Kooiman v FM Custodians Ltd - [2019] NZCA 76

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA139/2018
[2019] NZCA 76

BETWEEN	MICHAEL EDWIN KOOIMAN Appellant
AND	FM CUSTODIANS LIMITED Respondent

Hearing:	25 February 2019
Court:	French, Dobson and Brewer JJ
Counsel:	J D Dallas for Appellant S D Munro and A L Davidson for Respondent
Judgment:	1 April 2019 at 10 am

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe respondent is entitled to costs and disbursements on an indemnity basis. Reasonable quantum to be fixed by the Registrar in the event that counsel do not agree.

____________________________________________________________________

REASONS OF THE COURT

(Given by Dobson J)

A bankruptcy notice was issued against the appellant (Mr Kooiman) in August 2017. This is an appeal from a decision of Associate Judge Smith delivered on 16 February 2018 dismissing Mr Kooiman’s application to set aside the bankruptcy notice.[1]

Background

[1]Kooiman v FM Custodians Ltd [2018] NZHC 176.

Mr Kooiman guaranteed a loan that had been made by the respondent, FM Custodians Ltd (FMC), to a company of which he was a shareholder. After the principal debtor had defaulted, FMC obtained summary judgment against Mr Kooiman in July 2017 for a sum of approximately $930,000.[2] The bankruptcy notice against him followed shortly thereafter.
[2]FM Custodians Ltd v Kooiman HC Wellington CIV-2017-485-343, 7 August 2017.
Initially acting for himself, on 7 September 2017, Mr Kooiman applied to set aside the bankruptcy notice, citing some 14 grounds of challenge.
On 16 November 2017, Mr Kooiman became aware of an email exchange that had occurred between the High Court Registry and solicitors for FMC on 24 October 2017. The Registry’s email questioned the appropriateness of Mr Hutchison signing the creditor’s application for adjudication on behalf of FMC. Mr Hutchison was the individual who had instructed solicitors to pursue the proceedings against Mr Kooiman and had executed various applications that arose in the proceedings against him. The application for adjudication had been filed on the basis that a deficiency in the form of Mr Kooiman’s application to set aside the bankruptcy notice rendered it a nullity. The Registry was concerned that an application for adjudication needed to be signed by the applicant itself (that is, FMC).
The email response from FMC’s solicitors provided a brief description of the relevant corporate structure. FMC is the custodial company of Trustees Executors Ltd, which is the trustee of Capital Mortgage Income Trust Group Investment Fund (the Fund). Fund Managers Otago Ltd managed the business of the Fund, which had provided the advance that Mr Kooiman had guaranteed. That email referred to Mr Hutchison’s affidavit filed in support of the creditor’s application for adjudication, in which Mr Hutchison had confirmed his authority to swear such affidavits and sign applications for adjudication on behalf of FMC as a part of his role as managing director of the Fund.
A fortnight later, on 30 November 2017, Mr Haines, as counsel then acting for Mr Kooiman, confirmed that no new grounds would be…

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: [2019] NZCA 76
Decision Date: 1 April 2019 at 10 am

CaseChat Overview and Summary

Michael Edwin Kooiman appealed against the decision of the Associate Judge to dismiss his application to set aside a bankruptcy notice. The appellant guaranteed a loan made by FM Custodians Limited (FMC) to a company of which he was a shareholder. After the principal debtor defaulted, FMC obtained summary judgment against the appellant. The bankruptcy notice against the appellant followed shortly thereafter. The appellant initially applied to set aside the bankruptcy notice citing 14 grounds of challenge. On 26 January 2018, five working days before the hearing allocated for the appellant's application, new grounds were raised. The new grounds were that Mr Hutchison did not have the actual authority of FMC to issue those proceedings. The Court of Appeal was asked to determine whether the challenge to Mr Hutchison’s authority to act on behalf of FMC was made out. The Court of Appeal found that the content of Mr Russell’s affidavit adequately evidenced the authority vested in Mr Hutchison to take the various steps in the proceeding that he had taken, at the times he took them. The Court of Appeal dismissed the appeal and found that the respondent is entitled to costs and disbursements on an indemnity basis. Reasonable quantum is to be fixed by the Registrar in the event that counsel do not agree.

Orders