Norris Ward McKinnon Limited v Halse

[2025] NZHC 490

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2023-419-317

[2025] NZHC 490

IN THE MATTER

AND

of the Insolvency Act 2006

IN THE MATTER

of the Bankruptcy of ALLAN GEOFFREY HALSE

BETWEEN

NORRIS WARD MCKINNON LIMITED, SAMUEL WALLACE HOOD and ERIN REBEKAH ANDERSON

Substituted Judgment Creditors

AND

ALLAN GEOFFREY HALSE

Judgment Debtor

Hearing:	12 March 2025
Appearances:	DM Vautier for the Substituted Judgment Creditors AG Halse, Judgment Debtor in Person
Judgment:	13 March 2025

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 13 March 2025 at 10 am pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

Fee Langstone, Auckland

NORRIS WARD MCKINNON v HALSE [2025] NZHC 490 [13 March 2025]

Introduction

[1]                 I issue this judgment making the orders discussed in the hearing of this matter yesterday.

[2]                 I make an order for adjudication of Mr Halse in bankruptcy but on the basis that the order is to lie in court to allow payment by Mr Halse by Wednesday, 19 March 2025 of the judgment debts claimed in the adjudication application totalling

$27,408.18. Costs of the adjudication application are reserved and discussed further below.

[3]                 If the amount claimed is not paid by 19 March 2025, Mr Halse ought to be adjudicated bankrupt. I set out my reasons for reaching this decision below by addressing the following:

(a)the validity of the process substituting Norris Ward McKinnon Limited, Samuel Hood and Erin Anderson as the judgment creditors;

(b)Mr Halse’s application for a stay of these proceedings; and

(c)the requirements of the Insolvency Act 2006 before an adjudication order is made.

Substitution process

[4]                 Norris Ward McKinnon, Mr Hood and Ms Anderson were substituted in as judgment creditors by my minute dated 26 November 2024.

[5]                 The judgment creditors were the second, third and fourth defendants in proceedings brought by Mr Halse in the High Court. Those proceedings were brought against the Rangiura Trust Board and each of the judgment creditors, being the law firm, the partner and associate who had represented the Trust Board in an employment dispute.

[6]                 Mr Halse brought claims for deceit, fraud, conspiracy to defraud and knowing assistance against each of the defendants. Those claims were struck out on the application of the Trust Board, supported by the judgment creditors in this case.1

[7]                 The judgment creditors also successfully brought an application for an extended order under s 166 of the Senior Courts Act 2016 restraining Mr Halse from commencing or continuing civil proceedings on that matter or any related matter.2 Costs and disbursements were then awarded to the first defendant and jointly to the judgment creditors of $21,688.50 each.3

[8]                 Mr Halse appealed to the Court of Appeal but was unsuccessful with further costs awarded of $10,456.25.4 Security for costs had been lodged of $7,236.57 so only

$3,219.68 is outstanding in respect of that decision.

[9]                 Mr Halse then sought leave to appeal to the Supreme Court but was unsuccessful with costs awarded of $2,500.5

[10]The three costs awards together amount to $27,408.18.

[11]             In terms of the substitution process, Mr Halse submits that Norris Ward McKinnon, Mr Hood and Ms Anderson are not able to be substituted for the original creditor, Turuki Healthcare Charitable Trust (Turuki), because:

(a)the criteria in s 44(1)(a) of the Insolvency Act 2006 have not been met by Turuki; and

(b)the criteria in s 44(2) have not been met as there is no act of bankruptcy as the debt owing to Turuki has been paid.

1      H v RPW & Ors [2023] NZHC 1519 at [117].

2 At [118].

3      Halse v Rangiura Trust Board & Ors [2023] NZHC 3051.

4      H v RPW & Ors [2024] NZCA 263.

5      Halse v Rangiura Trust Board & Ors [2024] NZSC 143.

[12]Section 44 of the Insolvency Act 2006 provides:

44       Substitution of creditor

(1)The court may substitute another creditor (Creditor 2) for the

creditor making the application for adjudication (Creditor 1), if—

(a)Creditor 1 has not proceeded with due diligence or at the hearing of the application offers no evidence; and

(b)the debtor owes Creditor 2 $1,000 or more.

(2)In that case, Creditor 2 must file another application for adjudication, but can rely on the act of bankruptcy to which Creditor 1’s application related.

[13]             Norris Ward McKinnon, Mr Hood and Ms Anderson (referred to from here as “NWM”) filed a notice of appearance in support of the bankruptcy proceedings brought by Turuki dated 30 October 2024.

[14]             Shortly prior to the hearing of Turuki’s application for adjudication, Turuki filed a memorandum dated 20 November 2024 confirming that the whole of the judgment debt owing to Turuki had been paid that day and that Turuki did not intend to proceed with its application for adjudication.

[15]             As Turuki no longer wished to proceed, a memorandum was filed on behalf of NWM seeking to substitute in as judgment creditors. I made orders substituting NWM on 26 November 2024 as confirmed in my minute of that date.

[16]             I am satisfied that the criteria in s 44(1)(a) have been met as Turuki no longer wished to proceed.

[17]             In terms of s 44(2), NWM has filed another application for adjudication as directed in my 26 November 2024 minute and can rely on the act of bankruptcy to which Turuki’s application related because, although the debt was finally paid, it was not paid by 19 August 2024. That date was the extended date for compliance with the bankruptcy notice as set out in my decision issued on 19 July 2024.6 An act of

6      Turuki Healthcare Charitable Trust v Halse [2024] NZHC 2000 at [83].

bankruptcy had therefore occurred on 19 August 2024 prior to payment of the debt to Turuki on 20 November 2024.

[18]             Mr Halse further submits that even if the act of bankruptcy did occur on 19 August 2024, NWM’s adjudication application was not filed until 11 December 2024 and so was not within three months following the act of bankruptcy as required.7

[19]             However, where a creditor is substituted for the original creditor, the adjudication application by the substituted creditor is not required to be filed within three months of the act of bankruptcy as s 44(2) expressly provides that the substituted creditor may rely on the act of bankruptcy alleged in the original petition. Previous decisions have confirmed this position.8

[20]I am therefore satisfied that the substitution process cannot be challenged.

Stay application

[21]             In addition to his opposition to the bankruptcy application by the substituted creditors, Mr Halse filed an application seeking to stay these proceedings. The stay application was originally based on proceedings before the Supreme Court and the Court of Appeal. Since the stay application was filed, Mr Halse accepts that the Supreme Court has issued judgments refusing leave to appeal and refusing recall of that decision.

[22]             In his written submissions Mr Halse recorded that he intended to file a recall of the Court of Appeal’s decision issued on 14 February 2025, which he submits failed to adequately address his grounds for seeking a judicial review.

[23]             I do not consider that an intention to apply for a recall of the Court of Appeal judgment is sufficient to stay these bankruptcy proceedings.

7      Insolvency Act 2006, s 13(b).

8      Re Ebbett, ex p Marac Financial Services Limited 14/9/89, Fisher J, HC Rotorua, B11/89 and Ronaldson v Dominion Freeholds Limited Ltd [1981] 2 NZLR 132 (CA), both considering the wording of the Insolvency Act 1967 but which is similar to the 2006 Act.

[24]             In addition, Mr Halse submits that these bankruptcy proceedings are part of an attempt to run Mr Halse out of business that has been going on since 2018. However, these proceedings are based on costs awards that have been made by three New Zealand courts that have not been successfully appealed and in proceedings that were originally brought by Mr Halse. This submission does not therefore provide a basis for a stay either and so I proceed to set out the reasons for determining that a bankruptcy order is appropriate (if payment is not made as advised by Mr Halse by 19 March 2025).

Do the substituted judgment creditors satisfy the requirements of the Insolvency Act?

[25]             I briefly set out the Insolvency Act requirements before considering the facts in this case.

Requirements of section 13 of the Insolvency Act

[26]             Section 36 of the Insolvency Act provides that the Court may, at its discretion, adjudicate a debtor bankrupt if the creditor has established the requirements as set out in s 13 of the Act that:

(a)the debtor owes the creditor $1,000 or more or, if 2 or more creditors join in the application, the debtor owes a total of $1,000 or more to those creditors between them; and

(b)the debtor has committed an act of bankruptcy within the period of 3 months before the filing of the application; and

(c)the debt is a certain amount; and

(d)the debt is payable either immediately or at a date in the future that is certain.

[27]             Even where the requirements of s 13 are satisfied, adjudication does not follow automatically. Section 37 of the Act provides that the Court may exercise its discretion to decline to make an order adjudicating the judgment debtor bankrupt if:

(a)the applicant creditor has not established the requirements set out in section 13; or

(b)the debtor is able to pay his or her debts; or

(c)it is just and equitable that the court does not make an order of adjudication; or

(d)for any other reason an order of adjudication should not be made.

[28]             In Baker v Westpac Banking Corporation, the Court of Appeal held in relation to the exercise of the Court’s discretion:9

It is proper for the court to consider not only the interests of those directly concerned — the petitioner, other creditors, the debtor — but also the wider public interest.  A creditor who establishes the jurisdictional facts set out in  s 23 [the equivalent of s 13] is not automatically entitled to an order. On the other hand, it is for an opposing debtor to show why an order should not be made. The court will give proper weight to the commercial judgment of the petitioner but the oppressive use of the bankruptcy process may be a ground for refusing an order. Another ground may be the undoubted absence of assets but that will not necessarily preclude an order given the range of interests involved including the public interest in the continuing oversight of a bankrupt’s affairs and the disqualifications that go with bankruptcy. In the end the court must balance the various considerations relevant to the case and determine whether the debtor has succeeded in showing that an order ought not to be made.

[29]             In Rabobank Australia Ltd v Tootell,10 Associate Judge Osborne (as his Honour then was) referred with approval to the list of factors set out in Re Epirosa, ex parte Diners Club (NZ) Ltd.11 These factors include the circumstances in which the debt was incurred and whether those circumstances suggest that the creditor is acting unreasonably in pursuing adjudication.

Section 13(a) - Debtor owes the creditor $1,000 or more

[30]             I accept that the amount owed by Mr Halse to the judgment creditors is greater than $1000. The amount is made up of the three judgments issued by the High Court, Court of Appeal and Supreme Court respectively, as set out above.

[31]             NWM sought to add interest to each of the judgment debts claimed. Interest was not awarded on the costs awards when made by those Courts and nor does it appear to have been sought in those proceedings.

[32]As Osborne J commented in Davern v QBE Insurance (Australia) Limited:12

[13] It is another fact that may not be universally understood amongst the profession that the previous provision in the High Court Rules that provided for interest to accrue on judgment debts (the superseded version of r 11.27) is

9      Baker v Westpac Banking Corporation CA212/92, 13 July 1993 at 4.

10     Rabobank Australia Ltd v Tootell [2013] NZHC 2975 at [7] and [8].

11     Re Epirosa, ex parte Diners Club (NZ) Ltd HC Wellington B498/91, 6 March 1992.

12     Davern v QBE Insurance (Australia) Limited [2023] NZHC 3543 at [13].

no longer in existence — interest does not automatically (without order of the Court) accrue on a judgment debt. What r 11.27 High Court Rules provides:

11.27   Interest as part of judgment debt

Interest must be awarded in a money judgment in accordance with the Interest on Money Claims Act 2016.

[33]             Before interest can be awarded under the Interest on Money Claims Act 2016, s 25 of the Act must be complied with. This requires the party claiming interest to specify the section under the Act under which interest is claimed and, as far as possible, the period for which it is claimed.13

[34]             In Davern a late amendment to the pleadings was allowed pursuant to s 25(4).14 However, I do not consider any late application to claim interest can be made here. These are separate bankruptcy proceedings, rather than the proceedings in which the costs awards were made, and interest does not appear to have been referred to in those proceedings, unlike in the cases discussed by Osborne J where amendment was allowed. 15

[35]As a result, the total judgment debt that the application relates to can only be

$27,408.18.

Section 13(b) – Debtor has committed act of bankruptcy

[36]             There has been an act of bankruptcy as Mr Halse did not comply with the extended date for compliance with the bankruptcy notice of 19 August 2024, with payment of the debt owing to Turuki only being made on 20 November 2024 after the after Turuki’s submissions had been filed in support of its application for adjudication.

[37]             Section 44(2) expressly provides that a substituted creditor can rely on the act of bankruptcy of the original creditor. I am therefore satisfied that there is the required act of bankruptcy.

13     Interest on Money Claims Act 2016, s 25(1).

14     Davern v QBE Insurance (Australia) Limited, above n 12, at [36].

15     At [23] to [24], referred to with approval by Chen v Huang [2024] NZCA 38 at [243]-[244].

Section 13(c) – Debt is a certain amount

[38]             As set out above, NWM's application relies on the three judgment debts arising from the three decisions referred to.

[39]There is no question therefore that the debt is for a certain amount.

Section 13(d) – Debt is payable immediately

[40]             Again, there is no question that the judgment debt is payable immediately as the three amounts making up the total in the application for adjudication have each been awarded by the courts.

Conclusion

[41]NWM has established that the requirements of s 13 have been satisfied.

Should the court exercise its discretion to decline to make a bankruptcy order under s 37 of the Insolvency Act?

[42]             The grounds for the Court exercising its discretion to decline to make a bankruptcy order include that the creditors have not established the requirements set out in s 13.16 As set out above, these have been established.

[43]             The second ground is  where the debtor is  able to  pay his  or her debts.17    Mr Halse has not filed any evidence as to his financial position. However, as recorded above, he has said he is able to organise payment of the amount outstanding by Wednesday, 19 March 2025. I am therefore allowing the bankruptcy order to lie in Court until the day following to allow payment to be made. If payment is not made, this ground for declining to make a bankruptcy order will not be satisfied as there is no evidence before the Court as to Mr Halse’s financial position otherwise.

16     Insolvency Act 2006, s 37(a).

17     Section 37(b).

[44]             The next ground for declining an order is where it is just and equitable not to make an order.18 I am satisfied that in circumstances where Mr Halse has indicated that payment can be made on his behalf and he has exhausted all available appeals in New Zealand, there is no reason why it would be just and equitable for the Court not to make an order.

[45]             The Courts have considered Mr Halse’s claims that there has been a concerted campaign against him in the proceedings in which the costs awards have been made and his appeals have been declined so such claims cannot provide a basis for declining to make a bankruptcy order if those costs awards are not paid.

[46]             Mr Halse indicates that he may take proceedings to the United Nations Human Rights Committee but this cannot prevent an order being made at this stage.

[47]             The final ground for declining to make an order is that there is any other reason why an order of adjudication should not be made.19 Mr Halse volunteered that payment can be made on his behalf and there does not appear any other reason for an order not to be made if that payment does not occur.

Conclusion

[48]             In conclusion, the requirements of s 13 have been made out and I do not consider there is a proper basis for declining to make an order under s 37. A bankruptcy order is therefore made but on the basis that it is to lie in Court to allow payment by Wednesday 19 March 2025 as further directed below.

Costs

[49]             At the commencement of the hearing a memorandum as to costs was handed up by counsel for NWM. A copy was provided to Mr Halse at the same time.

[50]             As set out in the introduction, I am reserving costs to allow Mr Halse to have an opportunity to respond in respect of costs as he had not had an opportunity to

18     Insolvency Act 2006, s 37(c).

19     Section 37(d).

consider NWM’s costs memorandum prior to the hearing. As the judgment creditors have succeeded in obtaining an order subject to payment, costs will be payable to them in the ordinary course.

[51]             I discussed a number of adjustments that I considered would be appropriate to the costs claimed as follows:

(a)a reduction in the time allocation for the filing of the opposition to the stay application from 0.6 to 0.2 of a day as it was brief and no affidavits in support were required to be filed;

(b)a reduction in the hearing time as matters were completed by the morning adjournment, so reducing the time allocation from 0.5 to 0.25 of a day; and

(c)making the order for disbursements on a GST exclusive basis given Norris Ward McKinnon Limited will be registered for GST:

[52]             The judgment creditors also claim for the sealing fee for the bankruptcy order. This will only be appropriate if Mr Halse does not pay the amount owing by 19 March 2025 as directed. I therefore set out below an adjusted schedule capturing these amendments.

[53]             Mr Halse may make any costs submissions by 24 March 2025 as directed below (I have adjusted the date so that the position on bankruptcy is clear by the time the costs submissions are filed). The judgment creditors will then have an opportunity to respond in the usual way before a decision is made on the papers.

[54]             I ask the parties to try to agree costs to avoid the need to file further submissions and further time and costs being incurred by both. I remind Mr Halse that all such communications are required to be with the solicitors for the judgment creditors rather than directly with the judgment creditors themselves.

Schedule of 2B Costs – Daily rate of $2,390
Item	Particulars	Time Allocation	2B Costs ($)
46	Appearance at hearing of 26 November 2024	0.4	$478.00
45	Filing application for adjudication by creditor	0.6	$1,434.00
23	Filing opposition to interlocutory application	0.2	$478.00
24	Preparation of written submissions	1.5	$3,585.00
26	Appearance at hearing of 12 March 2025	0.25	$597.50
Subtotal			$6,572.50
Schedule of disbursements and filing fee
Item	Particulars		Amount ($)
48	Filing fee for creditors application for adjudication order		$565.22
14	Filing fee for Notice of Opposition		$124.35
50	Sealing fee for bankruptcy order (if bankruptcy order made)		$56.52
Subtotal			$746.09
Preliminary Total			$7318.59

Result

[55]             The application by Norris Ward McKinnon Limited, Samuel Hood and Erin Anderson for an adjudication order is granted with the order to lie in court until Thursday, 20 March 2025 at 5 pm to allow payment by Mr Halse by Wednesday, 19 March 2025 of $27,408.18.

[56]             If payment in full is not made by the date directed, the bankruptcy order will be confirmed following the filing of a solicitor’s certificate on behalf of the judgment creditors by 11 am on 20 March 2025, with a minute to be issued following receipt of the solicitor's certificate to indicate the time the bankruptcy order will take effect.

Costs

[57]Costs are reserved as discussed above with the following directions to apply:

(a)Mr Halse is to file and serve any submissions in response to the amount claimed as adjusted above by Monday, 24 March 2025;

(b)the judgment creditors are to file any submissions in response by

Monday, 31 March 2025; and

(c)costs will then be determined on the papers.

Associate Judge Sussock