R v The Queen
[2019] NZHC 2198
•4 September 2019
NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH S 11B, 11C AND 11D OF THE FAMILY COURT ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-2683
[2019] NZHC 2198
UNDER the Insolvency Act 2006 IN THE MATTER
of the bankruptcy of R
BETWEEN
M E R
Judgment Creditor
AND
M L R
Judgment Debtor
Hearing: 9 May 2019 Appearances:
Mr R, the Judgment Debtor in person
Mrs M Pollak and Mrs P Grant for the Judgment Creditor
Judgment:
4 September 2019
JUDGMENT OF ASSOCIATE JUDGE SMITH
This judgment was delivered by me on 4 September 2019 at 10.00 am, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors / Counsel:
Neilsons Lawyers, Auckland
Copy to:
Mr R
R v R [2019] NZHC 2198 [4 September 2019]
[1] On 21 September 2016 the judgment creditor (Ms R) obtained a judgment against the judgment debtor (Mr R) in the Family Court at Waitakere (the judgment). The judgment required Mr R to make payments to Ms R under the Property (Relationships) Act 1976 (the PRA), totalling $37,061.79.
[2] Mr R did not pay the $37,061.79, and on 6 December 2018 Ms R issued a bankruptcy notice for that sum. Mr R now applies to set aside the bankruptcy notice. The application is opposed by Ms R.
[3] A fixture was made to hear the application on 9 May 2019. Mr R applied for an adjournment of the fixture, and I heard from counsel and Mr R on the adjournment application on 6 May 2019. I refused the adjournment application, and directed Mr R to file any reply affidavits and written submissions by 5.00 pm on 8 May 2019.
[4] In the event, Mr R did not get his submissions filed and served by that date. However, I permitted him to make oral submissions at the hearing on 9 May 2019. Ms Pollak made oral submissions in reply.
[5] Neither party produced in evidence a copy of the judgment (given orally by Judge Rogers on 21 September 2016), although Mr R had referred to parts of it in his affidavit. A copy of the judgment has since been provided, and I have taken it into account in the judgment that follows.
[6]I now give judgment on Mr R's application to set aside the bankruptcy notice.
Mr R's application
[7]Mr R's application is brief. It states:
… Herewith is an Application to Set Aside a Bankruptcy Notice and to file a Counterclaim Set-Off or Cross Demand against the Judgment Creditor that exceeds the amount claimed by the Judgment Creditor; and that I could not put forward in the action or proceeding in which the Judgment was obtained.
[8]In support, Mr R filed an affidavit sworn on 21 January 2019.
[9] Mr R had been represented by counsel in the Family Court proceeding, but his counsel was appointed to the bench. Mr R filed a notice in the Family Court dated 15 June 2016, stating that he would thenceforth be representing himself, and that his address for service would be "[a stated number] Maraetai Coast Road, Clevedon 2582". Mr R's notice said that documents for service on him could be left at that address, or transmitted to him by email to a stated email address.
[10] Mr R was not present at the 21 September 2016 Family Court hearing, and his defence was struck out by Judge Rogers due to his failure to attend. Mr R said that a fixture notice dated 9 June 2016 had not been sent to him at the correct address, and he did not receive notice of the fixture (whether in hard copy or by email).
[11] On 20 September 2016 Mr R had sent an email to Ms R about her collecting certain agreed chattels the following day. He said he was then unaware of the Court hearing scheduled for the following day.
[12]Mr R said in his 20 September 2016 email:
Aa Carriers have availability to pick up these items tomorrow between 10 and
12. I have just spoken with Jordan at AA Carriers. Please confirm today, by 4pm, that you will have these items, that you wanted, collected tomorrow. I do not have the capacity to store them. I have arranged this for you. We can then confirm the following day for our selection of the balance of the chattels.
[13] Seven minutes later, Ms R replied by email: "[M], once I have had a chance to consider the contents of your email I will come back to you".
[14] At 6.00 pm on 21 September 2016 Mr R sent an email to Ms R noting that she had not contacted him that day, and that no carrier had contacted him regarding the collection of the items she wanted. Mr R said that he waited around for many many hours in case Ms R's carrier arrived, but the carrier did not come and he heard nothing from Ms R.
[15] Ms R responded approximately 2 hours later, saying "[M], given your absence today, it is probably best to wait until you receive a copy of the final order before things are progressed".
[16] The following day Mr R queried the reference to his "absence", saying "What absence? No carrier arrived — you have not collected your items …". Ms R replied the next day: "Absence from Court!"
[17] Mr R contended that Ms R had figured out on 20 September 2016 that he was unaware of the hearing scheduled for the following day, but chose not to tell him about it.
[18] Mr R contacted the Case Management Team, Manukau, on 23 September 2016, and asked about any notices or orders they had sent out to him regarding any hearings. He produced a copy of an email from the case management team at Manukau dated 23 September 2016, in which the Court registry officer said:
Thank you for your email. Please find attached documentation from July 2016 that was returned to the Court.
[19] The attachment was a letter from the Manukau Family Court dated 19 July 2016, advising Mr R of a hearing between the parties in a separate matter in that Court scheduled for 26 October 2016.
[20] Mr R pointed out that his address as shown on the 19 July 2016 fixture notice was incorrect — Maraetai Coast Road was spelt "Maraeti" Coast Road, and there was no post code, correct or incorrect.
[21] Mr R said that he eventually obtained a copy of the fixture notice for the hearing under the PRA that had been held on 21 September 2019. He produced a copy. The notice was addressed to him at the correct street number, but to "Maraeti Coast Road, Maraeti, New Zealand". Mr R said that his address was in Clevedon, not "Maraeti".
[22] Mr R set out particulars of the claims he says he has against Ms R that he could not present in the Family Court hearing.
[23] The first is a claim for $8,216,683.53 representing the estimated lifetime cost of care of the parties' 8 year old son. Mr R said that the parties' son suffers from foetal alcohol spectrum disorder (FASD), which has resulted in significant disabilities. Mr R
attributed this to the pre-natal and post-natal alcohol consumption of Ms R. He produced a report dated 14 February 2018 from Dr Mark Sinclair, a consultant clinical psychologist, confirming the evidence for pre-natal alcohol exposure. However, the letter notes that "it is unclear whether this was at a sufficient level to be associated with behavioural or neurodevelopmental effects and other diagnoses such as genetic/chromosomal cannot be completely excluded".
[24] Mr R referred to "a concerted campaign" by Ms R for over 6 years against any diagnosis of FASD.
[25] Mr R said that as a consequence of his son's FASD he has had to give up working. Since 2012 he has directly lost income of $40,000 – $80,000 per year. He said that he will continue to suffer that loss for the rest of his son's life. He put a figure of $1.2 million – $2.4 million on these alleged losses. In addition, he said that he had incurred costs since 2012 for his son, for therapy, tutoring, and accommodation in a therapeutic environment, totalling $15,000 – $17,000 per year. These costs would continue for the next 30 years.
[26] The parties' son does receive funding from the Ministry of Education at the rate of $50,000 per annum, but Mr R said that when his son leaves school in about 8 years' time all his therapy costs will fall on Mr R. Mr R said that his son wishes to live with him after he turns 16. He estimated costs from then at approximately $440,000.
[27] Mr R also claims for "loss of enjoyment of life", arising from the fact that he will have to care for his son on a 24 hour basis. He claims a total of $1,200,000 for this item.
[28]In addition, Mr R made various challenges to the judgment.
[29] First he claimed that debts totalling $8,275.27 ordered to be paid by him as his "sole and separate debts" were in fact relationship debts, and that Ms R had acknowledged that that was the position before the hearing. He said that he was prevented from putting that argument to the Court when he was not notified of the 21 September 2016 hearing. He contended that the $8,275.27 should be offset against
an amount of $8,729.79 that he was ordered to pay to Ms R in respect of a (relationship) debt of $15,000 plus interest owed to Ms R's brother. With that offset, the amount payable by him to Ms R in respect of the debts, would be reduced to
$454.52.
[30] Next, Mr R referred to a tenancy bond of $1,260 to which Ms R was entitled, going back to a tenancy agreement entered into in 2009. That tenancy bond was not allowed for in the judgment, and Mr R considered that it was relationship property that should be offset against the balance of the money due from him to Ms R in respect of the debts (calculated by Mr R at $454.52). That would produce a debt of $806.57 owing by Ms R to Mr R in respect of the debts and the tenancy bond.
[31] Mr R also claimed that chattels in his possession were overvalued in the judgment.
[32] He attached screenshots from Trade Me or a similar site, showing the "latest selling prices of most of these items". The screenshot figures were said to show the actual values of the items. Mr R said that he had listed all these chattels online, with a reserve price at Ms R's valuation and a starting price of 10 per cent of that. No one bid to the reserve price.
[33] On that basis, Mr R contended that "the evidence is clear that an injustice has occurred by me not being present at the hearing". The chattels were unwanted by him at these "untested overvaluations". Mr R further claimed that some items were presents, or effectively claimed for twice, or were owned prior to marriage. He claimed a "chattels adjustment of $37,083" on these bases.
Ms R's opposition
[34] In her affidavit in opposition, Ms R rejected what she characterised as Mr R's attempts to disparage her in relation to the health of the parties' son. She did not provide a detailed response on this, however, as she considered it irrelevant to the issue of whether the bankruptcy notice should be set aside.
[35] Ms R pointed out that Mr R has been aware of the Family Court orders for some years now, but has made no application to set them aside, and has not appealed them. And in addition to the Family Court orders, he still owes her costs of $15,920 awarded by the High Court on 25 February 2015 in other proceedings between the parties.
[36] Ms R referred to various episodes in the past where she contended Mr R had avoided paying his debts. She said that it was his custom to not answer the telephone, and he would leave mail from creditors unopened for months.
[37] Ms R said that she is a solo mother who has 61 per cent care of the parties' son. She accepted that her son has been diagnosed as having development delays consistent with a diagnosis of FASD, and acknowledged that no safe minimum amount of alcohol is recognised in order to protect a child from FASD (though many professionals and doctors continue to tell women, as she was told, that small amounts of alcohol after the first trimester probably would not do any harm).
The judgment
[38] Judge Rogers recorded that Ms R had commenced the proceeding under the PRA in October 2013. The proceeding had been opposed by Mr R, and a number of hearings had been scheduled, with adjournments granted on account of unavailability of Mr R's counsel. A hearing in March 2016 did not proceed because there was insufficient hearing time.
[39]Judge Rogers recorded that Mr R did not appear at the hearing. She then said:
[3] I have carefully reviewed the administrative section of the file and I note that in June 2016 Mr R filed a notice that he would be representing himself following the appointment of his former counsel to the District Court bench. Mr R's notice dated 15 June 2016 gives his address for service as [stated number] Maraetai Coast Road, Clevedon, and also confirms his email address as [stated email address].
[4] Notice of today's hearing was sent to Mr R both at his physical address and at his email address. The notice makes it clear that the Court may proceed to make orders today if Mr R is not present. Mr R has not attended at Court today. He has not contacted the Court and I have no explanation for his absence.
[5] In view of the length of time that these proceedings have been on foot and the number of attempts there have been to get the matter heard, Ms Bailey on behalf of Ms R has urged me to proceed with the hearing today in the absence of Mr R. I can see no reason why I should not proceed. Mr R has been given notice of hearing at the address he provided. He has not attended at Court despite being aware that orders could be made in his absence.
[6] I am satisfied that Mr R has failed to prosecute his defence of Ms R's applications. Mr R's defence will therefore be struck out for want of prosecution and I will proceed to determine matters on essentially a formal proof basis.
[40] The Judge also noted that in April 2016 Mr R had filed an affidavit which he had sought leave to file out of time. That leave was never granted, and in view of the fact that Mr R did not appear at the hearing on 21 September 2016, and that his defence had been struck out, the Judge specifically noted that leave to file the April affidavit was not granted.
[41] Her Honour then turned to deal with the various issues under the PRA, referring to various positions Mr R had taken in the proceeding, but generally finding for Ms R on disputed items in the absence of evidence from Mr R supporting his contentions.
[42] Her Honour recorded that chattels had been a vexed issued, and that there had been extensive correspondence and endeavours to settle chattels issues up to a few days before the hearing. Her Honour noted that counsel for Ms R had provided a lengthy list of chattels in the possession of Mr R, and a more modest list of chattels sought by Ms R. Her Honour then said:
[31] In terms of the list of chattels sought by Ms R, annexure B, to counsel's February submissions there are a number of items which have been disposed of for which Mr R received $5990. He is to pay an adjustment to Ms R of $2995 with that payment to be made within 21 days.
[32] Following collection of the identified chattels, all chattels in Ms R's possession will be deemed her sole and separate property. All of the chattels in the possession and control of Mr R will be deemed his sole and separate property. Mr R is to pay Ms R an adjustment of $25,337 in respect of chattels. That payment is to be made within 21 days of today's date.
DISCUSSION AND CONCLUSIONS
Applications to set aside bankruptcy notices — legal principles
[43]Section 17 of the Act materially provides:
17 Failure to comply with bankruptcy notice
(1)A debtor commits an act of bankruptcy if—
(a)a creditor has obtained a final judgment or a final order against the debtor for any amount; and
(b)execution of the judgment or order has not been halted by a court; and
(c)the debtor has been served with a bankruptcy notice; and
(d)the debtor has not, within the time limit specified in subsection (4),—
complied with the requirements of the notice; or
(ii)satisfied the court that he or she has a cross claim against the creditor.
…
(7)In subsection (1)(d)(ii), cross claim means a counterclaim, set-off, or cross demand that—
(a)is equal to, or greater than, the judgment debt or the amount that the debtor has been ordered to pay; and
(b)the debtor could not use as a defence in the action or proceedings in which the judgment or the order, as the case may be, was obtained.
[44] In order to satisfy s 17(1)(d)(ii) of the Act, the debtor must show that he or she has a genuine, triable claim against the creditor.1 The words "genuine" and "triable" require the debtor to demonstrate that he or she has a claim of true substance which he or she genuinely proposes to pursue.2
[45] The primary emphasis of s 17(7)(b) is on the legal inability of the debtor to establish the cross claim as a defence in the proceeding in which the judgment was
1 Thomasen v Nigro CA124/76, 19 July 1978; Clark v UDC Finance Ltd [1985] 2 NZLR 636 (HC).
2 Sharma v ANZ Banking Group (1992) 6 PRNZ 386, [1992] 2 NZBORR 183 (CA), at 389.
obtained. There must be cogent circumstances for the judgment debtor to be able to establish a factual inability to set up the cross claim as a defence.3
[46] In addition to the "cross claim" ground of opposition, there may be a limited number of circumstances in which a court may set aside a bankruptcy notice on the basis of an abuse of process on the part of the creditor. Re Wise was a case where a creditor had obtained a judgment by default.4 The debtors sought orders setting aside the bankruptcy notice subsequently served by the creditor, on the basis that they had a valid defence to the creditor's claim which they were unable to put forward because they were not aware of the court hearing which resulted in the judgment against them. Master Kennedy-Grant considered that the court had jurisdiction to grant relief to the debtors despite the limitation in s 17(7) (then s 19(1)(d) of the Insolvency Act 1967), where there was an arguable ground of defence to the claim for which judgment was given.5
[47] In Re Saker, however, Associate Judge Faire expressed reservations as to whether the inherent jurisdiction is available when the matter is expressly covered by s 17 of the Insolvency Act 2006. The Associate Judge said: 6
In short, as the Act provides the express ground for setting aside the bankruptcy notice, it is that ground which I must analyse in determining whether the bankruptcy notice should be set aside.
[48] In Re Minter Ellison Rudd Watts, Associate Judge Osborne adopted the reasoning of Associate Judge Faire as set out in the passage from Re Saker quoted above, stating that "as the Act provides the express ground for setting aside a bankruptcy notice, the concept of resorting to the inherent jurisdiction is contradicted."7
[49] In Chittenden v Chittenden,8 Mr Chittenden had withdrawn the instructions he had given to his counsel, before the hearing in the Family Court. He did not appear at
3 Hardie v Booth [1992] 1 NZLR 356 (HC) at 362.
4 Re Wise, ex parte Benecke B227/95, 21 June 1995.
5 At 6.
6 Re Saker, ex parte Blackler HC Wellington CIV-2008-485-124, 26 May 2008 at [26].
7 Re Minter Ellison Rudd Watts, ex parte Hampton [2012] NZHC 1715 at [60].
8 Chittenden v Chittenden HC Auckland, B219/90, 24 August 1990.
the hearing, and an order for payment of a monetary sum was made in his absence. On his application to set aside a bankruptcy notice based on the order made in the Family Court, Fisher J noted that the onus of proof is on the applicant/debtor to establish grounds to set aside a bankruptcy notice. Where the debtor has not advanced his arguments in the Court in which judgment was entered against him, the issue will be whether he was given the opportunity to do so.9 His Honour took the view that it was for Mr Chittenden to ensure that proper steps were taken to safeguard himself against future communication problems once he had chosen to "change legal horses in midstream".10
Application of principles in this case
Could Mr R have raised the cross claims he now makes in the Family Court?
[50] The onus is on Mr R to show that they could not have been raised. He relies primarily on a contention that he did not receive notice of the 21 September 2016 fixture.
[51] Where the debtor relies on factual circumstances to establish the claimed inability to raise the defence (as opposed to legal reasons), the circumstances raised by the debtor must be "cogent".11 In a case such as the present, where the debtor contends that he was unaware of the hearing, the issue is whether the debtor had the opportunity to put the cross claims to the Court that gave the judgment on which the bankruptcy notice was based.12
[52] The starting point on this issue must be the statement in the judgment that the Judge had carefully reviewed the administrative section of the file, and her conclusion that notice of the hearing had been sent to Mr R both at his physical address and at his email address.
[53] In my view, that statement in the judgment called for far more evidence from Mr R than he produced.
9 At 5.
10 At 6.
11 Hardie v Booth, above n 3.
12 Chittenden v Chittenden, above n 8, at 5.
[54] First, there is nothing to tell me what was on the administrative part of the Family Court file that persuaded the Judge that Mr R had received notice of the hearing. Mr R could have obtained copies of the relevant documents from the Court file, but it appears he did not do so. Nor did he produce a copy of the judgment — it was only after I secured the agreement of both parties at the hearing that a copy could be provided to the Court that the judgment came in.
[55] Mr R complains that "Maraetai" was spelt incorrectly as "Maraeti" in the fixture notice, and that his address is in Clevedon, rather than "Maraeti", but it seems unlikely that NZ Post would have failed to appreciate that "Maraeti" meant "Maraetai", or (with the benefit of the correct number for Mr R's property on Maraetai Coast Road) failed to locate his property on that road. The fact that a fixture notice for an unrelated hearing in October 2016 (also addressed to Mr R at "Maraeti Coast Road, Maraeti") was returned to the Court says little about whether the fixture notice sent by the Waitakere Family Court on 15 June 2016 reached Mr R. He has provided no evidence that that fixture notice was returned to the Waitakere Court.
[56] Nor has Mr R explained what was happening with his legal representation throughout the period from April 2016 to 15 June 2016, when he gave his notice of change of representation and address for service. He has explained that the barrister then acting for him retired from practice to take up a judicial appointment, but he has not said when that occurred (although he told me at the hearing it was before the fixture notice was sent on 9 June 2016). Mr R did not explain why no attempt was apparently made to follow up on the application for leave to file out of time the affidavit filed by Mr R in April 2016. As Fisher J observed in Chittenden v Chittenden, it was for Mr R to ensure that proper steps were taken to safeguard himself against future communication problems once he had elected to change legal horses in midstream. In this case, I think that meant at very least that Mr R should have promptly obtained his file from the lawyer who had been acting for him, and brought himself up to speed with the steps that would be required to ensure that his position could be properly put to the Court, including ascertaining what steps needed to be taken to obtain leave to have his April 2016 affidavit read. There is no evidence as to what Mr R did about those matters.
[57] Mr R's strongest point on this issue is that he apparently did make an attempt to arrange a carrier to uplift chattels from his property between 10.00 am and 12 midday on the day of the scheduled hearing. Ms R may have wondered why Mr R would wish to arrange for the collection of the chattels from his property between
10.00 am and 12 midday on 21 September 2016 when the Court hearing was scheduled for that day, but she did not raise the Court hearing when she replied to Mr R at 10.15 am that morning, saying only that she would get back to him once she had had a chance to consider the contents of his email.
[58] Ms R did not get back to Mr R, and at 6.00 pm on 21 September 2016 he sent an email to Ms R saying that he "waited around for many hours in case your carrier arrived".
[59] In his affidavit, Mr R alleged that Ms R had figured out that he was unaware of the hearing on 21 September 2016, but chose not to tell him, leading him on about arrangements for the collection of the chattels (which she had insisted on collecting immediately). But that allegation was speculation or inference only; it was not admissible evidence of fact.
[60] In her submissions, Mrs Pollak pointed out that Ms R was aware that documents in the proceeding had been served on Mr R or his counsel, and that Mr R had subsequently informed the Court of his change of address for service. Mrs Pollak submitted that Ms R had no reason to assume that Mr R had not received the notice of the fixture; on the contrary, she had every reason to assume that he was aware of it.
[61] I do not consider the evidence is sufficient to show that Ms R knew that Mr R was unaware of the hearing scheduled for 21 September 2016, and deliberately took advantage of that knowledge. Ms R presumably went into the email exchange on 20 September 2016 assuming that Mr R had received notice of the fixture for the following day, and was well aware of it. She probably wondered why he was proposing an uplift of the chattels between 10.00 am and 12 midday on the day of the hearing, but she may have assumed he had made arrangements for somebody to be at his property to hand over the chattels in his absence. She would have wondered about it, but on the limited evidence I have before me I do not think it can be said that she
deliberately led Mr R on about the chattels pick-up, knowing that he was unaware of the Court fixture and would miss it if he stayed home to hand over the chattels.
[62] In the face of the Judge's clear statement that the Court file showed that notice of the fixture had been sent to Mr R at both his physical address and his email address, the onus was on Mr R to produce sufficient evidence to show that he did not receive the notice, and did not have the opportunity to present his claims in the Family Court. The file copy of the fixture notice produced by Mr R does not show that the notice was transmitted to Mr R at his email address, but the Judge was able to say from her reading of the administrative part of the Court file that it was. Her Honour clearly saw something on the Court file that led her to make that statement, and it was not enough for Mr R to simply assert in his evidence that the Judge's statement was wrong.
[63] In the end, I am left with the Judge's statement, and Mr R's uncorroborated denial that he received the notice (and impliedly did not simply overlook it or ignore it). The onus of proof was on Mr R, and I am not persuaded on the evidence produced that he has discharged that onus.
Has Mr R shown that he has a genuine and triable cross claim, that he genuinely proposes to pursue, which exceeds the sum of $37,061.79?
[64] First, I am not persuaded that Mr R genuinely proposes to pursue the cross claims he has identified. By the date of the hearing he had done nothing about pursuing his alleged cross claims for over two and a half years since the Family Court judgment, and he had no satisfactory explanation for his failure to pursue them. Certainly he has responsibilities to his son, but he is not the sole care-giver and it appears that he has found time to engage in other litigation with Ms R. That cannot provide a good explanation. Nor can lack of money to resource further litigation, where an important issue is whether Mr R genuinely intends to pursue the claims he has identified, and he has not said that he has sought legal aid to assist him to do so.
[65] As far as the relationship debts, tenancy bond and chattels issues are concerned, he is well out of time to lodge an appeal against the judgment,13 and in the absence of
13 Under r 20.4(2)(b) of the High Court Rules 2016, any appeal had to be filed within 20 working days of the decision.
any good explanation for the delay it seems improbable that he would now obtain special leave to appeal under r 20.4(3) and (4) of the High Court Rules.14
[66] Nor has Mr R applied to the Family Court to have the judgment set aside under rr 56, 59 and 209 of the Family Court Rules 2002, on the grounds that there was or may have been a miscarriage of justice in the proceeding.
[67] While the sums due under the judgment have remained unpaid, Mr R has filed other proceedings in the Family Court and this Court. A costs order in this Court in favour of Ms R going back to February 2015 has not been paid.
[68] If Mr R genuinely intended to pursue the claims he has identified under the PRA, a necessary first step would have been appealing the judgment or applying to set it aside. He has had plenty of time to do that, but he has not done it. He may have thought that he could sit back and use these claims as some sort of "defence" to any enforcement action Ms R might take, but that view ignores the fact that Ms R has obtained a judgment against him, under which payment was due within 21 days.
[69] A lesser point relates to Mr R's calculation of the net value of the debts and the asset. Mr R appears to have assumed that treating the debts totalling $8,275.27 as relationship debts (rather than as his separate debts, as the Judge found), and treating the tenancy bond as an additional item of relationship property not accounted for, would produce a debt owed by Ms R to him (on those items) of $806.57. I confess I do not follow Mr R's calculations. If the debts totalling $8,275.27 had been classified as relationship debts, Mr R would presumably still have been liable for 50 per cent of them. Similarly, Ms R would have been entitled to 50 per cent of the value of the tenancy bond if it was relationship property. The judgment records that Ms R assumed liability for $16,000 of the debt owed to her brother, and that she had paid $8,000 to her brother on 13 June 2014. Judge Rogers said that the $8,729.79 Mr R was ordered to pay consisted of his half share of the $16,000 owing to Ms R's brother plus interest at 5 per cent per annum for the period from July 2014 to 4 February 2016. It appears that Ms R's assumption of responsibility for $16,000 of the debt to her brother
14 Sharma v Askelund (2004) 17 PRNZ 853 (HC).
represented over two thirds of the net values of the total debts less the tenancy bond. On that view, there would have been no off-set payment due to Mr R.
[70] Mr R has produced evidence suggesting that many of the chattels which he has retained could not be sold on Trade Me for amounts close to the values that were apparently allocated to them in the judgment. But in the absence of clear valuation evidence showing the values of the chattels taken by both parties I do not think it is possible to take a view on whether Mr R might reasonably have contended that the chattels adjustment of $25,337 ordered by the Judge was excessive, to the extent that nothing should have been ordered, or even an adjustment ordered in Mr R's favour. I did not find Mr R's evidence on this part of the case easy to follow, and it is not clear to me whether the chattels taken by Ms R were also put up on Trade Me to check their values. If that did not occur, it would seem to be at least possible that the chattels taken by her might also have been taken at inflated values, leaving it unclear whether any overstatement in Ms R's favour would have exceeded the figure of $25,337 adopted by the Judge.
[71] In the end, I do not need to resolve the matter on the basis of whether or not Mr R has a genuine, triable claim on the chattels over-value issue. Insofar as his application relies on the purported cross claims under the PRA, it will be dismissed because of (i) his failure to show that he did not have the opportunity to present those claims in the Family Court proceeding and (ii) his failure to persuade me that he genuinely proposes to pursue those claims.
[72] The very large claims Mr R claims to have against Ms R relating to their son's FASD might not have been claims that could have been raised in the PRA proceeding (they appear to be tort claims, that might have been outside the scope of the PRA proceeding), but in my view there is even less reason to believe that Mr R genuinely proposes to pursue them. First, the principal party affected by the FASD is not Mr R but his son. Any claim by Mr R would presumably have to be a "secondary" claim, relating to costs or losses said to have been incurred by him in the care of his son.15
15 Mr R referred in his submissions to the Australian case of Lynch v Lynch (1991) 25 NSWLR 411. But that was a case concerning an alleged duty of care owed by a parent to a child where the child sustained injuries because of negligent pre-natal driving of a parent. It was not a case involving a claim against the mother by someone other than her child.
[73] Mr R has not produced any authority supporting the existence of a duty of care owed to him by Ms R in respect of any such costs or losses, and the claim would appear to be a novel one. In such cases, the approach to the duty of care issue was summarised by Blanchard J, writing for the majority, in North Shore City Council v Attorney-General [The Grange].16
[74] The plaintiff must first pass the "screening test" of whether the loss suffered was reasonably foreseeable by the defendant.17 The next question will be whether the (foreseeable) loss occurred within a relationship that was reasonably proximate.18 Considerations at this stage of the Court's enquiry will include balancing the plaintiff's claim for compensation for avoidable harm against the defendant's claim to be protected from an undue burden of legal responsibility.19 The Court will then look beyond the individual parties to the case, and assess any wider effects of its decision on society, and on the law generally. Issues under this heading may include the capacity of each party to insure against liability, the likely behaviour of other potential defendants in relation to the decision, and the consistency of imposition of liability with the legal system generally.20
[75] Any claim of the kind Mr R has signalled would in my view face formidable difficulties, particularly on the policy consideration of ensuring consistency with existing legislation. There is a legislative scheme under which a non-caregiver parent can be required to contribute to the costs of a child's care (in the Child Support Act 1991), and a separate legislative scheme under which a former spouse or partner may seek an order for his or her own maintenance from the other former spouse or partner (Family Proceedings Act 1980 and Property (Relationships) Act 1976). In a number of cases under these Acts the Court will be dealing with circumstances where a child in the care of one parent has special needs, and the amount required by way of support is significantly higher than in other cases. It is not clear how the claims advanced by Mr R for personal costs and losses associated with his son's care could be advanced
16 North Shore City Council v Attorney-General [The Grange] [2012] NZSC 49; [2012] 3 NZLR 34.
17 At [157].
18 At [158].
19 At [159], referring to the judgment of Richardson J in Fleming v Securities Commission [1995] 2 NZLR 514 (CA) at 532.
20 At [160].
consistently with these statutory provisions, in particular the regime for spousal or partner maintenance. Nor does it seem at all probable that someone in Ms R's position could have obtained insurance cover for claims of the kind Mr R has identified.
[76] There would be other difficulties. First, Mr R is not the sole care-giver for the parties' son. Ms R said that she is a solo mother who has shared care of the parties' son, and it appears that the son spends a considerable amount of time with her. Mr R did not take issue with Ms R's evidence on that point in any reply affidavit. Secondly, it seems unlikely that Mr R could have a genuine, triable claim against Ms R for costs incurred voluntarily by him (notwithstanding that such costs might have been incurred because of an understandable desire to do the very best he could for his son).
[77] Thirdly, it appears that any claim of the kind Mr R has described might well be out of time. There is a six year time limit for bringing money claims for breach of an alleged duty of care,21 and in his affidavit sworn on 21 January 2019 Mr R referred to "a concerted campaign" by Ms R for over six years against any diagnosis of FASD. The implication of that statement appears to be that there was evidence pointing to a diagnosis of FASD (and therefore likely damage resulting from Ms R's alleged breaches of the alleged duty of care) over six years before Mr R signed his affidavit.
[78] Given the long period of delay, I am not satisfied that Mr R genuinely intends to pursue these claims, even if the law permitted them (a matter I do not need to determine). Following the decision of the Court of Appeal in Sharma, the Court must be satisfied that the debtor genuinely intends to pursue the identified cross claims, and in this case I am not so satisfied. That is fatal to Mr R's application to set aside the bankruptcy notice.
[79] For the reasons set out above, Mr R has failed to show that he has a cross claim as defined in s 17(4) of the Act, and he has not shown that there has been any relevant abuse of process (if abuse of process does provide an additional ground for setting aside a bankruptcy notice, a point I do not need to decide).
21 Limitation Act 1950, s 4, and Limitation Act 2010, s 11.
Result
[80] The application to set aside the bankruptcy notice is refused. Costs are awarded in the usual way to Ms R on a 2B basis, plus disbursements as fixed by the Registrar.
Associate Judge Smith
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