Nothling v Clayton - [2023] NZHC 1523

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2022-470-000103

[2023] NZHC 1523

IN THE MATTER

AND
of the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of MARK ARNOLD CLAYTON

BETWEEN

LYNN ALTHEA NOTHLING, ZAK EDWARD NOTHLING and ETH

TRUSTEES (NOTHLING) LIMITED
Judgment Creditors

AND

MARK ARNOLD CLAYTON

Judgment Debtor

Hearing: On the papers

Appearances:

DG Hayes for the Judgment Debtor/Applicant

GC Jenkin for the Judgment Creditors/Respondents

Judgment:

19 June 2023

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

[Costs]

This judgment was delivered by me on 19 June 2023 at 4 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
NZ Commercial Law Group Ltd, Hamilton, GC Jenkin, Princes Chambers, Auckland,

Case Officer: Katrina George

NOTHLING & ORS v CLAYTON [2023] NZHC 1523 [19 June 2023]

Introduction

[1] The trustees of the Clayton Nothling Trust (Trustees) seek indemnity costs following the discontinuance of an application to set aside a bankruptcy notice served on Mr Mark Clayton.

Background

[2] The Trustees served a bankruptcy notice on Mr Clayton on 4 November 2022. The notice expired unanswered on 18 November 2022. Mr Clayton filed an application to set aside the notice on 21 November 2022.

[3]The grounds for the application to set aside the bankruptcy notice were:

(a)that the costs judgment dated 9 August 20221 was not entered for the three named judgment creditors who issued the bankruptcy notice and so the sealed judgment relied on is a nullity; and

(b)Mr Clayton has a counterclaim, cross-demand or set-off that equals or exceeds the amount of the claim of Ms Lynn Nothling and the Trustees.

[4] The Trustees filed a notice of opposition together with an application for adjudication on the basis that the application to set aside was filed out of time and therefore could not proceed.

[5] In my minute dated 3 February 2023, I raised the issue of the timing of the application to set aside as the joint memorandum filed seeking timetable directions on 27 January 2023 had recorded the date of expiry of the bankruptcy notice as being 18 November 2022 and it is settled law that the 10 working day time limit is not able to be extended. I recorded that it was not clear on what basis Mr Clayton could proceed with an application to set aside given it had been filed outside of the 10 working day time limit. I asked counsel to consider this point and if there was no proper basis for argument, to reconsider whether to proceed with the application.

1 Nothling v Clayton [2022] NZHC 1943.

[6] In the meantime, I stayed the application for adjudication by minute dated 7 February 2023 until the outcome of the application to set aside was known.

[7] Mr Clayton did not discontinue at that stage and a hearing for the application to set aside was allocated on 23 May 2023. The date for filing and serving the common…

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 1523
Decision Date: 19 June 2023

CaseChat Overview and Summary

The case of Nothling v Clayton involves the Trustees of the Clayton Nothling Trust seeking indemnity costs from Mr Mark Clayton after he discontinued an application to set aside a bankruptcy notice served on him. The legal issues at hand were whether the application to set aside was a hopeless case and bound to fail, and whether Mr Clayton brought the application with a view to causing damage and discomfort to the trust. Additionally, the Trustees sought an order confirming that the stay of the application for adjudication is lifted.

The Court found that the application to set aside was indeed a hopeless case and bound to fail. The application was filed out of time, and Mr Clayton did not respond to the submissions that the application was hopeless or that he brought it with ulterior motives. The Court also found that the Trustees' claim for indemnity costs was reasonable and justified given Mr Clayton's conduct. As such, the Court awarded indemnity costs of $13,220 to the Trustees.

Finally, the Court lifted the stay of the application for adjudication, which had been put in place until the outcome of the application to set aside was known. With the discontinuance of the application to set aside, the stay was no longer necessary.

In conclusion, the Court ordered Mr Clayton to pay costs on an indemnity basis to the Trustees in the amount of $13,220. The order for a stay in respect of the judgment creditors' application for adjudication is lifted as a result of the discontinuance.

Orders