Highmark Homes Limited v Watkins - [2025] NZHC 128

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-0800

[2025] NZHC 128

UNDER the Insolvency Act 2006

IN THE MATTER OF

the bankruptcy of N M Watkins

BETWEEN

HIGHMARK HOMES LIMITED

Judgment Creditor

AND

NICOLA MAREE WATKINS

Judgment Debtor

Hearing: 4 February 2025

Counsel:

D Hayes for the Judgment Creditor Judgment Debtor in Person

Date of Judgment:

12 February 2025

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 12 February 2025 at 12 midday Pursuant to Rule 11.5 of the High Court Rules.

…………………..
Registrar/Deputy Registrar

Solicitors:
Hunwick Law Ltd, Hamilton D Hayes, Hamilton

HIGHMARK HOMES LTD v WATKINS [2025] NZHC 128 [12 February 2025]

Introduction

[1] The judgment creditor, Highmark Homes Ltd (Highmark), seeks an order adjudicating the judgment debtor, Nicola Watkins (Ms Watkins), bankrupt. Ms Watkins was formerly an employee of Highmark. The employment relationship ended acrimoniously in 2017.

[2] During the employment relationship, Highmark provided financial assistance to Ms Watkins for construction of a house (the financial assistance). After the employment relationship ended, Highmark commenced a claim against Ms Watkins in the Disputes Tribunal to recover the financial assistance. Highmark was successful and the Disputes Tribunal ordered Ms Watkins to pay Highmark $23,996 (the Disputes Tribunal order). Ms Watkins unsuccessfully appealed to the District Court.1

[3] Ms Watkins brought a claim against Highmark in the Employment Relations Authority (ERA), claiming an unjustifiable disadvantage during the employment relationship and an entitlement to wage arrears, and an unjustified dismissal. The claim for unjustified disadvantage and wage arrears was unsuccessful.2 The claim for unjustified dismissal could not proceed because it had not been raised within the statutory timeframe.3

[4] Ms Watkins filed a proceeding in the Employment Court seeking to reopen the determinations of the ERA. The Employment Court ordered Ms Watkins to pay security for costs, or alternatively to pay existing costs awards to Highmark,4 before her claim could proceed. The Employment Court awarded costs to Highmark of
$10,396.50.5 Ms Watkins has not complied with the Employment Court orders, and she has appealed those decisions to the Court of Appeal.

[5] In 2022, Highmark enforced the Disputes Tribunal order by serving a bankruptcy notice on Ms Watkins, followed by an application for adjudication (the

1      Watkins v Highmark Homes Ltd [2021] NZDC 16979.
2      Watkins v Highmark Homes Ltd [2022] NZERA 632.
3      Watkins v Highmark Homes Ltd [2020] NZERA 467; Watkins v Highmark Homes Ltd
[2022] NZERA 638.
4      Watkins v Highmark Homes Ltd [2024] NZEmpC 105.
5      Watkins v Highmark Homes Ltd [2024] NZEmpC 167.

first bankruptcy proceeding). The application for adjudication was ultimately heard by Associate Judge Gardiner (as she then was). The Associate Judge determined that it was appropriate to adjudicate Ms Watkins bankrupt but allowed her a final opportunity to pay the Disputes Tribunal order.6

[6] Ms Watkins elected to pay the Disputes Tribunal order. Associate Judge Gardiner subsequently ordered Ms Watkins to pay Highmark’s costs in respect of the…

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: [2025] NZHC 128
Decision Date: 12 February 2025

CaseChat Overview and Summary

Highmark Homes Ltd is a judgment creditor seeking an order to adjudicate Nicola Maree Watkins, the judgment debtor, bankrupt. Ms Watkins was formerly an employee of Highmark. The employment relationship ended in 2017. During her employment, Highmark provided financial assistance to Ms Watkins for the construction of a house. After the employment relationship ended, Highmark commenced a claim against Ms Watkins in the Disputes Tribunal to recover the financial assistance. Ms Watkins was ordered to pay Highmark $23,996. Ms Watkins unsuccessfully appealed to the District Court. Ms Watkins filed a proceeding in the Employment Court seeking to reopen the determinations of the Employment Relations Authority. The Employment Court ordered Ms Watkins to pay security for costs, or alternatively to pay existing costs awards to Highmark, before her claim could proceed. The Employment Court awarded costs to Highmark of $10,396.50. Ms Watkins has not complied with the Employment Court orders, and she has appealed those decisions to the Court of Appeal. In 2022, Highmark enforced the Disputes Tribunal order by serving a bankruptcy notice on Ms Watkins, followed by an application for adjudication. Ms Watkins elected to pay the Disputes Tribunal order. Associate Judge Gardiner subsequently ordered Ms Watkins to pay Highmark’s costs in respect of the first bankruptcy proceeding of $12,786.50 plus disbursements of $1,426.09 (the costs order). Ms Watkins has not paid the costs order, and Highmark served a second bankruptcy notice. Ms Watkins opposes adjudication and argues that she should not be adjudicated bankrupt until her appeals to the Court of Appeal have been determined.

The court was required to decide whether the judgment debtor should be adjudicated bankrupt. Section 36 of the Insolvency Act 2006 provides that the court may, at its discretion, adjudicate the debtor bankrupt if the creditor has established the requirements set out in section 13. Section 13 requires that the debtor owes the creditor a debt for a certain amount of $1,000 or more, payable immediately or at a date in the future that is certain, and that the debtor has committed an act of bankruptcy within a period of three months before the filing of the application for an order for adjudication. The court may, at its discretion, refuse to make an order for adjudication if the debtor is able to pay his or her debts; or it is just and equitable that the court does not make an order of adjudication; or for any other reason an order of adjudication should not be made. The onus is on the debtor to show why an adjudication order should not be made. The court can exercise its discretion to refuse to adjudicate a debtor bankrupt if there is good reason to doubt the liability established by the underlying judgment. In exercising its discretion, the court may consider, inter alia, the views of all affected parties, including the petitioner, other creditors and the debtor; the wider public interest; the circumstances in which the debt was incurred and whether those circumstances suggest that the creditor is acting unreasonably in pursuing adjudication; whether the debtor is able to pay their debts over a reasonable period of time; whether adjudication would be pointless in the sense that the creditors are unlikely to receive payment; and whether adjudication would render the debtor unable to support him or herself. The court should also remain cognisant of the broader purposes of bankruptcy which include: allowing for administration of the debtor’s estate in the interests of creditors; holding the debtor accountable for his or her debts; punishing or stigmatising the debtor for misconduct; protecting the community from a debtor who runs up credit without being able to honour it; and allowing the debtor to eventually take up commercial activity once freed from his or her liabilities after the discharge of their bankruptcy.

The court found that the judgment debtor, Nicola Maree Watkins, is adjudicated bankrupt. The order is timed at 12 pm. The judgment debtor shall pay the judgment creditor’s costs on a 2B basis together with disbursements. The court found that the judgment creditor had established the requirements set out in section 13 of the Insolvency Act 2006. The judgment debtor owes the judgment creditor a debt for a certain amount of $1,000 or more, payable immediately or at a date in the future that is certain, and the judgment debtor has committed an act of bankruptcy within a period of three months before the filing of the application for an order for adjudication. The court found that the judgment debtor was unable to pay her debts and that it was just and equitable to make an order of adjudication. The court found that there was no good reason to doubt the liability established by the underlying judgment. The court found that the judgment debtor had not shown why an adjudication order should not be made. The court found that the judgment debtor’s appeals to the Court of Appeal would not affect the judgment debtor’s liability to pay the judgment creditor. The court found that the judgment debtor’s defamation proceeding was an abuse of the process of the Court. The court found that the judgment debtor’s challenges to the decisions of the Employment Relations Authority and the Employment Court were not tenable. The court found that the judgment debtor had no extant challenge to the costs order that underpins this bankruptcy proceeding. The court found that the judgment debtor was insolvent and unable to pay her debts. This is an appropriate case for an order adjudicating the judgment debtor bankrupt.

Orders