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Hair v Schmidt

Hair v Schmidt

Case [2014] NZHC 2476 24 September 2014

Bankruptcy Notices

Finality of Costs Orders

Interest on Judgment Debts

Cross-Claims Under Insolvency Act

Insolvency Law

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-1038
CIV-2014-404-1039
CIV-2014-404-1041

CIV-2014-404-1925 [2014] NZHC 2476

UNDER the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of Taylor Jade Smith
(also known as Linda Ash)

BETWEEN

NOEL HAIR Judgment Creditor

AND

TAYLOR JADE SCHMIDT Judgment Debtor

Hearing: 24 September 2014

Counsel:

NW Woods and SG Rhind for judgment creditor
AJ Woodhouse for judgment debtor

Judgment:

24 September 2014

(ORAL) INTERIM JUDGMENT OF ASSOCIATE JUDGE BELL

Solicitors: Rice Craig, Auckland
Woodhouse Law, Auckland

Hair v Schmidt [2014] NZHC 2476 [24 September 2014]

[1] Mrs Schmidt has applied to set aside four bankruptcy notices. As a preliminary matter, following the decision of Heath J in Balzat v Zhang,1 I am hearing these applications in court. I am not hearing them in chambers. I will repeat this at the end of the decision so that there is no confusion about this.2

[2] Mr Hair’s bankruptcy notices are these:

(a) In CIV-2014-404-1038 for $12,558.20. The notice, issued on 2 May

2014, is based on an order for costs made by Heath J in Schmidt v Ebada Property Investments Ltd.3 Heath J gave Mr Hair, the third defendant, summary judgment against Mr and Mrs Schmidt as plaintiffs;

(b) In CIV-2014-404-1039 for $3,290. The notice issued, on 23 May

2014, is based on an order for costs I made in CIV-2010-404-7389. In that case, Mrs Schmidt had applied under s 145A of the Land Transfer Act 1952 to sustain a caveat. I dismissed her application and ordered costs in favour of Mr Hair;

(c) In CIV-2014-404-1041 the amount appearing on the bankruptcy notice, issued on 23 May 2014, is $6,764.37. The notice is based on a costs order made by Miller J on 3 May 2011 in CIV-2010-404-6804. In that decision he dismissed an application by Mr and Mrs Schmidt for leave to appeal against a decision of the District Court on an appeal from the Tenancy Tribunal under the Residential Tenancies Act
1986. As I will show later in this judgment, the amount in the bankruptcy notice is incorrect. It will be necessary to establish how
much is actually payable under the costs order of Miller J; and

1      Balzat v Zhang HC Auckland CIV-2009-404-1923, 22 September 2009.
2      I say this because some people have difficulty reading those parts of my judgments where I state that the matter has been heard in Court. See Wati v Sharma HC Auckland CIV-2008-404-6367,
9 March 2011, paragraph 1, second sentence and Sharma v Wati [2012] NZCA 195, paragraph
17(d).
3      Schmidt v Ebada Property Investments Ltd HC Auckland CIV-2011-404-4752, 25 November
2011.

(d)In CIV-2014-404-1925 for $3,564. That is the amount of a costs order of the Court of Appeal, dismissing an application by Mr and Mrs Schmidt for special leave to appeal from the judgment of Miller J. That bankruptcy notice was issued on 6 August 2014.

[3] I am advised that there is a fifth bankruptcy notice which has been issued and recently…

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 Hair v Schmidt

Details

AGLC: Hair v Schmidt [2014] NZHC 2476
Case: [2014] NZHC 2476
Decision Date: 24 September 2014

CaseChat Overview and Summary

Mrs Schmidt has applied to set aside four bankruptcy notices issued by Mr Hair, a judgment creditor, against her, the judgment debtor. The notices are based on various costs orders made in different proceedings between the parties. The High Court heard the applications together, given the overlapping issues and evidence. The court considered whether the costs orders were final, whether the amounts stated in the notices were correct, whether interest should be paid on the amounts, whether security should be offered, and most importantly, whether Mrs Schmidt had a cross-claim under the Insolvency Act that exceeded the costs orders and could be used to defeat the bankruptcy notices. The court found that while some of the issues could be resolved, the key cross-claim issue needed to await the outcome of Mrs Schmidt's appeal against earlier court decisions before a final determination could be made on setting aside the notices. The court gave provisional views on some aspects of the cross-claim argument but emphasised that its decision would defer to the Court of Appeal's ultimate ruling on the appeal.

The parties are Mrs Schmidt, the judgment debtor, and Mr Hair, the judgment creditor. Four bankruptcy notices have been issued by Mr Hair against Mrs Schmidt based on costs orders made in previous proceedings between the parties. The High Court heard applications to set aside the notices. The court found some issues could be resolved, but the key cross-claim issue requires awaiting the outcome of Mrs Schmidt's appeal before a final determination can be made on setting aside the notices. The court gave provisional views on some aspects of the cross-claim argument but emphasised that its decision will defer to the Court of Appeal's ultimate ruling on the appeal. The proceedings have been adjourned pending the appeal decision.

Orders