Izard Weston v Ayers - [2017] NZHC 3000

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2017-409-000200 [2017] NZHC 3000

IN THE MATTER of the Insolvency Act 2006

AND

IN THE MATTER

of the bankruptcy of DANIEL FRANCIS AYERS

BETWEEN

IZARD WESTON Judgment Creditor

AND

DANIEL FRANCIS AYERS Judgment Debtor

Hearing: 7 November 2017

Appearances:

R K B Stewart for Creditor
D F Ayers (Debtor) in person

Judgment:

5 December 2017

JUDGMENT OF ASSOCIATE JUDGE OSBORNE [on application to set aside bankruptcy notice]

Introduction

[1] Izard Weston, a firm of solicitors, acted for Daniel Ayers and his company, Elementary Solutions Ltd (ESL) (now in liquidation), as plaintiffs in defamation proceedings between 2010 and February 2015. Izard Weston instructed Chris McVeigh QC as counsel. From February 2015, Izard Weston and Mr McVeigh ceased
to act for Mr Ayers and ESL.

IZARD WESTON v AYERS [2017] NZHC 3000 [5 December 2017]

[2] Later in 2015, Izard Weston sued Mr Ayers and ESL for unpaid fees. They applied for summary judgment, which the defendants opposed on the grounds that they had a defence and would be filing a counterclaim.

[3] Following a hearing, District Court Judge R E Neave on 23 August 2016 entered summary judgment for Izard Weston in the sum of $66,916.03.1 Judge Neave subsequently awarded Izard Weston interest of $11,586.56, costs (on the basis of increased costs) of $30,000 and disbursements of $4,691.05.2

The bankruptcy notice

[4] In March 2017, Izard Weston had a bankruptcy notice issued which required payment of $113,193.64 based on the District Court judgments. Upon service, Mr Ayers made this application for an order setting aside the bankruptcy notice.

The grounds of Mr Ayers’ application

[5] Mr Ayers invokes s 17(1)(d) Insolvency Act 2006 (the Act) and the Court’s inherent jurisdiction.

[6] Mr Ayers asserts:

(a) he has a genuine triable cross-claim which exceeds the judgment debt and which he could not use as a defence in the District Court proceeding; and

(b)the process by which the District Court judgments were obtained was defective, justifying a stay pursuant to the inherent jurisdiction.

Setting aside application under s 17(1)(d) Insolvency Act

[7] Section 17(1) of the Act establishes a number of acts of bankruptcy. Among them, s 17(1)(d) involves non-compliance with a bankruptcy notice. It provides, as an

1 Izard Weston v Ayers [2016] NZDC 14953.
2 Izard Weston v Ayers [2010] NZDC 26070.

alternative to compliance with the requirements of the notice, that the debtor may satisfy the Court that he or she has a cross-claim against the creditor.

[8] Section 17(7) defines what may constitute a cross-claim for the purposes of s

17(1)(d). It provides:

17 Failure to comply with bankruptcy notice

…

(7) In subsection (1)(d)(ii), cross claim means a counterclaim,
set-off, or cross demand that—

(a) is equal to, or greater than, the judgment debt or the amount that the debtor has been ordered to pay; and

(b) the debtor could not use as a defence in the action or proceedings in…

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 Izard Weston v Ayers

Details

AGLC: Izard Weston v Ayers [2017] NZHC 3000
Case: [2017] NZHC 3000
Decision Date: 5 December 2017

CaseChat Overview and Summary

In Izard Weston v Ayers, the applicant sought to set aside a bankruptcy notice issued against him in reliance of a District Court judgment. The judgment arose from a claim by Izard Weston for unpaid legal fees. The applicant had invoked s 17(1)(d) of the Insolvency Act 2006 and the Court’s inherent jurisdiction as grounds for setting aside the bankruptcy notice. The Court found that the applicant’s application under s 17(1)(d) of the Act must fail because he had not shown that he had a cross-claim against Izard Weston which he could not use as a defence in the District Court proceeding. The Court also found that the inherent jurisdiction did not provide a basis for setting aside the bankruptcy notice. The Court held that the procedure by which Izard Weston obtained its summary judgment was not defective. Further, the Court held that the summary judgment could not be impeached by reference to the over-ruling of previous authority in Joint Action Funding Limited v Eichelbaum. The Court dismissed the application and ordered the applicant to pay costs.

Orders