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Re Tootell, ex parte Rabobank Australia Ltd

Re Tootell, ex parte Rabobank Australia Ltd

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Case Copied 12 November 2013 22 min read

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IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2013-454-000065 [2013] NZHC 2975

BETWEEN RABOBANK AUSTRALIA LIMITED Judgment Creditor

ANDROBERT JOHN TOOTELL Judgment Debtor

Hearing: 31 October 2013

Appearances: P Drummond for Judgment Creditor
J W Maassen for Judgment Debtor

Judgment: 12 November 2013

JUDGMENT OF ASSOCIATE JUDGE OSBORNE
as to application for adjudication order

Introduction

[1] The creditor (Rabobank) obtained judgment against the debtor (Mr Tootell) in August 2012 for over AUD$6,200,000 (all reference to sums in this judgment will be to Australian currency unless otherwise noted). The debt remains unsatisfied after Mr Tootell failed to meet the requirements of a bankruptcy notice.

[2] Mr Tootell opposes adjudication. He accepts that the requirements for an order of adjudication under s 36 (and s 13) Insolvency Act 2006 are made out. He says, however, that in this a case, under s 37 of the Act, the Court should in its discretion refuse to adjudicate him bankrupt.

[3] Mr Tootell’s grounds of opposition raise two main issues for determination

by the Court:

RABOBANK AUSTRALIA LIMITED v TOOTELL [2013] NZHC 2975 [12 November 2013]

Mr Tootell has so few personal assets that bankruptcy would be pointless; and

An order of adjudication would be premature.

[4] Those are the main issues. There are other circumstances that might contribute to a finding that it would be unjust or inequitable to make an order of adjudication and I will deal also with those.

[5] Mr Maassen, for Mr Tootell submits, as an alternative to making a final determination on the adjudication application, that this would be an appropriate case in which to order under s 38 of the Act that the application be halted for a period.

General approach to adjudication

[6] The general principles which I adopt in relation to an adjudication application are these:

The creditor has the onus of establishing the allegations in its

application;

The Court may in its discretion refuse to adjudicate a debtor bankrupt (notwithstanding the jurisdiction is established) if it is just and equitable not to make an order or there is any other sufficient reason
not to make an order (see s 37(c)–(d) of the Act);

The debtor has the onus of satisfying the Court that either it is just and equitable or that some other sufficient reason exists for the Court’s not
making an order of adjudication; and

The Court is not to refuse an order of adjudication on the grounds of expediency or convenience.

Considerations affecting the discretion under s 37 of the Act

[7] A helpful list of factors relevant to the exercise of discretion under s 37 of the Act was provided by Master Williams QC in Re Epirosa ex parte Diners Club (NZ) Limited & American Express International Inc.1 Counsel invited me to accept Master Williams’s formulation of factors as a helpful reference point in this case, which I do.2

[8] Factors relevant to the exercise of the discretion include:

What are the wishes of all affected parties, including the…

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: [2013] NZHC 2975
Decision Date: 12 November 2013

CaseChat Overview and Summary

In the case of Rabobank Australia Limited v Tootell, the High Court of New Zealand was asked to decide whether to grant an application for an adjudication order against Mr Tootell, who was in debt to Rabobank. The court was required to consider whether it was just and equitable to make an order of adjudication or if there were any other sufficient reasons not to make an order. Mr Tootell argued that the adjudication would be pointless as he had few personal assets and that the order would be premature as there was a prospect that the debt could be met by funds available through the liquidation of Skerrett, a company in which he had an interest. The court found that the argument that the adjudication would be pointless was not of substantial assistance to Mr Tootell due to the suspicious timing of a relationship property agreement executed by Mr and Mrs Tootell. The court also found that the argument that the adjudication would be premature was not supported by sufficient evidence to satisfy the court that there was any prospect that the debt would be fully extinguished within a reasonable period by a successful outcome to the Skerrett receivership. The court ultimately found that it was just and equitable to make an order of adjudication against Mr Tootell. The debtor is adjudicated bankrupt, and the debtor is to pay to the creditor the costs of the creditor's application on a 2B basis together with disbursements to be fixed by the Registrar.

Orders