McDiarmid v Crum

[2012] NZHC 1567

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2012-488-295 [2012] NZHC 1567

UNDER  the Insolvency Act 2006

IN THE MATTER OF     the bankruptcy of MATTHEW JOHN CRUM

BETWEEN  MALCOLM JOSEPH McDIARMID, JOSEPH McDIARMID, TOMEIKE McDIARMID AND H & A TRUSTEE COMPANY LIMITED AS TRUSTEES OF THE MCDIARMID PEREZ FAMILY TRUST

Judgment Creditors/Respondents

AND  MALCOLM JOHN CRUM Judgment Debtor/Applicant

Hearing:         3 July 2012

Appearances: Matthew John Crum Judgment Debtor (Applicant) A Holgate for Judgment Creditors (Respondents)

Judgment:      3 July 2012

ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL

Solicitors:

SwanLaw (George Swanepoel) P O Box 1563 Whangarei 0110

Email:    [email protected]

Copy for:
Andrew Holgate, P O Box 1147 Whangarei  0140, for Judgment Creditor

Email:    [email protected]

MCDIARMID & ORS AS TRUSTEES OF THE MCDIARMID PEREZ FAMILY TRUST V CRUM HC WHA CIV-2012-488-295 [3 July 2012]

[1]      This is an application to set aside a bankruptcy notice that was served on the debtor on 23 May 2012.  It is being heard in court.  The bankruptcy notice is based on a judgment given on 26  March 2012 for a total sum of $61,647.40.

[2]      Mr Crum has applied  in person to  set  aside the bankruptcy notice.   His application sets out general grounds why he should not be adjudicated bankrupt, but it is not directed to setting aside his bankruptcy notice.

[3]      There are specific grounds for setting aside a bankruptcy notice.  The primary ground set out in the notice is that the debtor has a counterclaim, set -off or cross- demand against the judgment creditor that equals or exceeds the amount claimed by the  judgment  creditor  and  which  the debtor  could  not  have put  forward  in the proceeding in which the judgment was obtained.   The second ground is that sometimes the court in its inherent jurisdiction allows a bankruptcy notice to be set aside if the debtor alleges that the judgment in the original court can be set aside.  In most  cases the court typically adjourns the setting-aside application to allow an application to be made to the original court for the judgment to be set aside.

[4]      Mr Crum does not raise either of those grounds in this case. In particular, he acknowledges  that  he  does  not  have  any counterclaim,  set-off or  cross-demand against  the  judgment  creditor  and  he  does  not  contest  his  liability  under  the judgment.  He acknowledges that he is one of the parties to a settlement agreement and under that settlement agreement he was obliged to pay the sum of $55,000.  He accepts that he had no defence to the claim in which judgment was given against him.

[5]      Because of those factors, there is no basis for setting aside the bankruptcy notice that has been served on him.    Accordingly, I dismiss his application to set aside the bankruptcy notice.  That means that under r 24.10 of the High Court Rules the time for complying with the bankruptcy notice starts running again.  The time for complying with the notice has been suspended from the time when Mr Crum filed his application in court until today.

[6]      If  Mr  Crum  does  not  comply  with  the  bankruptcy  notice  the  judgment creditors will be entitled to present an application to the court for Mr Crum to be adjudicated bankrupt.   If the creditors take that step, Mr Crum will have the opportunity to file in court a notice setting out his opposition to that application and to file evidence by way of affidavit setting out the basis for his opposition to the application for adjudication in bankruptcy.

[7]      I have not addressed those grounds in this decision today.  I want to leave the ground open so that the court can consider at a later hearing of an adjudication application whether there should be an order made.  Nothing I say in this judgment today is intended to indicate how the court would exercise its discretion on the hearing of a bankruptcy application.

[8]      Mr Holgate asks for costs.   He is entitled to  costs as Mr Crum has not succeeded in his application.  Costs are to be on the 2B scale.  The creditor is to file and serve a memorandum setting out costs sought.  They should be set out in such a way  that  Mr Crum,  who  is  self-represented,  can  understand  the  basis  of  the application.  Mr Crum is to provide a written response within one week of receiving Mr Holgate’s memorandum.  I will then decide costs on the papers.

…………………………..

R M Bell

Associate Judge