Re Reynolds, ex parte Bartlett - [2014] NZHC 447

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-64 [2014] NZHC 447

BETWEEN SHARON LOUISE REYNOLDS ROBERT NEWCOMB LEARY and LYNETTE MAREE DUNCAN as trustees of the estate of PATRICIA AMSTEAD LEARY
Judgment Creditors

AND DOUGLAS JOHN BARTLETT
(aka DOUGLAS JAMES BARTLETT) Judgment Debtor

CIV-2014-404-68

BETWEEN SHARON LOUISE REYNOLDS ROBERT NEWCOMB LEARY and LYNETTE MAREE DUNCAN as trustees of the estate of PATRICIA AMSTEAD LEARY
Judgment Creditors

ANDSHARYN DAWN BARRATT Judgment Debtor

Hearing: 10 March 2014

Appearances: G D Wiles for Judgment Creditors
A M Swan for Judgment Debtors

Judgment: 10 March 2014

ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL

Solicitors:
Duncan Horrocks Law, Epsom, Auckland, for Judgment Creditors
Whitlock & Co, Auckland, for Judgment Debtors

Counsel:
G D Wiles, Barrister, Auckland, for Judgment Creditors
A M Swan, Barrister, Auckland, for Judgment Debtors

REYNOLDS v BARTLETT and BARRATT [2014] NZHC 447 [10 March 2014]

[1] In each case the debtors have applied to set aside the creditors’ bankruptcy notices. The creditors object that the applications are out of time and that there is no merit in the applications. As a second string, the debtors say that, even if they are out of time, the court should nevertheless order a stay preventing the creditors from presenting the bankruptcy applications. At this point the creditors have not filed any application for adjudication in bankruptcy.

Background

[2] The creditors obtained judgment against both debtors on a summary judgment application in CIV-2012-404-7427. Cooper J gave judgment for the creditors against the debtors on 27 August 2013 for the sum of $246,792.44 plus costs.1 With costs, the sum owing under the judgment was $261,893.94. The creditors had sued the debtors (plus one other) for failure to settle the purchase of the creditors’ property at Cliff Road, Torbay, for a price of $2,580,000. The judgment was for damages following the failure to settle and included a sum of $121,000 odd for interest, some $67,000 odd for land agents’ commission and associated costs on
re-sale, plus various other heads of damage.

[3] The time for appealing from the decision of Cooper J expired on

24 September 2013. The debtors did not appeal within time and they did not apply for a stay of execution. They did however instruct new lawyers. In October 2013 they applied to re-call the judgment or to correct the sealed judgment. Their aim was to obtain orders from the court that under the judgment they would not be personally liable but would be liable only in their capacities as trustees of the Barratt family trust. I dismissed that application on 8 November 2013.2

[4] In asking the court to rule that they were not personally liable under the judgment of Cooper J, the debtors were relying on a limitation of liability provision
in clause 18 of the agreement for sale and purchase:

1 Reynolds v Barratt [2013] NZHC 2185.
2 Reynolds v Barratt [2013] NZHC 2992.

18.0 Limitation of Liability

18.1 If any person enters into this agreement…

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: [2014] NZHC 447
Decision Date: 10 March 2014

CaseChat Overview and Summary

The matter before the court involved two debtors, Douglas John Bartlett and Sharyn Dawn Barratt, who sought to set aside bankruptcy notices issued by creditors Sharon Louise Reynolds, Robert Newcomb Leary, and Lynette Maree Duncan as trustees of the estate of Patricia Amstead Leary. The debtors argued that the bankruptcy notices were invalid and sought to prevent the creditors from proceeding with bankruptcy applications. The primary legal issues were whether the debtors had applied to set aside the bankruptcy notices within time, if there was any merit in the applications, and if the debtors could seek a halt order to prevent the creditors from filing bankruptcy applications. The court found that the debtors' applications were invalid as they were not served within the required timeframe. It was established that a valid application to set aside a bankruptcy notice must be both filed and served within the time for compliance with the notice. The court dismissed the debtors' applications to set aside the bankruptcy notices but noted that the debtors could apply for a halt under sections 38 and 42 of the Insolvency Act when creditors' applications were on foot. The court also ordered costs on a 2B basis, meaning that the debtors would be responsible for the creditors' costs.

Orders