Palmer v Hewitt Building Limited

[2022] NZHC 204

IN THE HIGH COURT OF NEW ZEALAND MASTERTON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKAORIORI ROHE

CIV-2019-435-005

[2022] NZHC 204

BETWEEN

BARBARA LYNN PALMER

Plaintiff

AND

HEWITT BUILDING LIMITED

First Defendant

MARK WILSON HEWITT

Second Defendant

Hearing:	On the papers
Appearances:	P W Michalik for plaintiff
Judgment:	17 February 2022

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1]        On 18 June 2021 Cooke J entered judgment in favour of the plaintiff,  Barbara Palmer (the judgment creditor), against the first defendant, Hewitt Building Ltd (the judgment debtor), in the sum of $392,400.

[2]        Subsequently, the judgment creditor applied for an order for examination of the judgment debtor and Cooke J made such an order on 19 November 2021.

[3]        On 15 December 2021 the examination took place in the High Court at Masterton before Registrar Anne Murdoch Moar, the company appearing through Mr Hewitt as its sole shareholder and director.

[4]        At the conclusion of the examination Mr Michalik for the judgment creditor made an oral application for an order that the judgment debtor be ordered to pay

$10,000 per month or such other order as the Court regarded as just.

[5]        The  Registrar  declined  to  make  any  order  on   jurisdictional   grounds. Mr Michalik was asked to reiterate his oral application in written form. This he did in a written application dated 16 December 2021, in which he sought an order:

That the Judgment Debtor Hewitt Building Ltd shall make periodic payments of $10,000 per month (or such other sum as to the Court may seem just) towards the Judgment Debtor and accruing interest, starting from the 15th day of January 2022) or such other date as to the Court may seem just (and continuing until the Judgment Debt is fully paid together with such interest as accrues on the Judgment Debt under the Interest on Money Claims Act 2016.

[6]The application was referred to me on 17 December 2021.

[7]        In a minute issued the same day, I gave the judgment debtor until 24 December 2021 to respond.

[8]The judgment debtor elected not to do so.

[9]        The grounds on which Mr Michalik seeks an order in the terms that he does are set out in his application in the following terms:

The grounds on which this order is sought is as follows:

1.   It appears from the evidence recorded in the Record of the Examination of Mr Hewitt for the Registrar that, if it is managed by Mr Hewitt in such a way as to continue in business, the Judgment Debtor has the capacity to make periodic payments in the order of $8,000–$10,000 a month towards repayment of the judgment debt.

2.   An  order  for  periodic  payments  as  sought  by  the  Judgment Creditor would incentivise Mr Hewitt to manage the Judgment Debt with a view to ensuring he earns the money required to pay the Judgment Debt within a reasonable time.

[10]      The application is made pursuant to r 17.17(1)(b) of the High Court Rules which provides as follows:

17.17   Orders by court

(1) After an examination is completed, a Judge may, after giving the examining party and the examinee an opportunity to be heard, do any 1 or more of the following:

…

(b)make an order that the money owing under the judgment be paid by instalments payable at times fixed by the court.

[11]      In the absence of any response from the judgment debtor, either when the oral application was made at the conclusion of the examination on 15 December 2021, or by the deadline of 24 December 2021 set in my later minute, it is difficult to determine whether there are any grounds upon which the order sought by the judgment creditor might be resisted.

[12]      Mr Michalik contends that the evidence suggests that the company is in a position to make substantial regular payments of between $8,000 and $10,000 per month.

[13]      The primary evidence is the company’s financial records and Mr Michalik’s cross examination of Mr Hewitt in relation to these. It is clear from the financial statements for the year ending 31 March 2021 that Hewitt Building was a successful and profitable business. That is especially so when one has regard to the fact that the company’s expenses during that year included legal costs of close to $50,000 relating to this proceeding. Once these are written back in it looks as if the company might have had earnings before interest and tax in the order of approximately $250,000.

[14]      Early in the financial year ending 31 March 2022 Cooke J delivered his judgment. After this the financial affairs of the company altered materially, as is evident from subsequent financial statements. As Mr Michalik put to Mr Hewitt in cross examination, it appears that contracts that Hewitt Building had were transferred to another entity owned and controlled by him, as were key staff.

[15]      Despite Mr Hewitt’s protestations to the effect that these changes in his affairs were really a part of his long-term planning for retirement, it is quite impossible to avoid the conclusion that steps were taken after 18 June 2021 (the date of Cooke J’s

judgment) to insulate the company from the effects of the judgment debt. Having said that, I should acknowledge that Cooke J also entered judgment against Mr Hewitt personally for $77,711.25 and a substantial costs award of $107,257.18 against the company and Mr Hewitt jointly and severally, and that, to his credit, Mr Hewitt has made arrangements to pay the judgment against him and the costs judgment.

[16]      The upshot of all this is that Mr Michalik is entitled to make the submission he does that the Court should make a realistic order for periodic payments to the judgment creditor in order to encourage Mr Hewitt to ensure that the company continues to operate profitably and that incoming work is channelled through Hewitt Building Ltd so that it can pay these amounts.

[17]      In the end, no serious argument has been advanced against an order in the terms sought on the judgment creditor’s behalf by Mr Michalik.

[18]      Pursuant to r 17.17(1)(b) of the High Court Rules I order that the judgment debtor, Hewitt Building Ltd, pay to the judgment creditor, the sum of $8,000 per month commencing on the first day of March 2022 and continuing on the first day of every month from that date until such time as the principal amount of the judgment debt

$392,400, together with interest on the same pursuant to the Interest on Money Claims Act 2016 from 18 June 2021, and that those payments continue until such time as the full amount of the judgment debt (together with interest) is paid.

Associate Judge Johnston

Solicitors:
Taverner Keys & Co, Carterton for plaintiff