Samson Corporation Limited v Sutherland
[2025] NZHC 374
•4 March 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-629
[2025] NZHC 374
UNDER the Insolvency Act 2006 IN THE MATTER OF
an application to bankrupt WENDY ANN SUTHERLAND
BETWEEN
SAMSON CORPORATION LIMITED
Judgment Creditor
AND
WENDY ANN SUTHERLAND
Judgment Debtor
Hearing: 24 February 2025 at 10:00am Appearances:
Brett Martelli for the Judgment Creditor Judgment Debtor is self-represented
Judgment:
4 March 2025
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
[Creditor’s application for an adjudication order]
This judgment was delivered by me on 4 March 2025 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
Solicitors:
Martelli Yaqub Lawyers Limited, Onehunga, Auckland, for the Judgment Creditor
Copy for:
Ms W A Sutherland, Auckland, Judgment Debtor
SAMSON CORPORATION LIMITED v SUTHERLAND [2025] NZHC 374 [4 March 2025]
[1] This is an application by the judgment creditor, Samson Corporation Limited (Samson Corporation), for an order adjudicating the judgment debtor, Ms Wendy Ann Sutherland (Ms Sutherland), bankrupt. The application is opposed by Ms Sutherland.
Background
[2] Samson Corporation applied for summary judgment against Ms Sutherland for failure to pay lease arrears. On 7 December 2022, Judge Sharp in the District Court granted Samson Corporation’s application, and judgment of $65,814.97 (including costs) was entered against Ms Sutherland.1
[3] On 6 April 2023, Samson Corporation served Ms Sutherland with a bankruptcy notice.2 Ms Sutherland did not apply to set the bankruptcy notice aside within 10 working days (or at all).
[4] Ms Sutherland admits liability for $47,000.3 She did not pay. Samson Corporation has applied to bankrupt Ms Sutherland. Ms Sutherland opposes the application and requests that the Court exercise its discretion under s 37 of the Insolvency Act 2006 (Insolvency Act) to refuse to adjudicate her bankrupt. Ms Sutherland states bankruptcy will be ruinous as she is a director of a catering company, Hudson Fox Limited, which she will not be able to operate if adjudicated bankrupt.4
[5] On 8 April 2024, the parties reached an accord under which Ms Sutherland agreed to pay the judgment debt ($69,071) and costs ($8,395) by weekly instalments of $550.
[6] Samson Corporation was concerned that Ms Sutherland may default so did not discontinue the bankruptcy application and requested that the Court adjourn the matter
1 Oral Judgment of Judge Sharp dated 7 December 2022 (Samson Corporation Limited v Wendy Sutherland [2022] NZDC 24457).
2 Bankruptcy notice dated 6 April 2023.
3 Minute of Associate Judge Gardiner dated 23 November 2023 at [2].
4 Notice of opposition to judgment creditor’s submission dated 18 February 2025 at [2].
for six months so it could monitor Ms Sutherland’s compliance with the conditional agreement.5 On 8 April 2024, Associate Judge Lester granted the adjournment.6
[7] Ms Sutherland has defaulted under the agreed instalment payment arrangement. She paid $7,945, before stopping all payments in September 2024.7
[8] On 5 February 2025, Samson Corporation terminated the instalment agreement which restored the parties to the position before the adjournment.8
Legal principles
[9] The principal requirements for court adjudication on a creditor’s application are in s 13 of the Insolvency Act 2006 (the Act):
13 When creditor may apply for debtor's adjudication
A creditor may apply for a debtor to be adjudicated bankrupt if–
(a) the debtor owes the creditor $1,000 or more or, if 2 or more creditors join in the application, the debtor owes a total of $1,000 or more to those creditors between them; and
(b) the debtor has committed an act of bankruptcy within the period of 3 months before filing the application; and
(c) the debt is a certain amount; and
(d) the debt is payable either immediately or at a date in the future that is certain.
[10] Briefly stated, a creditor may bring a bankruptcy proceeding against a debtor who owes that creditor at least $1,000 and who has committed an act of bankruptcy within three months before the filing of the application. The sum must be a "certain amount" and payable immediately or at a future date that is certain.
[11] There are further relevant provisions in Part 2 of the Act. Section 17 provides that a debtor commits an act of bankruptcy if:
5 Joint memorandum regarding settlement dated 8 April 2024 at [2].
6 Minute of Associate Judge Lester dated 8 April 2024.
7 Submissions for judgment creditor supporting bankruptcy application dated 11 February 2025, Schedule 1.
8 Affirmation of Saffron Gabriel dated 12 February 2025, Exhibit B.
(a)a creditor has obtained a final judgment or a final order against the debtor for any amount;
(b)execution of the judgment or order has not been halted by a court;
(c)the debtor has been served with a bankruptcy notice; and
(d)the debtor has not, within the relevant time limit, complied with the requirements of the notice or satisfied the court that he or she has a cross-claim against the creditor.
[12] Section 37 of the Act confers a discretion on the Court to decline to make an order for adjudication:
37 Court may refuse adjudication
The court may, at its discretion, refuse to adjudicate the debtor bankrupt if—
(a)the applicant creditor has not established the requirements set out in section 13; or
(b)the debtor is able to pay his or her debts; or
(c)it is just and equitable that the court does not make an order of adjudication; or
(d)for any other reason an order of adjudication should not be made.
[13] When hearing a creditor’s application, a court may, among other things, adjudicate the debtor bankrupt if the creditor has established the s 13 requirements,9 or halt the application for adjudication for the period the court thinks appropriate.10
[14] The Court may also halt or refuse the creditor’s application for adjudication if the debtor has appealed against the judgment or order underlying the bankruptcy notice and that appeal is still to be decided.11
9 Insolvency Act 2006, s 36.
10 Section 38.
11 Section 42.
[15] The following general principles, extracted from the caselaw, are relevant to the Court’s discretion to refuse adjudication:
(a)The onus is on the debtor to show why an adjudication order should not be made;12
(b)in exercising its discretion, the Court may consider, inter alia, the following factors:
(i)the views of all affected parties, including the petitioner, other creditors and the debtor;13
(ii)does the debtor have the ability to meet his or her debts over time and, if so, does that meet the requirements of achieving finality within a reasonable period?14
(iii)the wider public interest, including whether adjudication is “conducive or detrimental to commercial morality and the interests of the general public”;15
(iv)the circumstances in which the debt was incurred and whether those circumstances suggest that the creditor is acting unreasonably in pursing adjudication;16
(v)whether adjudication would be pointless in the sense that the creditors are unlikely to receive payment;17
(vi)whether adjudication would render the debtor unable to support him or herself;18
12 McHardy v Wilkins & Davies Marinas Ltd (In Rec) CA54/93, 7 April 1993 at 3.
13 Re Sturdee [1985] 2 NZLR 627 (HC) at 635.
14 Rabobank Australia Ltd v Tootell [2013] NZHC 2975 at [8].
15 Re Nisbett, ex parte Vala [1934] GLR 553 (SC) at 556.
16 Re Epirosa, ex parte Diners Club (NZ) Ltd HC Wellington B498/91, 6 March 1992 at 6.
17 Re Fidow [1989] 2 NZLR 431 (HC) at 444.
18 Re Epirosa, above n 16, at 7.
(vii)does the debtor have such a standing in the community that significant issues of stigma or embarrassment will result?19
(viii)the potential for further investigation procedures to be made available to creditors by the bankruptcy?20
(c)in exercising its discretion, the Court should also remain cognisant of the broader purposes of bankruptcy which include:
(i)allowing for administration of the debtor’s estate in the interests of creditors;
(ii)holding the debtor accountable for his or her debts;
(iii)punishing or stigmatising the debtor for misconduct;
(iv)protecting the community from a debtor who runs up credit without being able to honour it; and
(v)allowing the debtor to eventually take up commercial activity once freed from his or her liabilities after the discharge of their bankruptcy;21
(d)ultimately, the Court must balance the various considerations relevant to an application when concluding whether the debtor has succeeded in showing that the order sought should not be made.22
Analysis
[16] The issue to be determined in this judgment is whether there are grounds under s 37 of the Insolvency Act to refuse Samson Corporation’s application for an adjudication order against Ms Sutherland.
19 Rabobank, above n 14, at [8].
20 Loan Investment Trustees Ltd v Ding [2024] NZHC 1328 at [28].
21 Sheppard v Blanchett [2012] NZHC 789, (2012) 3 NZTR 22-014 at [35]-[43].
22 McHardy above n 12, at 4.
Samson Corporation’s submissions
[17] Mr Martelli, for Samson Corporation, submits that the requirements of s 17 of the Insolvency Act are met and Ms Sutherland has not established sufficient grounds under s 37 for the Court to exercise its discretion to refuse the adjudication order sought.
Compliance with s 17
[18]Mr Martelli submits that the requirements of s 17 are met as:
(a)Ms Sutherland owes Samson Corporation $47,000, being the admitted debt. Alternatively, Ms Sutherland owes Samson $65,814 (less payments of $7,945 since April 2024), being the judgment debt.
(b)Ms Sutherland has committed an available act of bankruptcy on 4 May 2023 by failing to comply with the bankruptcy notice.
(c)Ms Sutherland’s offer, in May 2023, to pay the debt by weekly instalments was declined by Samson Corporation.
[19] Mr Martelli submits the Court has consistently said a debtor’s offer to pay a debt via instalments is not a valid defence to adjudication, citing Robertson Bixley Ltd v Jolly23 and Westpac New Zealand Ltd v Chen.24
Section 37(b) – debtor is able to pay his/her debts
[20] Mr Martelli submits that Ms Sutherland’s assertion that she can repay the debt is unsupported by probative evidence or actions. He points to the following:
(a)She has produced no probative evidence of her ability to pay, such as a sworn statement of assets and liabilities showing net assets exceeding the debt, easily realisable assets or cash.
23 Robertson Bixley Ltd v Jolly [2023] NZHC 286.
24 Westpac New Zealand Ltd v Chen [2022] NZHC 1834.
(b)She was unable to adhere to the instalment agreement.
(c)She did not provide details of the opportunities she claims will enable her to repay in the future, including the potential earnings of being offered a corporate catering contract with the Employers and Manufacturers Association (EMA), or a record of incorporating a company called “Lazy Betty”.
[21] Mr Martelli submits that s 37 does not refer to the future ability to pay and, even if it did, the Court can have no confidence in Ms Sutherland’s future ability to pay because:
(a)There is no record of Ms Sutherland incorporating a company called “Lazy Betty”.
(b)Ms Sutherland adduced no evidence about what she might earn from the EMA contract (or if that exists).
(c)Ms Sutherland, in December 2023, was confident in making lump sum payments to repay the arrears “as soon as possible”. Almost 13 months have passed, and she has not paid the large lump sum or any payments since September 2024.
Sections 37(c) and (d) – just and equitable or other reasons
[22] Mr Martelli submits that there is a public interest factor in making the adjudication order. He points to the following:
(a)Ms Sutherland now has a “history” of leaving creditors unpaid by her corporate entities and in her own name. He refers to the liquidation of two companies associated with Ms Sutherland, Marque Hospitality Limited and Marvel Grill North Wharf Co Limited.
(b)Ms Sutherland undertook the commercial activity leading to the undisputed debt of $47,000. The Official Assignee should investigate that activity and Ms Sutherland’s asset position.
(c)People and companies should know Ms Sutherland has a personal and corporate trading history and an adjudication will achieve that public benefit.
[23] As to Ms Sutherland’s assertion that adjudication will prevent her from earning a living, Mr Martelli submits that bankruptcy generally does not prevent a person from earning a living practically or legally. He also points out that as there is no company registered as “Lazy Betty”, it is Ms Sutherland’s trading name and if any party wants to continue to trade with Ms Sutherland, as “Lazy Betty”, after adjudication then they can do so.
[24] Mr Martelli submits the undisputed debt of $47,000 is significant and Ms Sutherland could not reduce the debt below the threshold for a considerable period of time, and that execution against Ms Sutherland’s assets is not an option as she has adduced no evidence of any realisable assets.
Ms Sutherland’s submissions
[25]Ms Sutherland opposes the application on the following grounds:
(a)She is now financially capable of continuing a reasonable weekly payment structure. Ms Sutherland notes she made payments of $7,945 until September 2024. However, during the fourth quarter of 2024 the company saw a massive downturn and the business was closed for two weeks, prohibiting her from continuing weekly payments. She has recently resumed steady trading.
(b)Bankruptcy will prohibit Ms Sutherland from being director of a company. This would force her business to close, affecting the financial stability of the five staff members.
(c)The original amount of cessation of the lease has been unjustifiably inflated to more than double by additional charges.
(d)Mr Martelli, counsel for Samson Corporation, acted as Ms Sutherland’s lawyer during the liquidation of her previous company, Marvel Grill North Wharf Company Limited. This is a conflict of interest. Ms Sutherland has not given consent for him to act. She asserts Mr Martelli is now misusing confidential information, including referencing that she was previously a director in two insolvent liquidations. These liquidations were the result of financial stress during COVID-19.
[26]Regarding the conflict of interest, Ms Sutherland seeks;
(a)disqualification of Mr Martelli from acting in these proceedings;
(b)any filings or submissions prepared by Mr Martelli to be set aside as improperly obtained; and
(c)consideration by the Court as to whether any further action is necessary to address the professional misconduct.
[27]Regarding the debt, Ms Sutherland seeks;
(a)an order that Samson provide a clear, itemised statement of the total amount owed, including justification for all additional charges; and
(b)that the Court consider a structured repayment plan (instead of bankruptcy).
Result
[28] I am of the view that the adjudication order sought by Samson Corporation against Ms Sutherland should be made. She has not made out grounds for the Court
to exercise its discretion to refuse an adjudication order under s 37 of the Insolvency Act. The reasons for this are:
(a)There is no cogent evidence that she is able to pay the debt. She has filed no evidence of her financial situation, assets and liabilities. While she has made a claim of income from operating the catering café for the EMA, she has not filed any sworn evidence as to the existence of the contractual arrangement and expected returns from it which would support her ability to make a reasonable payment proposal to Samson Corporation.
(b)There is no cogent evidence presented to the Court as to the earnings of the business with the trading name “Lazy Betty” and what repayments it would support her making to Samson Corporation.
(c)The conflict of interest issue Ms Sutherland has raised in respect of Samson Corporation’s counsel, Mr Martelli, is untenable for the following reasons:
(i)she is not able to point to any confidential information Mr Martelli may have misused in acting for Samson Corporation in the current proceedings. The fact that both companies are liquidated is clearly public knowledge from the Companies Register;
(ii)the liquidations occurred in 2019 and 2023 and it is difficult to see how there could be any confidential information relevant to the current proceedings that could have been misused.
(d)There is public interest in the adjudication order being made. There are two failed businesses in Ms Sutherland’s past and she has failed to put before the Court any cogent evidence of her financial position and assets and liabilities. In my view, this justifies the Official Assignee
enquiring into Ms Sutherland’s circumstances and there is public interest in this occurring.
Orders
[29]I make the following orders:
(a)Samson Corporation’s application for an adjudication order is granted, with effect from the time and date of issue of this judgment.
(b)Samson Corporation, as the successful party, is entitled to costs on a 2B basis.
…………………………….. Associate Judge Taylor
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