Spurr v CRT Fuel Limited - [2012] NZHC 3307

IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY

CIV-2012-476-000237 [2012] NZHC 3307

IN THE MATTER OF the Insolvency Act 2006

AND

IN THE MATTER OF the bankruptcy of STUART GRAEME SPURR

BETWEEN STUART GRAEME SPURR Applicant

ANDCRT FUEL LIMITED Respondent

Hearing: 3 December 2012 (Heard at Dunedin)

Appearances: B C Nevell for Applicant/Judgment Debtor
M B Couling for Respondent/Judgment Creditor

Judgment: 7 December 2012

JUDGMENT OF ASSOCIATE JUDGE OSBORNE [as to setting aside of bankruptcy notice]

[1] Mr Spurr operated a service station in Timaru (through a company). I will refer to the company and Mr Spurr collectively as “Mr Spurr”. He entered into a fuel retailer agreement with CRT. He personally guaranteed payment of all amounts payable to CRT under the agreement. He had trading difficulties from an early stage and through 2011 was experiencing serious cash-flow issues. In January 2012 CRT ceased supplying Mr Spurr with fuel and took steps to recover the debt then owed. It obtained a summary judgment for $160,067.06 against both Mr Spurr and his company.

[2] The next month, CRT served Mr Spurr with a bankruptcy notice.

SPURR V CRT FUEL LIMITED HC TIM CIV-2012-476-000237 [7 December 2012]

[3] Mr Spurr applies to set aside the bankruptcy notice.

The grounds of Mr Spurr’s application

[4] Mr Spurr does not challenge the validity of the summary judgment.

[5] Mr Spurr invokes the provisions of s 17(1)(d)(ii) Insolvency Act 2006. He says that he has a cross claim against CRT which exceeds the judgment debt so as to meet the requirements of s 17(7)(a) of the Act.

[6] He says that, as a matter of law, he could not have used the cross claim as a defence in the summary judgment proceeding as cl 39 of the retailer agreement expressly forbade the setting up of a cross claim.1 He adds that he could also not have pursued the cross claim in practical terms because he had no money to pay his lawyers to do so.

[7] Mr Spurr’s cross claim is based on two (alternative) causes of action: (a) A breach of contract by CRT by:
(i) ceasing to supply fuel to the company on 10 January 2012;

(ii)failing to provide the company with written notice of its decision to cease fuel supply; and

(iii)requiring payment of all funds outstanding before fuel supply recommenced rather than requiring payment of only the balance above a $65,000 credit limit.

(b)A breach of s 9 Fair Trading Act 1986 by reason of misleading and deceptive conduct and trade through:

(i)without notice to the company purporting to amend the contractual terms of payment from five days credit to cash on delivery at the time of the 9 January 2012 delivery;

(ii)making that decision on the basis that the company had exceeded a proposed, but not agreed, $65,000 credit limit which the company had not previously enforced;

(iii) imposing new payment terms on the company after the 9

January 2012 delivery had already taken place so that the company…

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.

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Details

Case: [2012] NZHC 3307
Decision Date: 7 December 2012

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Spurr v CRT Fuel Limited was heard in Timaru. Stuart Graeme Spurr, the applicant and judgment debtor, applied to set aside a bankruptcy notice issued by CRT Fuel Limited, the respondent and judgment creditor. The application arose out of a fuel retailer agreement between Mr Spurr and CRT, in which Mr Spurr personally guaranteed payment of all amounts payable under the agreement. Following financial difficulties and cash-flow issues, CRT ceased supplying fuel to Mr Spurr and obtained a summary judgment for $160,067.06 against both Mr Spurr and his company. The central issue in this case was whether Mr Spurr had a cross claim against CRT that met the requirements of s 17(7)(a) of the Insolvency Act 2006. The court found that Mr Spurr's cross claim was precluded by an agreement in the retailer contract that expressly forbade the setting up of a cross claim. As a result, the court dismissed the interlocutory application to set aside the bankruptcy notice. The court also specified that, had the Legal Services Act not applied, costs would have been ordered to be paid by the applicant to the respondent on a 2B basis together with disbursements to be fixed by the Registrar. The date for payment pursuant to the bankruptcy notice was extended to 21 December 2012, failing payment by which date CRT Fuel Ltd would be entitled to present an application for the adjudication of Mr Spurr.

Orders