Strachan v Moodie - [2014] NZHC 3167

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2013-454-000064 [2014] NZHC 3167

IN THE MATTER OF The Insolvency Act 2006

BETWEEN

ELIZABETH GRACE STRACHAN Judgment Creditor

AND

ROBERT ALEXANDER MOODIE Judgment Debtor

Hearing: 13 November 2014

Counsel:

J Maassen for Judgment Creditor
R A Moodie in person

Judgment:

11 December 2014

JUDGMENT OF ASSOCIATE JUDGE SMITH

The application for adjudication

[1] This is an application by Ms Strachan to have Dr Moodie adjudicated bankrupt.

[2] Ms Strachan obtained judgment debts against Dr Moodie in June 2012 and November 2012. As a result, Dr Moodie owes Ms Strachan $222,239.18, together with interest on the judgments.

[3] When Dr Moodie did not pay, Ms Strachan issued a bankruptcy notice against him. Dr Moodie applied to set that notice aside, contending that he had a cross-claim against Ms Strachan (a defamation claim filed in the Wellington registry of this Court) for an amount which would exceed the amount of Ms Strachan’s
judgments.

ELIZABETH GRACE STRACHAN v ROBERT ALEXANDER MOODIE [2014] NZHC 3167 [11 December
2014]

[4] In a reserved decision given on 11 December 2013, Associate Judge Osborne dismissed Dr Moodie’s application to set aside the bankruptcy notice. Dr Moodie filed an appeal to the Court of Appeal against that decision, but that appeal was dismissed when Dr Moodie failed to post security for Ms Strachan’s costs in the Court of Appeal. The decision striking out his appeal to the Court of Appeal was made on 23 June 2014.

[5] The cross-claim which Dr Moodie advanced in his application to set aside the bankruptcy notice is no longer available to him. The defamation claim against Ms Strachan has been stayed on Ms Strachan’s application, which Dr Moodie did not oppose.

[6] On 14 August 2014 Ms Strachan filed a creditor’s application to have Dr Moodie adjudicated bankrupt. Dr Moodie filed a notice of opposition and an affidavit in opposition.

[7] Dr Moodie acknowledged at the hearing that the debt owing to Ms Strachan remains unpaid. Mr Maassen and Dr Moodie also confirmed that, following the dismissal of Dr Moodie’s appeal to the Court of Appeal against the decision of Associate Judge Osborne, an order which had been made by the Associate Judge on
13 February 2014 staying execution of his judgment pending the determination of the appeal, is to be regarded as no longer being in force.1

Dr Moodie’s grounds for opposing the adjudication application

[8] Dr Moodie advances two principal grounds of opposition:

(1)The alleged act of bankruptcy results wholly from a judgment of the Employment Court that was issued from a proceeding that miscarried, because the Chief Judge of that court “failed to act appropriately and
judicially”; and

1 Andrew Beck and others McGechan on Procedure (online looseleaf ed, Brookers) at
[CR12.01(6)].

(2)Dr Moodie is retired, and his sole income is government superannuation. He says that he owns no capital assets, and, in effect, it would be pointless to adjudicate him bankrupt.

The background to Dr Moodie’s first ground…

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 Strachan v Moodie

Details

AGLC: Strachan v Moodie [2014] NZHC 3167
Case: [2014] NZHC 3167
Decision Date: 11 December 2014

CaseChat Overview and Summary

The case of Strachan v Moodie involves an application by Ms Strachan to have Dr Moodie adjudicated bankrupt. Dr Moodie has been unable to pay Ms Strachan the sum of $222,239.18, together with interest, following judgment debts obtained against him in 2012. Dr Moodie had applied to set aside the bankruptcy notice, contending that he had a cross-claim against Ms Strachan for defamation. However, this cross-claim is no longer available to him, as the defamation claim has been stayed.

The court was required to decide whether Dr Moodie could attack the judgment on which the bankruptcy proceeding is based, as a judgment resulting from "a proceeding that miscarried," and whether it should decline to make an adjudication order. The court found that Dr Moodie could not attack the judgment, as the Court of Appeal found no evidence of bad faith and that the Employment Court had acted within its jurisdiction. The court also found that it was not just and equitable to decline to make an adjudication order, as it was in the public interest that employers should not be permitted to walk away from their obligations to employees without consequences.

The court ordered that Dr Moodie be adjudicated bankrupt and that Ms Strachan have her costs on a scale 2B basis, with disbursements as fixed by the registrar.

Orders