Seven Brews Limited v Flavell
[2025] NZHC 1086
•7 May 2025
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2024-409-649
[2025] NZHC 1086
UNDER the Insolvency Act 2006 IN THE MATTER
of a bankruptcy
BETWEEN
SEVEN BREWS LIMITED
Judgment Creditor
AND
GRAEME PIERRE FLAVELL
Judgment Debtor
Hearing: 1 May 2025 Counsel:
R V Sami and K K Montu for Judgment Creditor Judgment Debtor in person
Judgment:
7 May 2025
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 7 May 2025 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:
SEVEN BREWS LIMITED v GRAEME PIERRE FLAVELL [2025] NZHC 1086 [7 May 2025]
[1] This is a creditor’s application by Seven Brews Ltd (Seven Brews) for an order adjudicating Mr Graeme Flavell bankrupt.
[2] The creditor’s application is founded on a judgment for $51,516.97 obtained by Seven Brews against Mr Flavell in the District Court at Christchurch on 24 September 2024.
[3] Mr Flavell opposes the creditor’s application. He does not dispute Seven Brews’ judgment but says he should be given an opportunity to pay his debt off over time and that if he is adjudicated bankrupt his creditors will receive little.
[4] The creditor’s application first came before the Court on 3 April 2025 when Associate Judge Lester adjourned it to allow Seven Brews to consider Mr Flavell’s proposal for time payment of the debt.
[5] When the application next came before the Court on 1 May 2025, I was advised Seven Brews had not accepted Mr Flavell’s proposal and wished to obtain an order for adjudication. I heard from both Counsel for Seven Brews and Mr Flavell.
Mr Flavell’s circumstances and grounds of opposition
[6] Mr Flavell is currently working for a food manufacturing company, and he expects that his income will increase substantially when developments overseas come to fruition. He does not, however, say what he presently earns or provide any detail of the overseas developments that will increase his income.
[7] Mr Flavell is concerned that if he is adjudicated bankrupt, he will be unable to travel overseas. He says he needs to have the ability to travel overseas for his employment. He also says he has been offered a contract overseas in the sports field which will provide him with work in the weekends and after hours which would potentially bring in further income closer to the end of this year.
[8] Mr Flavell provided information concerning his assets and liabilities. He has disclosed that he has “current major creditors” totalling $85,600 as follows:
Seven Brews Ltd $53,000 Christchurch Orthopaedic $14,000 St George’s Hospital $6,600 Inland Revenue Department $12,000 [9] His assets are said to be: Business account
$1,200
Personal accounts $2,800 Invoices owed – Equinox $86,500 Invoices owed – Current $6,000 [10] It appears Mr Flavell has been making payments
to some of his creditors but
not to Seven Brews. The amounts owing to all creditors other than Seven Brews have been reduced. In the case of Seven Brews the debt has, according to his evidence, risen from $31,000 to $53,000. I understand some part of the increase relates to interest and costs awarded in the District Court proceeding. Mr Flavell says he has not made any payments to Seven Brews because it has not accepted his proposals.
[11] Mr Flavell’s only significant asset appears to be an amount said to be owed to him by a company in liquidation, Equinox New Zealand Ltd (in liquidation) (Equinox). Mr Flavell says Equinox was a former employer that was placed into liquidation in August 2024. He says he is a creditor for $86,500 and he expects to be paid from “the sale of assets and goods currently owed and stored by Equinox Labs and a creditor in Auckland.” He says the value of those assets and goods exceeds
$350,000 and that any money received from this source will go to Seven Brews.
[12] Mr Flavell’s latest proposal, which is set out in an email to Seven Brews’ lawyers of 29 April 2025 is that he would:
(a)make payment immediately of $2,000;
(b)make minimum payments thereafter of $1,500 monthly, starting 31 May;
(c)increase payments when current contracts from his employment come to fruition; and
(d)pay any monies received from the liquidator of Equinox to Seven Brews.
[13] Mr Flavell says if he is adjudicated bankrupt his creditors will miss out and he does not want that to happen.
The creditor’s application
[14] Section 13 of the Insolvency Act 2006 provides for the circumstances when a creditor may apply for a debtor’s adjudication in bankruptcy. Those circumstances are as follows:
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 the filing of 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.
[15]All of these requirements are satisfied in this case.
[16] Notwithstanding the grounds for making an order of adjudication are satisfied, the Court may in the exercise of its discretion refuse to make such an order. For present purposes, s 37 of the Insolvency Act is relevant which provides as follows:
37 Court may refuse adjudication
The court may, at its discretion, refuse to adjudicate the debtor bankrupt if—
…
(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.
[17] Guidance as to the approach the Court should take when hearing a creditor’s application can be found in Baker v Westpac Banking Corporation, which although decided under former legislation is still applicable:1
The principles governing the exercise of the discretion under s 26 to grant or refuse an order of adjudication in bankruptcy are well settled and have been discussed by this court in recent years in Ellis v NZI Finance Ltd and McHardy v Wilkins & Davies Marinas Ltd (in receivership). It is proper for the court to consider not only the interests of those directly concerned — the petitioner, other creditors, the debtor — but also the wider public interest. A creditor who establishes the jurisdictional facts set out in s 23 is not automatically entitled to an order. On the other hand, it is for an opposing debtor to show why an order should not be made. The court will give proper weight to the commercial judgment of the petitioner but the oppressive use of the bankruptcy process may be a ground for refusing an order. Another ground may be the undoubted absence of assets but that will not necessarily preclude an order given the range of interests involved including the public interest in the continuing oversight of a bankrupt’s affairs and the disqualifications that go with bankruptcy. In the end the court must balance the various considerations relevant to the case and determine whether the debtor has succeeded in showing that an order ought not to be made.
[18] In Re Tootell, ex parte Rabobank Australia Ltd, Associate Judge Osborne accepted the following principles applied in relation to an adjudication application:2
(a)The creditor has the onus of establishing the allegations in its application.
(b)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.
1 Baker v Westpac Banking Corporation CA212/92, 13 July 1993 at 4, cited in Re Commissioner of Inland Revenue, ex parte Brown [2016] NZHC 1232 at [14].
2 Re Tootell, ex parte Rabobank Australia Ltd [2013] NZHC 2975 at [6].
(c)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 not making an order of adjudication.
(d)The Court is not to refuse an order of adjudication on the grounds of expediency or convenience.
[19] Associate Judge Osborne also referred to the decision of Master Williams QC in Re Epirosa, ex parte Diners Club (NZ) Ltd, where the factors considered relevant to the exercise by the Court of its discretion included:3
(a)What are the wishes of all affected parties, including the applying creditor, other creditors and the debtor?
(b)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?
(c)What were the circumstances in which the debt was incurred, and do those circumstances suggest that the creditor is acting unreasonably in pursuing adjudication?
(d)Will adjudication be pointless?
(e)Will the debtor, if adjudicated, be rendered unable to support himself or herself?
(f)Does the debtor have such a standing in the community that significant issues of stigma or embarrassment will result?
Analysis
[20] While Mr Flavell is genuine in his desire to pay his creditors, he has not provided sufficient evidence to establish that his proposal to make time payments is
3 Re Epirosa, ex parte Diners Club (NZ) Ltd HC Wellington B498/91, 6 March 1992.
realistic. He has not made any payments to Seven Brews which immediately gives rise to concern as to his ability to do so. I do not have before me anything from other creditors confirming they have accepted time payment proposals or on what terms.
[21] Mr Flavell has also not provided evidence of his employment or of his earnings to show that he has the ability to make payments to Seven Brews at the rate proposed as well as making payments to his other creditors. Even if I were to accept that he could maintain the payments, it would take almost three years before Seven Brews was paid its core debt without any interest on that debt to which it is entitled.
[22] In respect of his assets Mr Flavell has not provided evidence that he has made a creditor’s claim in the liquidation of Equinox in respect to the $86,500 that he says he is owed by the company. There is nothing from the liquidators to confirm he has made a creditor’s claim, and the liquidators’ reports do not list Mr Flavell as a creditor. The liquidators’ reports also say nothing about them holding or having access to assets the sale of which will allow for payment of unsecured creditors. The only evidence that Mr Flavell has provided is a letter said to be from two founders of the company, which does little more than express good intentions to see creditors paid.
[23] While Mr Flavell considers Seven Brews and his other creditors will likely do better participating in a time payment arrangement than bankrupting him, it is not clear to me that this is the case. If adjudicated bankrupt the Official Assignee may require Mr Flavell to make contributions from his earnings towards payment of his creditors and, perhaps more significantly, if Mr Flavell is owed a substantial sum by Equinox, recovery of that sum by the Official Assignee would also benefit his creditors. Given Mr Flavell’s circumstances and the uncertainty about steps taken to date to recover what he says is owed, it appears to me the Official Assignee will be better placed than Mr Flavell to recover any debt.
[24] Mr Flavell is concerned he needs to travel overseas for his employment. As noted, he has not provided evidence of his employment nor of the need to travel other than his assertion that this is the case. In any event, a bankrupt may leave New Zealand
during the period of his or her bankruptcy provided they first obtain the approval of the Official Assignee.4
[25] Seven Brews has satisfied me that the grounds for making an order of adjudication are made out. Standing back and looking at all the evidence before me, Mr Flavell has not satisfied me that the Court should not make an order adjudicating him bankrupt on the just and equitable ground or because some other sufficient reason exists for the Court to not make such an order.
Result
[26]I order:
(a)The judgment creditor’s application is granted and Mr Flavell is adjudicated bankrupt.
(b)The judgment creditor is entitled to costs on a 2B basis plus disbursements as fixed by the Registrar.
(c)This order is timed at 2.30 pm on 7 May 2025.
O G Paulsen Associate Judge
Solicitors:
Godfreys, Christchurch
4 Insolvency Act 2006, s 433(f) and Insolvency (Personal Insolvency) Regulations, reg 11.
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