Malley & Co v Burgess - [2016] NZHC 2920

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2016-409-000439 [2016] NZHC 2920

IN THE MATTER of the Insolvency Act 2006

AND

IN THE MATTER

of the Bankruptcy of GARY OWEN BURGESS

BETWEEN

MALLEY & CO
Judgment Creditor/Respondent

AND

GARY OWEN BURGESS Judgment Debtor/Applicant

Hearing: 29 November 2016

Appearances:

M Parker and A J Gaborieau for Judgment Creditor/Respondent
Judgment Debtor/Applicant self represented

Judgment:

5 December 2016

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1] On 27 November 2014 the High Court, in a judgment by Dunningham J on proceeding CIV-2013-409-1385, ordered that the applicant (Mr Burgess) pay to the respondent (Malley & Co) costs and disbursements in the sum of $43,844.29.1 The order was sealed by the Court on 1 December 2014.

[2] Mr Burgess has not paid any part of this sum.

[3] On 2 June 2016 Malley & Co issued a bankruptcy notice to Mr Burgess in relation to this order. The bankruptcy notice was served on Mr Burgess on 18 June
2016. On 1 July 2016 Mr Burgess applied for an order setting aside the bankruptcy

notice.

1 Malley & Co v Burgess [2014] NZHC 2981.

MALLEY & CO v BURGESS [2016] NZHC 2920 [5 December 2016]

[4] On proceeding CIV-2010-009-2712, Malley & Co sued Mr Burgess for unpaid professional fees in a total sum of $56,303.70. This claim had initially been brought in the District Court, but was transferred to this Court after Mr Burgess filed a counterclaim seeking judgment for $894,000, together with general and exemplary damages in the sum of $150,000 each.

[5] On 5 May 2016, the Court entered judgment for Malley & Co in the sum of

$54,594.81 and dismissed the counterclaim by Mr Burgess.2

[6] In his application to set aside the bankruptcy notice issued by Malley & Co Mr Burgess relies on having a counterclaim against Malley & Co, which is the counterclaim to which I have referred and which has been dismissed by the Court. Mr Burgess has lodged an appeal against the judgment of this Court and says in his application to set aside the bankruptcy notice that it is inevitable that the Court of Appeal will grant the appeal. As a result he will be owed money by Malley & Co, not vice versa.

Application of the relevant provisions of the Insolvency Act 2006

[7] Before a person may be adjudicated bankrupt, that person must have committed an act of bankruptcy, within a period of three months before the filing of the application.3 An act of bankruptcy is committed if a creditor has obtained a final judgment against a debtor for a sum of money, execution of the judgment has not been halted by a court, the debtor has been served with a bankruptcy notice, and the debtor has not within a specified time either complied with it or satisfied the Court that he or she has a cross claim against the creditor.4 In this case, most of these requirements are satisfied. The bankruptcy notice is based on…

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 Malley & Co v Burgess

Details

AGLC: Malley & Co v Burgess [2016] NZHC 2920
Case: [2016] NZHC 2920
Decision Date: 5 December 2016

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Malley & Co v Burgess involved a dispute over an outstanding judgment debt of $43,844.29 owed by Gary Owen Burgess to Malley & Co. Burgess, who had not paid the sum, applied to set aside a bankruptcy notice issued by Malley & Co. The underlying litigation involved claims by Malley & Co for unpaid professional fees and Burgess' counterclaim against Malley & Co, which was dismissed. The central legal issue before the court was whether Burgess could demonstrate a cross claim against Malley & Co under the Insolvency Act 2006, sufficient to set aside the bankruptcy notice.

The court examined whether Burgess had a genuinely triable cross claim against Malley & Co, as defined in section 17(7) of the Insolvency Act. This section requires that the cross claim must be equal to, or greater than, the judgment debt and that the debtor could not use it as a defence in the original action. The court concluded that Burgess' counterclaim, which was dismissed, did not meet the criteria of being genuinely triable. The judgment against Burgess was final and binding, and his appeal against it was unlikely to succeed. The court found that Burgess had not established a genuinely triable cross claim against Malley & Co, and therefore, the application to set aside the bankruptcy notice was dismissed.

The court's decision was based on the conclusive nature of the findings against Burgess in the earlier proceedings, the critical observations made about Burgess' claims, and the limited prospects of success of his appeal. Burgess was ordered to pay costs to Malley & Co on a 2B basis, along with disbursements fixed by the Registrar.

Orders