Parkin v Marr

[2016] NZHC 2891

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2016-404-001023 [2016] NZHC 2891

IN THE MATTER OF

of the bankruptcy of CHARLOTTE

RUBY MARR

BETWEEN

BARRY IAN PARKIN Judgment Creditor

AND

CHARLOTEE RUBY MARR Judgment Debtor

CIV 2016-404-001025

IN THE MATTER OF       of the bankruptcy of BERNADETTE MAKUINI MARR

BETWEEN  BARRY IAN PARKIN Judgment Creditor

ANDBERNADETTE MAKUINI MARR Judgment Debtor

Hearing:	30 November 2016
Appearances:	M F Nelson for the Judgment Creditor J Wain for the Judgment Debtors
Judgment:	1 December 2016

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on

01.12.16 at 3:00pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

BARRY IAN PARKIN v CHARLOTEE RUBY MARR [2016] NZHC 2891 [1 December 2016]

CIV 2016-404-001027

IN THE MATTER OF

BETWEEN

The bankruptcy of KEITH CHARLES BLUETT MARR

BARRY IAN PARKIN Judgment Creditor

ANDKEITH CHARLES BLUETT MARR Judgment Debtor

[1]      The applications herein for adjudication and to be considered by reference to the provisions of the Insolvency Act 2006 (the Act).

The adjudication application

[2]      The judgment creditor (Mr Parkin) applies to adjudicate the judgment debtors bankrupt.   Each of the judgment debtors (Mrs Marr and her children Keith and Charlotte) was jointly and severally ordered to pay Mr Parkin’s costs and disbursements following their unsuccessful High Court proceeding claim against Mr Parkin. Total costs exceeding $99,000 have been ordered to be paid.

[3]      The judgment debtors’ claim was heard before Faire J on 3 – 6 November

2014.   His Honour’s judgment issued on  17 December 2014.    It  explained the judgment debtors had defaulted on their mortgage over a residential property.  Mrs Marr engaged a third party, her friend Ms Guttenbeil to bid on their behalf at the mortgagee auction with the intention that Mrs Marr would raise finance and settle that purchase.  The day before the auction Mrs Marr’s mortgage broker referred her to another broker, a Mr Barton who had spoken to Mr Parkin about providing a purchase deposit of $25,000.   Ms Guttenbeil entered into an agreement with the mortgagee.  She did not formally settle that purchase.

[4]      The purchase did not settle in time and Ms Guttenbeil was in breach of the mortgagee sale and purchase contract.  Ms Guttenbeil then nominated Mr Parkin to settle the purchase and this Mr Parkin did.  Mr Parkin had provided the deposit on the condition he was named as nominee in the purchase contract.

[5]      The judgment debtors sued Mr Parkin.   In essence it was alleged he was acting for or on behalf of them or otherwise illegally or in breach of commercial obligations to their detriment.   In short they sued him for knowing receipt of a property subject to a constructive trust, in breach of competing interest claim and for breaches of the Credit Contracts and Consumer Finance Act 2003 (CCCFA).

[6]      Faire J entered judgment in favour of Mr Parkin.   His Honour held Mrs Marr’s friend Ms Guttenbeil was their agent but that the scope of that agency did not extend to the friend raising finance herself and it was never intended that she would

have to settle the purchase.  Rather and within the scope of the agency to nominate Mr Parkin, he did not receive anything in breach of a fiduciary duty or dishonestly. The competing equities cause of action claim failed because His Honour found the (other) sale and purchase agreement identifying Keith and Charlotte as purchasers and by which the plaintiffs’ claimed they had an equitable interest, was a scam.  The CCCFA causes failed because there was no credit contract between judgment debtors and Mr Parkin.

[7]      In that outcome it was determined Mr Parkin had been entitled to ownership of the residential property Mrs Marr and her husband had occupied.

[8]      Bankruptcy notices  and  subsequently adjudication  applications  have been served on the judgment debtors because the costs orders remain unpaid.   Those applications are opposed by each judgment debtor, and in some respects on identical grounds, namely:

(a)      The judgment debt arose out of, or in connection with, conduct and dealings by Mr Parkin and his business associate (Mr Barton) that amounted to:

(i)       Fraud; and

(ii)      Illegality; and/or

(iii)Misleading and deceptive conduct or conduct that was likely to mislead or deceive within the meaning of sections 9 and 11 of the Fair Trading Act 1986.

(b)That conduct and those dealings have caused loss and damage to the judgment debtors.

(c)       Pursuant to s 37(c) and (d) of the Act it is just and equitable that the

Court not makes an order for adjudication.

(d)The   Court   may   halt   the   judgment   creditor’s   application   for adjudication on terms appropriate to the Court pursuant to s 38(1)(2) of the Act pending resolution of those matters set out in paragraph (a).

The affidavit evidence

[9]     By Charlotte’s affidavits dated 2 November and 28 November 2016 in opposition, she expresses concern with her involvement with the debt because she had been named by her mother’s lawyer as a nominal plaintiff in the proceeding against Mr Parkin.  She says that she like her brother Keith, had no involvement in the litigation and did not receive any legal advice in relation to it.   She said her position as a nominal plaintiff was due to the fact that Mr Barton and his business associate Mr Parkin made a decision that she and Keith would be required to buy the property using their incomes.  She said her mother was proposing to form a family trust to re-purchase the family home but that Mr Parkin and Mr Barton decided not to use the family trust to purchase the property.

[10]     Charlotte  said  her  mother  had  engaged  a  lawyer  to  act  for  all  children including Charlotte and Keith in repurchasing the home at the mortgagee sale but this did not proceed and the lawyers were no longer engaged.

[11]     Charlotte  recalls  her  and  Keith  signing  the  initial  sale  and  purchase agreement for the property from Mrs Marr’s friend Ms Guttenbeil who was to have purchased the property at the mortgagee sale.

[12]     She confirms not having received any legal advice in relation to Mr Parkin’s claim and she says as far as she can recall she never saw any court documents, never spoke to any lawyer about the case, and was not asked to give evidence at court.

[13]     Charlotte left New Zealand in April 2015 and works in London.  She is an

Auckland University Arts degree graduate having majored in English literature.

[14]     Keith swore an affidavit dated 26 October 2016.  His evidence is in similar vain to that of his sister.  He was never involved in the litigation, was never called to give evidence and never received any legal advice in relation to it.  Rather his sole

purpose was to assist his mother in the purchase as she requested.  He explains the circumstances  of  haste  that  reflect  his  having  signed  the  (other)  agreement  to purchase the property from Ms Guttenbeil.  His passion is music, singing, acting and performing arts.  He recently auditioned for a part in an Australian production.

[15]     Keith has negligible assets and no savings.

[16]     By her affidavit dated 5 October 2016 Mrs Marr refers to the process by which her home was to have been rescued from mortgagee sale, as a scam.   Mrs Marr complains there was neither in the High Court nor before the Court of Appeal was there any analysis of what actually occurred or of the actions of Mr Parkin and Mr Barton in that regard.  She appears to blame her lawyer for this.  She asserts Mr Parkin had approached her employer to have her dismissed from her position as a real estate agent.

[17]     Mrs Marr’s a second affidavit dated 21 October 2016 attaches a 116 page submission completed on her behalf by counsel Mr Wain in response to Mr Parkin’s complaint to the Real Estate Agents Authority alleging that Mrs Marr had committed forgery by the production of the (other) sale and purchase agreement to secure the purchase of her family property when it was subject to the mortgagee sale process. Much of the focus of those  submissions addresses evidence  claimed to support allegations of fraud by Mr Parkin and Mr Barton with the mortgagee sale process.

[18]     Finally and by a third affidavit dated 29 November 2016  Mrs Marr has provided details of her present financial position from which it is clear she is without assets or income.

[19]     Charlotte has sworn a supplementary affidavit.   Hers was affirmed on 28

November 2016 in London.  She advises she has no assets and is renting a flat in London.   She has a student loan debt of $57,000.00, no bank savings and has no credit card debt.   She earns enough for living expenses including rent and other limited expenses.

[20]     Keith’s supplementary affidavit sworn in Auckland on 29 November 2016 refers to him owning an old model car valued at $3,000.  He has no bank savings.

His Kiwibank account is in debit.  He has a credit card debt of $2,825 and personal loans totalling $9,800.   Keith is 26 years old and is currently unemployed but is looking for stage work opportunities in the entertainment industry in New Zealand and Australia.

Considerations

Relevant provisions of the Act

[21]     In this case the requirements of s 13 of the Act have been met.   The debt exceeds  $1,000.00,  bankruptcy  notices  have  been  served  and  the  debt  remains unpaid.

[22]     Under s 37 of the Act the Court may use its discretion to refuse to adjudicate a debtor bankrupt if satisfied it is just and equitable to do so.  The onus is upon the debtor to show why it is just and equitable not to order bankruptcy.

[23]     Section 38 of the Act enables the Court to halt an adjudication application including to enable a judgment debtor the opportunity to challenge the judgment that gave rise to the judgment debt which remains unpaid, even if the court considered that challenge is unlikely to succeed.

[24]     Bankruptcy is not the inevitable outcome of an application that otherwise satisfies s 13 requirements.   But if just and equitable grounds are offered for consideration then it is for the debtor to show why bankruptcy should not be ordered. In that regard an undoubted absence of assets will not necessarily persuade a court not to order bankruptcy.   Ultimately it is a matter of balancing all relevant considerations.

[25]     A broad discretion exists concerning whether or not an order for bankruptcy is made.

[26]     Ms Nelson for Mr Parkin submits the judgment debtors have not discharged the onus of satisfying the Court that it is just and equitable not to make orders for bankruptcy.  Ms Nelson notes there is no evidence the initial proceedings are under

appeal; that absence of assets does not in itself call for “just and equitable” consideration; and nor can it be claimed the debtors were coerced into making the decisions that have resulted in their present debt liability.

[27]     Ms Nelson submits that claims by the judgment debtors of an absence of assets should not of itself support the exercise of discretion under s 37.

[28]     Regarding the claims about Keith and Charlotte being “nominal plaintiffs” and never having received legal advice, Ms Nelson comments the initial litigation was  solely  in  their  names  and  in  connection  with  their  claimed  interest  in  the property which was supported by a caveat registered also in their names.

[29]     Ms Nelson notes that Mr Parkin is open to the debtors paying the costs as a preferred outcome to an imposition of orders for bankruptcy.

The trial

[30]     Mrs Marr lost her home because mortgage repayments went into arrears.  She then engaged the services of a friend to help her to repurchase the property at the mortgagee sale.  Mrs Marr claims the engagement subsequently of the services of Mr Barton and through him Mr Parkin was responsible for her ultimate loss of the property when, by a process over which she had no control, Mr Parkin secured the right of purchase of that property.

[31]     Mrs Marr’s perceptions of commercial fraud were rejected by Faire J.  Mrs

Marr appealed Faire J’s decision.

The appeal

[32]     The  Court  of  Appeal  delivered  its  decision  on  13  August  2015.    That judgment noted issues for consideration included, inter alia:

(a)       Whether Mr Parkin received the property subject to a constructive trust in favour of Mrs Marr;

(b)      Whether a consumer credit contract existed between Mrs Marr and Mr

Parkin.

[33]     The Court of Appeal reviewed the evidence in detail. [34]     By their conclusions the Court noted, inter alia:

(a)      When  Mr Parkin  accepted from  Ms  Guttenbeil  the nomination  to purchase the property there was no fiduciary relationship in existence between Mrs Marr and Ms Guttenbeil and absent any breach of fiduciary duty by Ms Guttenbeil, Mr Parker could never have been liable on the basis of knowing receipt.

(b)Even if Mr Guttenbeil continued to owe a fiduciary duty to Mrs Marr at the time she nominated Mr Parkin as the purchaser, Mr Parkin did not act unconscionably.  When he accepted the nomination from Ms Guttenbeil he was simply giving effect to the rights he negotiated with Mrs Marr two days after the auction and which he was clearly entitled to enforce.

[35]     The Court of Appeal also noted that had it reached the stage of having to consider relief,  it  would  have required  considerable persuasion  that  Mrs  Marr’s conduct warranted equitable intervention – because in the Court’s view Mrs Marr’s “hands were far from clean”.

[36]     The Court concluded:

[54]      We  agree  with  Faire J  that  any credit  contract  in this  case  was between Mr Parkin and Ms Guttenbeil.  It was Ms Guttenbeil who entered into the contract to purchase the property from the mortgagee.   Mr Parkin agreed to pay the $25,000 deposit directly to the real estate agent acting for the mortgagee as vendor.  That payment was made to satisfy Ms Guttenbeil obligation under the agreement for sale and purchase.

[37]     Mrs Marr’s appeal was dismissed.

Presently

[38]     No appeal options remain to Mrs Marr in that outcome.  Costs awarded to Mr Parkin remain unpaid.  In support of the judgment debtors’ opposition to Mr Parkin’s bankruptcy application, submissions continue to characterise Mr Barton’s connection to that outcome as being criminal.   References were made to him having been imprisoned on at least three occasions for fraud and related charges.

[39]     Mr Parkin is portrayed as being Mr Barton’s business associate.   Together their ‘mortgagee sale rescue’ exercise has been characterised as fraud and by which Keith and Charlotte were also involved due to an attempt to extract money from them also to pay the fees ordered.

[40]     A considerable amount of time was spent by Mr Wain on behalf of Mrs Marr, to suggest by reference to documents attached to Mrs Marr’s affidavits that there was proof of fraud by the actions of Mr Barton in particular but also by Mr Parkin.  This evidence it is claimed was not available or the significance of it was not fully understood by lawyers representing Mrs Marr in the High Court or the Court of Appeal.   That evidence, Mr Wain submits, adds elements of fraud that were not subject of the trial or appeal proceedings.

[41]     Mrs Marr wishes to retain any rights of review or appeal that may still be open to her.  It is not this Court’s purpose at this time to evaluate her prospects in that regard.

[42]     Mr Wain submits it is a matter for proper consideration by reference to s 38 of the Act.

Claims of conduct post trial

[43]     Mrs Marr claims Mr Parkin has this year approached two real estate agent licensees for whom Mrs Marr worked claiming that in the circumstances and in relation to the mortgagee sale process it was Mrs Marr who had committed fraud by the manufacture of that (other) sale and purchase agreement i.e. the version Faire J considered was a sham.

[44]     Mrs Marr claims Mr Parkin then lodged a complaint with the Real Estate Agents Authority.  Mr Parkin confirms he did file that complaint much earlier this year.  It still remains to be dealt with.

The Court’s discretion

[45]     The considerations of the Court’s discretion not to adjudicate can be wide ranging.   Those concern not only the parties involved but also the wider public interest.  It is the debtor who has the responsibility of persuading a court not to order bankruptcy.    In that frame of matters the court can consider the actions of the judgment creditor in order to give proper weight to the purpose of pursuing the bankruptcy process.  It is about balancing all these considerations.

[46]     In this case a process has been engaged because of a failure to pay costs awards.   This commonly occurs and regularly the judgment debtor is adjudicated bankrupt.

[47]     For the judgment debtors it is claimed there is no benefit in bankruptcy if Mr

Parkin’s purpose is to recover funds, because it is clear that none exist.

[48]     In Rabo Bank Australia Limited v Tootell1 Associate Judge Osborne held that the issue of recovery was not an appropriate investigation by the court on an adjudication  application,  but  by  the  Official  Assignee  with  their  powers  to investigate and examine a bankrupt’s estate.

Conclusions

Charlotte and Keith

[49]     This case is not just about the inability of the judgment debtors to meet payment of the costs award against them but also about the circumstances by which they incurred that liability.  In part it is also about how that has occurred – including

what actions if any might have been attributable to the judgment creditor in that

1 [2013] NZHC 2975.

outcome.   It also requires some assessment of the functions of each of those defendants against whom judgment was entered.

[50]     Mr Parkin’s nomination as a purchaser when providing the deposit was not part of Mrs Marr’s plan to rescue her property from mortgagee sale.   She had no knowledge of purchase rights having been assigned to Mr Parkin.

[51]     By Mrs Marr’s arrangement both Charlotte and Keith became involved to assist her with the purpose of retaining the property. They were party to that exercise by which they claimed an entitlement to a registered interest in the property.  Beyond that, their involvement was very much only for the purpose of assisting their mother and for which otherwise there was no reward for them.  The main purpose of their involvement in their mother’s claim against Mr Parkin is unclear other than they were assisting their mother in that.   They received no legal advice so were not represented, except nominally, in Mrs Marr’s proceeding against Mr Parkin.

[52]     In  the  Court’s  view  and  for  reasons  referenced  to  their  affidavits  it  is appropriate for this Court’s discretion to be exercised pursuant to s 37 and to refuse to make orders for adjudication of Charlotte and Keith.

[53]     The situation affecting Mrs Marr is different.  The evidence given is that she has no assets at all of her own with which to meet the costs due to Mr Parkin.  Her adverse view regarding the justice of the outcome of her claim against Mr Parkin remains unchanged.   She participated in an attempt to rescue her home from a mortgagee sale and for which purpose she obtained the assistance of others.   She complains that assistance included a person who cheated her and who obtained the home for themselves.   Her recent evidence relies upon claims of  having found evidence of fraud implicating Mr Parkin since her trial that has been uncovered.

[54]     Previously those claims have been rejected and have called into question Mrs Marr’s own claims of the existence of the (other) agreement that has been the focus of Mr Parkin’s claims of dishonesty by Mrs Marr.  Mr Parkin’s claims have led to complaints and enquiries.  Mrs Marr is presently without any employment options as a real estate agent.  Almost certainly that employment option will be unavailable to her if she is bankrupted.

[55]     Two years later Mrs Marr is without any assets or income.   Her liability appears to be to Mr Parkin only.  She is 59 years old and is still capable and able to be employed.

[56]     The principles involved are about balance, justice and equity.  These are not about punishment or reward nor is it only about Mrs Marr and Mr Parkin.  A public interest perspective is required that goes beyond the interests of those parties involved.

[57]     There is  good reason for Mrs Marr to reflect  and regret what has since occurred.   She has lost her job and income source.   In that instance an order for bankruptcy would be punitive and serve no practical purpose for her or for public interest.

[58]     However Mrs Marr must on review of the events accept her present situation is as a result of her own actions.

[59]     In the Court’s view a bankruptcy order would in the circumstances be unduly oppressive.  The bankruptcy order should not be intended to dissuade a disaffected person from access to avenues of review if those exist.

Decision

[60]     In all the circumstances the Court considers there will be no useful purpose by the granting of an order for Mrs Marr’s bankruptcy as Mr Parkin’s costs orders will remain unpaid. Therefore that application is also refused.

[61]     The Court orders that all costs upon these applications are to lie where they fall.

Associate Judge Christiansen