Jones v Dromgool
[2020] NZHC 968
•12 May 2020
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2019-470-000066
[2020] NZHC 968
BETWEEN NORMAN ARTHUR JONES
Judgment Creditor
AND
SIMON VICTOR DROMGOOL
Judgment Debtor
Hearing: 11 May 2020 Appearances:
M J Toner for Judgment Creditor Judgment Debtor in Person
Judgment:
12 May 2020
REASONS JUDGMENT OF ASSOCIATE JUDGE P J ANDREW
This judgment was delivered by Associate Judge Andrew on 12 May 2020 at 4.00 pm
pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar Date……………………..
JONES v DROMGOOL [2020] NZHC 968 [12 May 2020]
Introduction
[1] The judgment creditor (Mr Jones) seeks an order adjudicating the judgment debtor (Mr Dromgool) bankrupt pursuant to ss 13 and 36 of the Insolvency Act 2006.
[2] Mr Jones says that the judgment debtor has committed an act of bankruptcy for the purposes of s 13, having failed to comply with the Bankruptcy Notice of 23 July 2019. The Bankruptcy Notice was based on a judgment of the District Court at Tauranga on 10 April 2013 in the amount of $20,925.
[3] At the conclusion of the oral hearing on 11 May 2020 (by telephone), I made orders adjudicating Mr Dromgool bankrupt (timed at 2.20 pm). I also awarded costs in favour of Mr Jones. This judgment contains the reasons for my orders.
Factual background
[4] It is clear that there is a lengthy litigation history between the parties. That litigation seems to have arisen from the deterioration of their business relationship in about 2006.
[5] Both parties were equal shareholders and directors in the engineering business, Team Engineering Ltd.
[6] Mr Dromgool initially brought proceedings against Mr Jones in 2007. The proceedings were struck out on 3 November 2009 because they disclosed no cause of action. Costs of $7,555.12 were awarded against Mr Dromgool. He paid those costs to Mr Jones.
[7] A second set of proceedings was filed by Mr Dromgool and Team Engineering Ltd in 2009. Those proceedings were heard by Judge Maze in the Tauranga District Court during December 2011.
[8] The certificates of judgment record that the counterclaim by Mr Jones was successful, resulting in judgment against Team Engineering Ltd in the sum of
$18,790.66.
[9] In addition, Judge Maze ordered that Mr Dromgool and Team Engineeering Ltd were to pay costs to Mr Jones in the sum of $20,925, plus disbursements of
$283.83. Those costs orders, which remain unpaid, form the basis of the Bankruptcy Notice.
[10] Mr Jones advised that he is not pursuing the counterclaim judgment made against Team Engineering Ltd. In relation to the costs jointly made against both Mr Dromgool and Team Engineering Ltd, Mr Jones has elected to pursue costs against Mr Dromgool only.
[11] A third set of proceedings was subject to a hearing in the Tauranga District Court before Judge Ingram during August 2014. Mr Dromgool and Team Engineering Ltd brought a claim against Mr Jones for the sum of $35,000. Judge Ingram struck out the claims. At [17] of his judgment, Judge Ingram stated:
No other remedy could properly overcome the injustice of the defendant (Mr Jones) of having to face more litigation on issues that could and should have been dealt with in the litigation before Judge Maze.
[12] No award for costs was made in those proceedings. Mr Toner contends that it remains open for Mr Jones to pursue costs against both Mr Dromgool and Team Engineering Ltd for those proceedings, but I do not need to decide that issue.
Relevant legal principles
[13]Section 13 of the Insolvency Act 2006 (the Act) reads:
When creditor may apply for debtor's adjudication
A creditor may apply for a debtor to be adjudicated bankrupt if –
(a)the debtor owes the creditor $1,000 or more or, if 2 or more creditors join in the application, the debtor owes a total of $1,000 or more to those creditors between them; and
(b)the debtor has committed an act of bankruptcy within the period of 3 months before the filing of the application; and
(c)the debt is a certain amount; and
(d)the debt is payable either immediately or at a date in the future that is certain.
[14]Section 36 reads:
Court may adjudicate debtor bankrupt
The Court may, at its discretion, adjudicate the debtor bankrupt if the creditor has established the requirements set out in section 13.
[15] If the jurisdictional facts in s 13 are established, then the petitioning creditor is prima facie entitled to an adjudication order. Doogue J in Coromandel Independent Living Trust adopted the observations of Bell AJ in Darby:1
… One of the objectives of bankruptcy is to make the debtor accountable for his or her debt. I understand this to mean that it is not in the public interest that a debtor should be able to default on her debts and for there to be no apparent consequence. Such an approach would subvert the expectation that individuals will repay their debts. Accountability also means there is a process that acknowledges the harm that is done to those who suffer loss at the hands of defaulting debtors.
[16] Under s 37 of the Act the Court may, at its discretion, refuse to adjudicate the debtor bankrupt if the applicant creditor has not established the requirements set out in s 13, where 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. The judgment debtor has the onus of satisfying the Court that it is either just and equitable or that some other sufficient reason exists for the Court not to make an order of adjudication.2
Analysis and decision
[17]Mr Dromgool defends the application on the following bases:
(a)That a period of more than six years has passed since the date of the Tauranga District Court judgment and it is therefore not enforceable under the s 35(1) of the Limitation Act 2010;
(b)that the judgment debt at issue was obtained against both Mr Jones and Team Engineering Ltd and should thus be apportioned between them;
1 Coromandel Independent Living Trust v Hammon [2016] NZHC 392 at [30], citing Darby v Official Assignee [2013] NZHC 22 at [14].
2 Re Rabobank Australia Ltd v Tootell [2013] NZHC 2975 at [6].
(c)that Mr Jones has lied in court proceedings and was charged by the New Zealand Police with perjury; and
(d)that Mr Jones refused to sign tax returns or pay any bills of Team Engineering Ltd, a business which the parties had established as engineers.
[18]I now turn to address each of those defences advanced by Mr Dromgool.
Limitation issue
[19] I do not accept that Mr Dromgool has a legitimate defence based on the Limitation Act 2010. As noted by Mr Toner, for the judgment creditor, s 35(4) of the Limitation Act 2010 clearly states that the six-year limitation period in s 35(1) does not apply to bankruptcy adjudication proceedings. The defence has no merit.
Judgment debt obtained against both Mr Dromgool and Team Engineering Ltd
[20] Rule 4.13 of the District Court Rules 2009 provided that the liability of each of two or more parties ordered to pay costs is joint and several, unless the Court has directed otherwise.3
[21] In this case it was open to Mr Jones to pursue Mr Dromgool personally for the full payment of the costs awarded. That was the direct effect of r 4.13.4
[22] There is no merit to the defence that Mr Dromgool is only proportionally liable for the costs award.
Perjury
[23] In late 2015, Mr Jones was charged with perjury. The proceedings were dismissed in the District Court on a no case to answer basis, immediately following the evidence given by Mr Dromgool.
3 The equivalent provision of the current District Rules is r 14.13. However, at the relevant time, the District Court Rules 2009 were in force.
4 The equivalent provision in the High Court Rules 2016 (which is a standard feature of costs regimes) is r 14.14.
[24] That matter is now closed. There is no live perjury issue and no basis for any defence of Mr Dromgool based on the perjury proceedings.
Refusal to sign tax returns or pay bills of the company Team Engineering Ltd
[25] I accept the submission of Mr Toner that this is an attempt by Mr Dromgool to re-litigate matters which have been the subject of prior court proceedings. There is a clear need for finality in this litigation.
[26] The jurisprudence makes it clear that it is an abuse of process to attempt to re- litigate issues previously determined by the courts. In Sutcliffe v Tarr, the Court of Appeal held that the circumstances in which proceedings may amount to an abuse of process are varied:5
One of these is an attempt to re-litigate a claim previously determined by the Court. As per Lord Diplock in Hunter v Chief Constable of the West Midlands Police:
The abuse of process which the instant case exemplifies is in the initiation of proceedings in a court of justice for the purpose of mounting a collateral attack upon a final decision against the intending plaintiff which has been made by another court of competent jurisdiction in previous proceedings in which the intending plaintiff had a full opportunity of contesting the position in the court by which it was made.
Essentially, it will be an abuse of process to bring the same proceeding in a different garb. If this is the case, it is no bar that the later proceeding is brought against a different party. Claims may be struck out as an abuse of process even though the defendant was not party to the previous litigation.
[27] It is clear from the lengthy litigation history outlined above that Mr Dromgool has had many opportunities to have his grievances aired and determined. It would be wrong to allow matters to continue.
[28]For all these reasons, I reject each of the defences advanced by Mr Dromgool.
[29] I also find that Mr Dromgool has put no evidence before the Court that he is in a position to pay the outstanding judgment debt. Furthermore, Mr Dromgool has not
5 Sutcliffe v Tarr [2018] NZCA 135 at [27]; [2018] NZAR 696 at [27] and [28].
satisfied the onus upon him to satisfy me that it would be just and equitable (or that some other reason exists) for the Court to refuse an order for adjudication.
[30] I find that the judgment creditor has established a proper basis for an order for adjudication in accordance with ss 13 and 36 of the Insolvency Act 2006.
Result
[31] I make an order adjudicating the judgment debtor, Mr Dromgool, bankrupt. My orders were timed at 2.20 pm on Monday, 11 May 2020.
[32] I further order that the judgment debtor is to pay costs to the judgment creditor on a 2B basis, plus disbursements, in the total sum of $4,877, as set out in Mr Toner’s memorandum dated 8 May 2020.
Associate Judge P J Andrew
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