Malley & Co Lawyers v Sundberg

[2020] NZHC 264

IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY

I TE KŌTI MATUA O AOTEAROA TE TIHI-O-MARU ROHE

CIV-2018-476-39

[2020] NZHC 264

BETWEEN

MALLEY & CO LAWYERS

Judgment Creditor

AND

JANINE NORA SUNDBERG

First Judgment Debtor

AND

LINDA BEVERLEY SUNDBERG

Second Judgment Debtor

Hearing:	21 February 2020
Appearances:	M J McKay for Applicant Judgment Debtors in person
Judgment:	26 February 2020

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 26 February 2020 at 11.00am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

26 February 2020

MALLEY & CO LAWYERS v SUNDBERG [2020] NZHC 264 [26 February 2020].

[1]                  The judgment creditor applies to renew a charging order over the judgment debtors’ property.

[2]The following timeline sets out the background:

9 June 2017:	Judgment debtors served with District Court proceedings under which the judgment creditor sought judgment for unpaid legal fees.
4 July 2017:	Judgment    debtors    file    statement    of defence and counterclaim.
17 July 2017:	Judgment    creditor    files    statement   of defence to counterclaim and reply to statement of defence.
18 October 2017:	Judgment creditor files its list of documents in accordance with agreed timetable.
20 October 2017:	Judgment debtors personally served with judgment creditor’s list of documents and a USB copy of those documents.
13 December 2017:	Judgment creditor applies to strike out the judgment debtors’ defence for failure to give discovery.
18 January 2018:	Strike out application served – judgment debtors do not take any steps.
1 February 2018:	Judgment debtors’ defence struck out.
12 February 2018:	Judgment creditor is served with notice of application for formal proof and affidavit in support – judgment creditor takes no steps.
22 February 2018:	Judgment entered against the judgment debtors.
1 March 2018:	Charging orders issued over judgment debtors’ property – this being the charging order that is sought to be renewed given it will expire on 1 March 2020.

23 September 2019:

Dunningham J makes an order on an

unopposed basis (the application having been served) extending sale orders that had been granted over the judgment debtors’ property.

13 December 2019:

Judgment debtors’ property passed in at auction under the sale orders.

6 March 2020:

New auction date for judgment debtors’ property. That date likely to be deferred.

[3]                  This application proceeded on notice as required with an affidavit in support filed explaining why the extension sought is just being the test under r 17.52(2) of the High Court Rules 2016. The judgment creditor submits it is just to extend the charging order as, since it obtained judgment and its charging order, it sought to negotiate payment with the judgment debtors and then sought orders for sale. In summary, the judgment creditor says it has not slept on its rights and the only reason the extension is required is that at the first auction of the property held by the Registrar of the Court, the reserve price was not achieved.1

[4]                  In Bank of New Zealand v Taleta, the applicant for an extension explained that they had not taken steps towards applying for an order for sale so as to give the respondent an opportunity to sell the property themselves.2

[5]                  The judgment debtors have filed notices of opposition which are an attack on the judgment entered against them by formal proof. They say that they are not liable for the fees they incurred with the judgment creditor as those fees are payable by the Estate of which they were executors. That, however, is not an argument that they can run in this Court.

[6]                  The judgment debtors reasserting the matters that were in their struck-out defence cannot form a basis for this Court to look behind the judgment obtained by

1      Associate Judge Osborne (as he then was) in Greig v Jeffery-Jones [2018] NZHC 833 looked to the reasonableness of a judgment creditor in that case not advancing matters during the two years after the grant of the charging order. It was held that in the circumstances it was reasonable for the judgment creditor in that case to not seek to enforce their judgment.

2      Bank of New Zealand v Taleta [2015] NZHC 2821.

the judgment creditor.3 If the judgment debtors believed that the formal proof should not have been entered, then they were obliged to apply to set aside or appeal the formal proof judgment given against them over two years ago. In the absence of any such challenge the judgment stands, and the judgment creditor is entitled to enforce their judgment.

[7]                  This is not a case where the judgment creditor has been inactive in seeking to enforce its rights having moved to obtain an order of sale. I am satisfied that maintaining the charging order is reasonably necessary to protect the judgment creditor’s position given the judgment debtors do not accept the validity of the debt.

[8]                  The notices of opposition filed by the judgment debtors in effect say it is unfair for the charging order to be renewed because they do not consider they are liable to the judgment creditor but do not take issue with the substance or form of the charging order. The judgment debtors’ challenge is only to the underlying judgment.

[9]                  I am satisfied that it is just to extend the charging order in this case and there are  orders  in  terms  of   paragraph   1(a)   and   1(b)   of   the   application   dated 23 January 2020. Save that in the order the word “extended” is to be used rather than the word “renewed” and that the date  of  renewal  is  21  February  2020  rather  than 1 March 2020.

[10]              Given the judgment debtors have opposed the application unsuccessfully, there is no reason why costs should not follow the event.

[11]              Accordingly, there is an order that the judgment debtors pay the costs of and incidental to the application on a 2B basis, together with disbursements as fixed by the Registrar. I record that Mr McKay, counsel for the judgment creditor, confirmed that this costs award will not be enforced independently of the sale order process.

3      Moncrieff Pastoral Ltd v Sim HC Auckland CIV-2004-404-5603, 20 July 2011.

Addendum

[12]              Ms Sundberg tabled documents explaining that they were the executors along with a Mr Butterfield of the Estate of Ms Baker. Mr Butterfield was apparently at the time a member of a chartered accountants firm in Timaru, Footes Ltd. Apparently, Footes Ltd is still administering Ms Baker’s Estate. I assume that the executors had got in the Estate and do hold the Estate, as trustees. This Court has a jurisdiction to supervise trustees. I was advised that accounts to 31 October 2017 had been prepared for the Estate. The status of the Estate and/or Trust is unclear to the Court. I request that Footes Ltd, as chartered accountants, provide me with a report as to the current asset and liability position of the Estate, details of cash and other assets received into the Estate, and what has become of those assets. I would be grateful to receive that information within 15 working days (that is by Wednesday 18 March 2020).

[13]              During the hearing of the application on 21 February 2020, the possibility of a sale of the property by private treaty came up. Mr McKay, counsel for the judgment creditor, confirmed that such a sale would be welcomed by Malley & Co. I urge the judgment debtors to keep Malley & Co informed of progress in that regard. No commitment to halt the sale process was given but if a contract is obtained or if the property is listed with a real estate agent with a clear marketing timeline then that will clearly be a significant matter for Malley & Co. If an unconditional sale contract is obtained then I would be very surprised if the judgment creditor did not simply wait for that to settle, provided the settlement terms were reasonable in particular there was not an extended settlement date.

Associate Judge Lester

Solicitors:
Malley & Co, Christchurch

Copy to:

Ms Janine Sundberg Ms Linda Sundberg Footes Limited