Owens v Coleman - [2017] NZHC 2575

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2016-404-000138 [2017] NZHC 2575

BETWEEN
COLIN DAVID OWENS AND DAVID

STUART VANCE AS LIQUIDATORS OF HAGFISH NZ LIMITED (IN LIQUIDATION)

Plaintiffs

AND

PETER COLEMAN First Defendant

AND

PETER COLEMAN AND TRUST MANAGEMENT SERVICES LIMITED Second Defendants

Hearing: 20 October 2017

Appearances:

J Sumner for the Plaintiffs
G Collecutt for the Defendants

Judgment:

24 October 2017

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on
24.10.17 at 3:30pm, pursuant to
Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar
Date……………

C D OWENS AND D S VANCE AS LIQUIDATORS OF HAGFISH NZ LIMITED (IN LIQUIDATION) v
P COLEMAN [2017] NZHC 2575 [24 October 2017]

[1] The first defendant (Mr Coleman) applies to set aside the judgment of Brewer J following a formal proof hearing on 8 September 2016. Rule 15.10 of the High Court Rules permits the Court to set aside or vary any judgment obtained by default if it appears to the Court there has been or may have been a miscarriage of justice. The three considerations relevant to the Court making a decision whether to grant leave to defend out of time are:

(a) Whether the defendant has a substantial ground of defence.

(b) Whether the delay is reasonably explained.

(c)Whether the plaintiff will suffer irreparable injury if judgment is set aside.1

Background

[2] The plaintiffs were appointed liquidators when Hagfish NZ Limited (Hagfish) was on 20 February 2015 placed into liquidation by the High Court. About one year later in February 2016 the plaintiffs filed liquidation proceedings against three companies associated with Mr Coleman. Each of those claimed, inter alia, that there was a debt due by the companies to Hagfish.

[3] At about the same time the plaintiffs served notice of a claim on behalf of

Hagfish against Mr Coleman.

[4] Initially Mr Coleman filed statements of defence in response to the claims against his three companies. By his affidavit filed on behalf of those companies he rejected claims of any debt due. He explained his reasons for belatedly engaging the services of counsel.

[5] Although attending to matters on behalf of the companies Mr Coleman failed to file any defence in relation to the civil proceeding served on him. Because Mr Coleman took no steps to oppose that separate claim against him personally, the

1 Neumayer v Kapati Coast District Council [2014] NZHC 417 [8].

plaintiffs sought judgment by default and a hearing on 8 September 2016 was scheduled for formal proof upon the plaintiffs’ claim against Mr Coleman. Meanwhile applications to liquidate the companies were scheduled for a defended hearing on 29
November 2016.

[6] On 8 December 2016 the formal proof applications were part heard by Brewer J, His Honour noting that the hearing time allocated was insufficient and because His Honour was unsure of the basis on which the plaintiffs were advancing the causes of action alleging breaches of duty owed…

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: [2017] NZHC 2575
Decision Date: 24 October 2017

CaseChat Overview and Summary

The case of Owens v Coleman involved a legal dispute between the plaintiffs, who were liquidators of Hagfish NZ Limited, and the defendant, Mr. Coleman. The liquidators sought to recover debts owed by Mr. Coleman and his associated companies to Hagfish. The High Court of New Zealand considered Mr. Coleman's application to set aside a default judgment obtained by the liquidators. The court was required to determine whether Mr. Coleman had a substantial ground of defence, whether the delay in filing a defence was reasonably explained, and whether the liquidators would suffer irreparable injury if judgment was set aside.

The court found that there was a substantial ground of defence, as the evidence provided by the liquidators was challenged by Mr. Coleman. The court accepted that Mr. Coleman's initial failure to respond to the liquidators' claims and the Inland Revenue Department's demands for company records was lax. However, the court held that it was inappropriate to accept without more the liquidators' reconstruction of the company's financial records and the Inland Revenue Department's provisional position taken in the Notice of Proposed Assessment (NOPA). The court noted that there was good reason to challenge the sufficiency of the evidence provided by the liquidators.

In conclusion, the court granted Mr. Coleman's application to set aside the default judgment obtained by the liquidators. The court held that the considerations of the availability of a substantial ground of defence outweighed others usually considered in cases like this. The costs of and incidental to this application were to lie where they fell.

Orders