McCollum v Thompson - [2019] NZHC 915

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-001605

[2019] NZHC 915

BETWEEN ALLAN ROY McCOLLUM, NANCY MARGARET McCOLLUM and TERENCE NEIL WALKER
Judgment Creditors

AND

DAVID JOHN THOMPSON

Judgment Debtor

CIV-2018-404-001605

BETWEEN

ALLAN ROY McCOLLUM, NANCY MARGARET McCOLLUM and
TERENCE NEIL WALKER
Judgment Creditors

AND

JOSEPHINE RUTH MACBETH

Judgment Debtor

Hearing: 8 March 2019

Appearances:

B D Gustafson for Judgment Creditors

A Barker QC and C R T Hollings for Judgment Debtors

Judgment:

30 April 2019

JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by Associate Judge Andrew on 30 April 2019 at 3.00 pm
pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar Date………………………

McCOLLUM v DAVID JOHN THOMPSON [2019] NZHC 915 [30 April 2019]

Introduction [1]

Relevant legal principles  [6]
Factual background  [14]
The competing position of the parties  [30]
Analysis and decision

Jurisdictional issue – is there a security for the debt? [34]

Jurisdiction under s 13 of the 2006 Act [41]

Just and equitable [48]

How should the Court exercise its discretion? [85]

Result [90]

Costs [91]

Introduction

[1] The judgment debtors defaulted on a substantial loan advanced by the judgment creditors (the McCollums) that was secured by general security agreement (GSA) over their dairy herd, including some 47 heifers. This resulted in a judgment debt of $105,752.76 plus interest1 following lengthy litigation in this Court2 and the Court of Appeal.3

[2] The McCollums now seek to have the judgment debtors adjudicated bankrupt for failure to comply with the bankruptcy notices based on the judgment debt.

[3]The bankruptcy notices did not refer to the existence of any security.

[4] The GSA was subject to the requirements of the Personal Properties Securities Act 1996 (the PPSA). The judgment debtors say, however, that the requirements of that legislation have not been met by the McCollums, who have failed properly to account to them for the income received from the 47 heifers (income from both milk and progeny). The judgment debtors also say that the taking and retention of the heifers by the McCollums discharged the debt in full and that there is a claim of true substance that the income from the heifers that should have been applied to the judgment debtors’ credit exceeds the value of the judgment debt and interest.

[5]The critical issues I must determine are:

(a)Whether the McCollums have established an act of bankruptcy by the judgment debtors under ss 13 and/or 14 of the Insolvency Act 2006 (the 2006 Act); and

(b)Whether it is just and equitable for the Court to make an order of adjudication (s 37 of the 2006 Act).

1      McCollum v Thompson [2018] NZHC 173 per Lang J (16 February 2018).
2      McCollum v Thompson [2016] NZHC 28.
3      McCollum v Thompson [2017] NZCA 269, [2017] NZAR 1106.

Relevant legal principles

[6] Under s 14 of the 2006 Act, a secured creditor can only bring an application for adjudication…

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 McCollum v Thompson

Details

AGLC: McCollum v Thompson [2019] NZHC 915
Case: [2019] NZHC 915
Decision Date: 30 April 2019

CaseChat Overview and Summary

The McCollums, as judgment creditors, sought an order for the adjudication of the judgment debtors, David John Thompson and Josephine Ruth Macbeth, as bankrupts based on a judgment debt of $105,752.76 plus interest. The judgment debtors opposed the application on the basis that the McCollums had not properly accounted for the income received from the 47 heifers they had retained under a general security agreement. The critical issue for the Court to determine was whether it was just and equitable for the Court to make an order of adjudication. The Court found that the judgment debtors had established genuinely triable claims, which may extinguish or exceed the judgment debt. The Court exercised its discretion to halt the adjudication of bankruptcy for three months, to allow the judgment debtors to explore options as to how their cross claims might be resolved. The Court ordered the judgment creditors' application for adjudication be halted, and the proceedings adjourned until 26 September 2019.

Orders