Norris Ward McKinnon v Skelton - [2023] NZHC 2016

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2022-488-82

[2023] NZHC 2016

UNDER the Insolvency Act 2006

IN THE MATTER OF

the bankruptcy (or proposal) of DONALD ALFRED SKELTON

BETWEEN

NORRIS WARD McKINNON

of Hamilton, a partnership trading as a law firm
Judgment Creditor/Applicant

AND

DONALD ALFRED SKELTON of Waimate

North, Kaikohe

Judgment Debtor/Respondent

Hearing: 10 July 2023

Appearances:

J D Savage for the Judgment Creditor(by AVL) Judgment Debtor is self-represented

Judgment:

31 July 2023

JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

[Application for an adjudication in bankruptcy]

This judgment was delivered by me on 31 July 2023 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

Solicitors:
Norris Ward McKinnon (Jesse Savage/Nathan Scrivener), Hamilton, for the Judgment Creditor

NORRIS WARD McKINNON v SKELTON of Waimate North, Kaikohe [2023] NZHC 2016 [31 July 2023]

Table of Contents

Paragraph

Introduction [1]

Background [2]

Norris Ward McKinnon’s application for order for adjudication [8]

Mr Skelton’s opposition [12]

Affidavit of Donald Alfred Skelton, dated 1 June 2023 [13] Response affidavit of Soroya Elizabeth McGall, dated 26 June 2023 [17] Reply affidavit of Donald Alfred Skelton, dated 27 June 2023 [18] Legal principles [23]
Analysis [30]

Transfer of assets to defeat creditors [31]

Sale of the kiwifruit cultivars [33]

Land sales [35]

Preferential payment to other creditors [37]

Mr Skelton’s submissions [38]

Mr Skelton’s health [39]

Result [40]

Orders [43]

Introduction

[1] Norris Ward McKinnon seeks that Mr Donald Skelton (Mr Skelton) be adjudicated bankrupt.

Background

[2] This application arises for a debt derived from a 24 June 2020 judgment of the High Court at Hamilton,1 and related 14 August 2020 cost orders.2 The debt owed is said to be $203,484.16, comprising the orders made by the High Court, costs, disbursements and interest.

[3] Norris Ward McKinnon served a bankruptcy notice dated 4 November 2022 and the certificate of judgment on Mr Skelton on 17 November 2022. The last day for compliance with the bankruptcy notice was 1 December 2022. Mr Skelton did not comply with the bankruptcy notice or apply to set it aside.

[4] Norris Ward McKinnon made the present adjudication application on 12 December 2022, Mr Skelton’s act of bankruptcy, the noncompliance with the bankruptcy notice, being within three months of that date.

[5] On 24 April 2023, the application was first called before Associate Judge Gardiner where Mr Skeleton, despite having no legal representation and having not filed a statement of claim, did not want the court to make the adjudication as he claimed to have no assets. Associate Judge Gardiner, noting the Court’s discretion to refuse adjudication based on a lack of assets and the age and health of the debtor, sought the matter be relisted for 6 June 2023 by which point Mr Skelton should have sworn an affidavit as to his assets and should bring a support person.3

1 Norris Ward McKinnon v Skelton [2020] NZHC 1445.
2 Norris Ward…

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: [2023] NZHC 2016
Decision Date: 31 July 2023

CaseChat Overview and Summary

Norris Ward McKinnon, a partnership trading as a law firm, has applied for an order for the adjudication of Donald Alfred Skelton as bankrupt, pursuant to the Insolvency Act 2006. The application arises from a judgment debt of $203,484.16. Skelton, who did not comply with a bankruptcy notice, has opposed the application. The court must determine whether Skelton has established grounds under s 37 of the Act for the court to exercise its discretion to decline to adjudicate him bankrupt. The court held that Skelton has not discharged the onus of satisfying the Court that it should exercise its discretion to refuse the adjudication order sought by Norris Ward McKinnon. The court found Skelton's explanations for his disposal of assets were unsatisfactory and found that the Official Assignee should investigate whether any funds are available in Skelton's estate. The court found that while Skelton's health and personal circumstances were relevant factors, they were outweighed by the requirement that there be an investigation into Skelton's finances. The court dismissed Skelton's application for the court to exercise its discretion to refuse an adjudication order. The proceeding is to be listed in the next available bankruptcy list in the Whangarei High Court and costs are reserved.

Orders