Sharrock v Kipping - [2018] NZHC 2210

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-000244

[2018] NZHC 2210

IN THE MATTER of the Insolvency Act 2006

AND

IN THE MATTER

of the bankruptcy of JOHN BRIAN KIPPING

BETWEEN

GERALD ERRINGTON SHARROCK

Judgment Creditor

AND

JOHN BRIAN KIPPING

Judgment Debtor

Hearing: 19 July 2018

Appearances:

J B Kipping (Debtor/Applicant) in person R B Hucker for Creditor/Respondent

Judgment:

27 August 2018

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

(application to set aside bankruptcy notice)

Introduction

[1]John Kipping owes a judgment debt of $22,681 to Gerald Sharrock.

[2] The judgment debt represents the costs and disbursements awarded by the High Court following Mr Sharrock’s successful summary judgment application.1

1 Sharrock v Wedd [2017] NZHC 1739.

SHARROCK v KIPPING [2018] NZHC 2210 [27 August 2018]

[3] The Court made its determination of the costs and disbursements payable by Mr Kipping on 5 April 2018.2

Mr Kipping’s application

[4] Mr Sharrock had a bankruptcy notice issued for the judgment debt on 27 April 2018. It had to be served by substituted service.

[5]Mr Kipping applies for the bankruptcy notice to be set aside.

Setting aside a bankruptcy notice – the principles

[6] Section 17(1) of the Insolvency Act 2006 establishes a number of acts of bankruptcy. Among them, s 17(1)(d) involves non-compliance with a bankruptcy notice. It provides, as an alternative to compliance with the requirements of the notice, that the debtor may satisfy the Court that he or she has a cross-claim against the creditor.

[7] Section 17(7) defines what may constitute a cross-claim for the purposes of s 17(1)(d). It provides:

17 Failure to comply with bankruptcy notice

…

(7)In subsection (1)(d)(ii), cross claim means a counterclaim, set-off, or cross demand that-

(a)is equal to, or greater than, the judgment debt or the amount that the debtor has been ordered to pay; and

(b)the debtor could not use as a defence in the action or proceedings in which the judgment or the order, as the case may be, was obtained.

[8] I adopt the following principles in determining whether I am satisfied that, in terms of s 17(1)(d)(ii) of the Act, the debtor has a cross-claim against the creditor:

2 Sharrock v Wedd [2018] NZHC 603.

(7)The debtor must show they have a genuine triable claim against the creditor.3

(8)The debtor’s inability to use the cross-claim as a defence (required under s 17(7)(b)) is primarily a legal inability. Factual inability is also available but that requires some cogent circumstance.4 Notwithstanding that the creditor’s original claim is pursued through a summary proceeding, it is open to the defendant in such a proceeding to set up a cross-claim.5

(9)To establish the required value under s 17(7)(a) the debtor must establish (including where a claim may be for unliquidated damages) a genuine, triable claim at least to a sufficient extent in monetary terms to bring it somewhere near the equality or excess required under the sub-section.6

The status of the judgment debt

[9]…

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.

Continue reading Sharrock v Kipping

Details

AGLC: Sharrock v Kipping [2018] NZHC 2210
Case: [2018] NZHC 2210
Decision Date: 27 August 2018

CaseChat Overview and Summary

The case of Sharrock v Kipping involves a dispute over a judgment debt of $22,681 owed by John Brian Kipping to Gerald Errington Sharrock, which arose from a successful summary judgment application. Mr Sharrock issued a bankruptcy notice on 27 April 2018, which had to be served by substituted service, and Mr Kipping applied for the notice to be set aside. The court considered the principles for setting aside a bankruptcy notice, which involves the debtor demonstrating a genuine triable claim against the creditor that is equal to or greater than the judgment debt and could not have been used as a defense in the original proceedings. The court also examined the status of the judgment debt, particularly in light of an appeal scheduled before the Court of Appeal, which had no bearing on the judgment debt. The court then reviewed the grounds of Mr Kipping's application, including the existence of a set-off, a challenge to the substantive and costs judgments, and an alleged breach of natural justice. The court found that Mr Kipping had failed to demonstrate a genuine triable claim, and the appeal's outcome did not affect the judgment debt. The court ultimately dismissed Mr Kipping's application to set aside the bankruptcy notice and ordered that he pay costs on a 2B basis.

The court's reasoning was based on the principles of setting aside a bankruptcy notice, the status of the judgment debt, and the grounds of the application. The court found that Mr Kipping had not demonstrated a genuine triable claim against Mr Sharrock and that the appeal's outcome did not affect the judgment debt. Furthermore, the court found no breach of natural justice in the proceedings. Therefore, the court dismissed Mr Kipping's application and ordered him to pay costs on a 2B basis.

Orders