Minter Ellison Rudd Watts v Hampton - [2013] NZHC 2434

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2011-409-002055 [2013] NZHC 2434

In the matter of the Insolvency Act 2006

AND

In the matter of the

bankruptcy of DAVID JOHN HAMPTON

BETWEEN

MINTER ELLISON RUDD WATTS

Judgment Creditor

AND

DAVID JOHN HAMPTON

Judgment Debtor

Hearing:

17 September 2013

Appearances:

D J Hampton Applicant in Person P Roy for Respondent

P J Shamy for Inland Revenue Department, as creditor in support

Judgment:

17 September 2013

ORAL JUDGMENT OF ASSOCIATE JUDGE OSBORNE
as to application for annulment or stay of an adjudication of bankruptcy

Introduction

[1] This is an application for annulment or stay of an order of adjudication made against Mr Hampton on 5 June 2013.

Background

[2] Minter Ellison Rudd Watts (“Minter Ellison”) obtained judgment against Mr Hampton on 11 February 2010. The judgment was for $172,452.57 together with interest and costs. Putting those together, the sum awarded at that date totalled
$220,949.59.

MINTER ELLISON RUDD WATTS v HAMPTON [2013] NZHC 2434 [17 September 2013]

[3] Mr Hampton and his associated entities were at the time and subsequently engaged in a number of proceedings with the Commissioner of Inland Revenue in relation to taxation. I will refer in this judgment, where the references are to the litigation undertaken by Mr Hampton and his associated entities, simply to “Mr Hampton”. Mr Hampton hoped to get funds either freed up or paid in order to satisfy the Minter Ellison judgment. Mr Hampton’s properties were affected by the Christchurch earthquakes, which led to significant difficulties in relation to insurance claims. As time passed, Mr Hampton also hoped to get funding freed up from the insurance settlements in order to satisfy this and other liabilities. In the absence of any payment, Minter Ellison obtained a charging order over a fund from which it received $176,553.86 in December 2012. That was, I note, almost three years after Minter Ellison obtained the judgment.

[4] The balance of the judgment debt together with accruing interest remains unpaid. In 2012 Minter Ellison served on Mr Hampton a bankruptcy notice. In July 2012 Mr Hampton failed in an application to have the notice set aside.1 The notice then expired unmet. Minter Ellison filed and served its application for Mr Hampton’s adjudication in late 2012.

[5] Mr Hampton obtained Minter Ellison’s agreement to two adjournments in the first half of 2013 to provide him with time to settle the debt. In May 2013, Mr Hampton obtained an opposed adjournment for the same purpose. The application was adjourned to 5 June 2013. Mr Hampton’s memorandum which led to the 7 May adjournment included this conclusion:

The debtor accordingly seeks an adjournment of the hearing of the creditor’s application until the formal High Court hearing concerning the High Court freezing orders.

[6] In granting an opposed adjournment the Associate Judge adjourned the application to a hearing date on 5 June 2013. It was on that date that the adjudication order was made. It was made in the absence of Mr Hampton,…

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: [2013] NZHC 2434
Decision Date: 17 September 2013

CaseChat Overview and Summary

The case of Minter Ellison Rudd Watts v Hampton, decided by Associate Judge Osborne, involves an application for annulment or stay of an adjudication of bankruptcy against David John Hampton, who is the judgment debtor. Minter Ellison Rudd Watts, the judgment creditor, had obtained a judgment against Hampton for $220,949.59. Despite several adjournments, Hampton failed to pay the judgment debt, leading to the creditor's application for adjudication of bankruptcy. Hampton applied for annulment or stay of the adjudication on the grounds of recent receipt of insurance funds, which were frozen due to ongoing litigation with the Commissioner of Inland Revenue. The court had to decide whether the adjudication should be annulled or stayed, considering the statutory provisions under the Insolvency Act 2006.

The court considered whether the adjudication should be annulled under s 309(1) of the Act, which allows annulment if the bankrupt should not have been adjudicated or if debts have been fully paid. The court found that the adjudication was proper as the creditor was entitled to proceed due to the unsatisfied balance of the debt. The court also determined that there had not been a substantial change in Hampton's financial circumstances after the adjudication date, which is a requirement under s 309(1)(c). Additionally, the court noted that Hampton had ample opportunities to settle the debt and had not made sufficient arrangements to satisfy his creditors.

Regarding the stay application, the court held that it would not grant a lengthy stay akin to an annulment, as it would undermine the public interest in resolving bankruptcy proceedings promptly. The court emphasised that the Official Assignee, with Hampton's cooperation, could manage the process of accessing frozen funds to pay creditors. Therefore, the court dismissed both the annulment and stay applications.

The final orders of the court were to dismiss the debtor's applications for annulment and stay, rescind the previous order of stay, and direct Hampton to pay the creditor's and supporting creditor's costs on a 2B basis, with disbursements to be fixed by the Registrar.

Orders