Roebuck v Croggon HC Auckland CIV2008-404-00158

[2008] NZHC 2317

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV2008-404-00158

IN THE MATTER OF     the Insolvency Act 2006, and

AND IN THE MATTER OF  the Bandruptcy of

BETWEEN  NGAIRE ROEBUCK OF LEVEL 1, UNION HOUSE, 132-138 QUAY STREET, AUCKLAND, REAL ESTATE AGENT

Judgment Creditor

ANDKEITH CROGGON OF CLOVELLY ROAD, BUCKLANDS BEACH, AUCKLAND, REAL ESTATE AGENT Judgment Debtor

Hearing:         8 May 2008

Judgment:      13 May 2008

RECORD OF ORAL JUDGMENT OF ASSOCIATE JUDGE SARGISSON

Solicitors:

Sandi Anderson, 9 Redmond Street, Ponsonby Auckland

K Croggon, 23 Clovelly Road, Bucklands Beach Auckland

ROEBUCK  V  CROGGON  HC AK CIV2008-404-00158  13 May 2008

[1]      Mr Croggon has made application for an order setting aside the bankruptcy notice served on him by Ms Roebuck.   The bankruptcy notice is based on a final District Court judgment obtained by Ms Roebuck by way of summary judgment against Mr Croggon for $41,118.10 for withheld commission. The judgment has not been stayed or satisfied.

[2]      Mr Croggon’s application was filed within the statutory time limit, but he did not serve it on Ms Roebuck.  Counsel for Ms Roebuck had to obtain a copy of the application from the Court but he confirms that no issue is taken with the lack of service and I proceed on that basis.

[3]      Mr Croggon maintains he has a counter-claim for damages for breach of contract that entitles him to an order setting aside the bankruptcy notice.  He says the contract was an oral contract that Ms Roebuck would pay him $105,000 if she terminated a licence agreement in which he authorised Ms Roebuck’s use of his real estate agent’s licence.   He says he was never given an opportunity to raise his counter-claim in the proceeding in the District Court where he was ordered to pay Ms Roebuck the commission that was received into his trust account.

[4]      The  first  question  I must  decide  is  whether  the  alleged  counter-claim  is arguable.  I am far from satisfied that it is.  The alleged oral contract is inconsistent with the licence agreement and there is no evidence in the affidavits before the Court that supports a finding that there possibly was such a contract.  Even if there were some evidential basis for saying that it is arguable that an oral agreement was made (and there is not), the oral contract would be an illegal contract for the same reasons that the Real Estate Agents Licensing Board has found that the licence agreement was illegal.  Nothing has been put before me to suggest that Mr Croggon would have any realistic prospect of recovering damages on the basis of an illegal contract that is a contract of the kind alleged by Mr Croggon.

[5]      Given  my  finding  on  the  first  question,  the  application  must  fail.    It  is therefore not necessary for me to deal with the question whether the alleged counter- claim was one that Mr Croggon was not able to set up in the proceeding in the

District  Court  where  judgment  was  entered  against  him.     For  the  sake  of completeness however I deal briefly with that issue.

[6]      It is clear that Mr Croggon did have the opportunity to raise a defence to the District Court proceeding which was brought against him by way of summary judgment.   He could have raised the alleged counter-claim as a factor going to whether he had an arguable defence.  Mr Croggon did not however file any papers in the District Court for the purposes of demonstrating a defence until after the time allowed by the District Court Rules.   The District Court Judge gave Mr Croggon leave to file his documents in opposition on terms that required Mr Croggon to pay the  amount  of  the  commission  claimed  by  Ms  Roebuck  into  a  solicitor’s  trust account.  Mr Croggon says he was not able to do that because he lacked the funds and he lodged an appeal against the District Court’s ruling to the High Court.   A difficulty for Mr Croggon is that he consented to orders in the High Court imposing the same requirement for the payment of the amount of the commission into a solicitor’s trust account.  Potter J ruled, on appeal, that if the monies were paid into trust, then the District Court’s judgment would be treated as set aside, the summary judgment  application  would  be  re-heard,  and  Mr  Croggon  would  have  the opportunity to oppose the summary judgment.   Had Mr Croggon complied with consent orders, he could again have raised his alleged counter-claim but Mr Croggon did not comply with the consent orders.

[7]      The direct cause therefore of Mr Croggon’s inability to raise his counter- claim was his own failure to comply with the Courts orders.   Significantly, the second of those orders was with his consent. I do not accept that the failure or inability  to  make  payment  in  those  circumstances  qualifies  as  or  resulted  in  a relevant inability to raise a counterclaim for the purpose of s 17 of the Insolvency Act 2006, (or the equivalent former provision, s 19 of the Insolvency Act 1967).

[8]      In these circumstances, I do not accept that Mr Croggon did not have the opportunity to raise the existence of his alleged counter-claim in the summary judgment proceeding where the order the bankruptcy notice relies on was obtained. He had two opportunities to raise the counter-claim in that proceeding.

[9]      Given the above findings, Mr Croggon’s application must fail and I order accordingly.  The bankruptcy notice stands.

[10]     Ms  Roebuck  has  been  the  successful  party,  and  in  accordance  with  the statutory costs regime she is entitled to an order for costs.  There will be an order

for costs on a 2B basis plus disbursements to be fixed by the Registrar.

Associate Judge Sargisson