Robt Jones 151 Limited v Henry

[2023] NZHC 280

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-001284

[2023] NZHC 280

BETWEEN

ROBT JONES 151 LIMITED

Judgment Creditor

AND

DAVID RYAN HENRY

Judgment Debtor

Hearing:	(On the papers)
Appearances:	K Francis for Judgment Creditor B Henry for Judgment Debtor
Judgment:	23 February 2023

JUDGMENT OF VENNING J

Application for leave to appeal

This judgment was delivered by me on 23 February 2023 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Lindsay & Francis, Auckland

Shanahans Law Limited, Auckland

Counsel:            B Henry, Auckland

ROBT JONES 151 LIMITED v HENRY [2023] NZHC 280 [23 February 2023]

[1]        David Henry faces a bankruptcy petition in this Court which is scheduled for a defended hearing on 7 March 2023 at 10.00 am.

[2]        When the petition was last before the Court on 8 December 2022 the Court dismissed Mr Henry’s application for particular discovery in the course of those proceedings.1 Mr Henry now seeks leave to appeal the Court’s decision to dismiss the application for particular discovery.

Background

[3]        On 23 May 2022 judgment was entered by consent against Mr Henry in favour of Robt Jones 151 Limited (Robt Jones) in the sum of $283,909.14 together with interest and costs.

[4]        Robt Jones subsequently issued and served a bankruptcy notice on Mr Henry. The notice expired unremedied. Robt Jones then issued a bankruptcy petition on 28 September 2022. The petition was first called before the Court on 17 November 2022. On that day the Court adjourned the petition to 8 December 2022 to permit the debtor to file a notice of opposition and affidavit.

[5]Mr Henry’s counsel then filed the following documents:2

(a)notice of intention to oppose the creditors’ application and seek a halt on the application dated 5 December 2022;

(b)without notice application to suppress the name of the judgment debtor and the contents of the evidence filed in the proceeding dated 6 December 2022; and

(c)an application for particular discovery which was filed on 7 December 2022.

1      Minute of Venning J, dated 8 December 2022.

2      The references to Mr Henry are to the judgment debtor. As Mr Henry is represented by B Henry I refer to B Henry as counsel to avoid confusion.

[6]        When the matter was called in the bankruptcy list on 8 December 2022 the Court indicated to counsel for Mr Henry that, having considered the application for discovery, the Court was not minded to grant discovery. Counsel requested a ruling which the Court subsequently delivered in a minute/directions issued on the same day. As the decision to decline the application for particular discovery was a decision made on an interlocutory application, Mr Henry requires leave of the Court to appeal to the Court of Appeal from that decision.3

Hearing – on the papers

[7]        Although a teleconference was convened to deal with the application, at the outset of the conference counsel for Mr Henry advised he understood the application would be dealt with on the papers. As both he and Mr Francis were content to deal with it on that basis I advised counsel I would issue a decision on the papers. This is the decision.

Principles

[8]        In Greendrake v District Court of New Zealand4 the Court of Appeal approved the discussion of the considerations relevant to an application for leave as identified in Finewood Upholstery Ltd v Vaughan.5 In particular, the leave requirement is a filtering mechanism and:

(a)a high threshold exists;

(b)the applicant must identify an arguable error of law or fact;

(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;

(d)the circumstances must warrant incurring further delay; and

3      Senior Courts Act 2016, s 56(3).

4      Greendrake v District Court of New Zealand [2020] NZCA 122.

5      Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679.

(e)the ultimate question is whether the interests of justice were served by granting leave.

[9]        In support of the application for leave counsel argues that an order for bankruptcy is a serious decision. The Court should follow a proper and fair process before reaching a decision to adjudicate a person bankrupt. Next, the Court has jurisdiction to order particular discovery but in this case the Court declined to hear from counsel and the decision on the application was pre-determined.

[10]      Counsel for Mr Henry also submits that the conduct of the judgment creditor is a relevant consideration as to whether an adjudication order should be made and supports the grant of leave as in this case there is a dispute as to who should be truly responsible of the debt. Mr Henry wants to argue that the true liability should lie with his former solicitor. Overall Mr Henry argues that particular discovery of a limited specific range of documents would be in the interests of justice in order to ensure those issues are taken into account when the Court is considering the exercise of the discretion whether to adjudicate him bankrupt.

[11]      While the Court accepts that it is possible for a discovery order to be made in bankruptcy proceedings, discovery will only rarely be ordered in such proceedings. Generally the focus will be on the solvency of the judgment debtor.

[12]      Mr Henry effectively seeks to challenge his liability for the debt. There are a number of stages during the course of proceedings when a defendant can challenge the basis of the claim against them. The most obvious is during the course of the substantive proceedings leading to the judgment. There is also a right of appeal. In this case Mr Henry did not take either of those steps.

[13]      Mr Henry’s concern seems to be that his former solicitors were responsible for him agreeing to the lease commitment to the judgment creditor and in so doing were negligent and in breach of their duty to him. However, those issues could, (to the extent they could be said to be relevant) and should, have been raised in the course of the substantive proceeding. There can be no challenge to the judgment.

[14]      Discovery is not appropriate in this case as it is effectively an attempt by Mr Henry to go behind and collaterally challenge a judgment entered by consent. It was primarily for that reason that the Court indicated to counsel in the course of the list on 8 December 2022 that it was not prepared to make the order for discovery as confirmed in the subsequent reasons for ruling. Any challenge to the basis of the claim which was perfected in the judgment should have been made in the summary judgment proceedings (or indeed in the previous related statutory demand and liquidation proceedings against the principal debtor).6

[15]      Further, in the present case, in his affidavit in support of the opposition, Mr Henry effectively conceded his obligation to pay the judgment debt. In the affidavit he sought further time to pay the judgment debt and indeed deposed that if the Court gave him time to complete litigation which he is apparently pursuing in the Singaporean High Court he would give the Court an undertaking that, after payment of legal expenses, he would apply the moneys received to pay the judgment creditor in full.

[16]      There is no particular public interest in the proposed discovery application. There is no error of general or public importance warranting determination sufficient to outweigh the lack of general or precedential value.

[17]      While the Court accepts that bankruptcy is a serious step, finality of litigation is also an important concept. The Court will not countenance collateral attacks on judgments, particularly consent judgments. The issue in these bankruptcy proceedings is Mr Henry’s solvency.

[18]      The interests of justice do not support the grant of leave. The Court of Appeal should not be troubled by a challenge to the Court’s decision not to grant discovery in these circumstances.

6      Kinleith Continuation LP v Robt. Jones 151 Limited [2021] NZHC 2206.

Result

[19]      The application for leave is dismissed. The applicant is to pay the judgment creditor costs on a 2B basis.

Venning J