Judd v Hodgkinson - [2018] NZHC 491

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2017-441-86

[2018] NZHC 491

UNDER the Insolvency Act 2006

IN THE MATTER OF

an application for an order for adjudication

BETWEEN

MICHELLE KERRIAN JUDD

Judgment Creditor

AND

RICHARD WILLIAM HODGKINSON

Judgment Debtor

Hearing: 1 March 2018

Counsel:

J L Bates for Judgment Creditor

M Macfarlane and T Sage for Judgment Debtor

Judgment:

21 March 2018

JUDGMENT OF ASSOCIATE JUDGE SMITH

[1] The judgment creditor, Ms Judd, applies for an order adjudicating the judgment debtor, Mr Hodgkinson, bankrupt.

[2] On 22 June 2017, Ms Judd obtained a judgment against Mr Hodgkinson in the Family Court at Napier, in the sum of $78,553.76. Mr Hodgkinson has not paid that sum or any part of it.

[3] Ms Judd issued a bankruptcy notice against Mr Hodgkinson on 21 August 2017. When he did not pay the amount stated in the bankruptcy notice within the 10 working day period allowed by the notice, or apply under s 17 of the Insolvency Act 2006 (the Act) to set aside the bankruptcy notice, she filed her application for a bankruptcy adjudication order.

JUDD v HODGKINSON [2018] NZHC 491 [21 March 2018]

[4] Mr Hodgkinson filed a short notice of opposition to the bankruptcy adjudication application, and a supporting affidavit. He does not deny that the debt is owing to Ms Judd, nor does he deny that he committed an act of bankruptcy when he failed to comply with the bankruptcy notice which had been served on him. Rather, he says that the Court has a discretion to refuse to make a bankruptcy adjudication order, and that the Court should exercise that discretion in his favour on the particular facts of this case.

Relevant statutory framework

[5]Section 13 of the Act provides:

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.

[6]Section 17 of the Act materially provides:

(1)A debtor commits an act of bankruptcy if—

(a)a creditor has obtained a final judgment or a final order against the debtor for any amount; and

(b)execution of the judgment or order has not been halted by a court; and

(c)the debtor has been served with a bankruptcy notice; and

(d)the debtor has not, within the time limit specified in subsection (4),—

(i)complied with the requirements of the notice; or

(ii)satisfied the court that he or she has a cross claim against the creditor.

…

(4)The time limit referred to in subsection (1)(d) is,—

(a)if the debtor is served with the bankruptcy…

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 Judd v Hodgkinson

Details

AGLC: Judd v Hodgkinson [2018] NZHC 491
Case: [2018] NZHC 491
Decision Date: 21 March 2018

CaseChat Overview and Summary

In the High Court of New Zealand, the judgment creditor, Ms Judd, applied for an order adjudicating the judgment debtor, Mr Hodgkinson, bankrupt. Ms Judd had obtained a judgment against Mr Hodgkinson for spousal maintenance in the sum of $78,553.76, which he had not paid. Mr Hodgkinson opposed the application, arguing that the court should exercise its discretion under s 37 of the Insolvency Act 2006 not to make a bankruptcy adjudication order. The court held that it was proper to consider the interests of the parties, including the wider public interest. It was for Mr Hodgkinson to show why an order should not be made. Mr Hodgkinson had not produced any evidence to show that he would have been able to meet all his debts as they fell due without recourse to the sums gifted to the Trust, in the period between 25 June 2014 and the present time. The gifts were made one day and two days respectively after the hearing of Ms Judd’s spousal maintenance claim, and the court was unable to accept that the timing was pure coincidence. The court held that it was not necessary to determine whether the application for spousal maintenance or the hearing on 24 June 2014 did or did not create a “debt” or a “contingent liability” of Mr Hodgkinson to Ms Judd. It was enough to find on the balance of probabilities, as the court did, that one of Mr Hodgkinson’s intentions in making the two gifts was to ensure that he would be unable to meet any substantial judgment Ms Judd might obtain against him. The court made an order adjudicating Mr Hodgkinson bankrupt.

Orders