the sum of $1,824.90 to the judgment creditor at the monthly rate of $152.08, no payments pursuant to the scheme of arrangement were received.

[14]     The District Court proceedings against Mr Taylor were issued in May 2013. The sum of $4,562.25 was sought plus interest, plus debt collection costs and Court costs.

[15]     Judgment was entered a year later for the sum of $8,505.72.

[16]   Mr Clapp says nothing has been received pursuant to the scheme of arrangement.

[17]     Mr Taylor’s case is that following the creditor’s meeting, notice of which had been provided to the judgment creditor, the company sent a letter to the judgment creditor requesting its signature to an Agreement to Compromise the Debt form sent with the letter. The judgment creditor neither signed nor returned the form.

[18]     Mr Taylor’s position is that there was no payment because the judgment creditor had not agreed to receive any pursuant to the scheme of arrangement.

[19]     In his submissions Mr Taylor “challenges” the judgment creditor to act in

Good Faith” and agree to the “creditor’s compromise”.

[20]     He says it is in the best interest of all parties to allow him to continue to trade and to pay the “creditor’s compromise” otherwise he will be forced to close the business to lay off staff and to face unemployment.

[21]     Mr Taylor says the major assets of the business are under finance and he is personally indebted himself to clear those obligations.  He says he has no real estate property or assets of real value.

[22]     Mr Taylor explains that the notice of claim was on his behalf served on his mother, but she did not then pass it on to him.  He was unaware of the District Court claim.

[23]     Mr Taylor offers the sum of $2,000 in settlement.

Considerations

[24]     Service of a bankruptcy notice is in part about providing a proven debtor with an opportunity to pay the debt  Applications to set aside bankruptcy notices usually involve challenges to the judgment obtained including that the judgment was irregularly obtained.

[25]     Applications to set aside bankruptcy notices are not about inviting the Court to exercise its discretion not to order a bankruptcy.   That discretion is for consideration if a bankruptcy application is later filed.

[26]     Mr Taylor does not dispute the judgment obtained against him.  He queries why the judgment debtor did not participate in the creditor scheme arranged with other creditors of his company.   But, that was the judgment creditor’s choice and understandably so because they held Mr Taylor’s guarantee for the full debt and not for a compromised amount.

[27]     Mr Taylor raises issues of hardship if he were to be adjudicated bankrupt. But, these are not matters for consideration upon his setting aside application.

Judgment

[28]     The application to set aside the bankruptcy notice is dismissed.

[29]     Costs are awarded  to the judgment creditor on a 1A basis together with disbursements of $160, being a total of $2,602.00.

Associate Judge Christiansen