Sullivan v Clode - [2017] NZHC 1973

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-3017 [2017] NZHC 1973

UNDER the Insolvency Act 2006

IN THE MATTER OF

the bankruptcy of BRENT DOUGLAS CLODE

BETWEEN

MICHAEL GRANT SULLIVAN, DUTHCO TRUSTEES (SULLIVAN) LIMITED AS TRUSTEES OF THE SULLIVAN FAMILY TRUST NO.1

Judgment Creditors

AND

BRENT DOUGLAS CLODE Judgment Debtor

Hearing: 17 August 20017

Appearances:

M D Pascariu for the Judgment Creditors
S R J Hamilton for the Judgment Debtor

Judgment:

17 August 2017

ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL

Solicitors:
MinterEllisonRuddWatts, Auckland, for the Judgment Creditors
Foley Hughes, Auckland, for the Judgment Debtor

Counsel:
Simon R J Hamilton, Auckland, for the Judgment Debtor

SULLIVAN & ORS v CLODE [2017] NZHC 1973 [17 August 2017]

[1] There are two matters. The creditors apply for Mr Clode to be adjudicated bankrupt. Mr Clode applies under s 42 of the Insolvency Act 2006 to halt the proceeding so that he may continue his appeal against the judgment on which the creditors’ bankruptcy notice is based.

[2] The creditors obtained judgment against Mr Clode in proceeding CIV-2014-

404-2717. In a judgment of 8 July 2016, Palmer J dismissed claims by Mr Clode and Synergy Management Ltd.1 He declared that an agreement of 3 July 2014 was void under s 43 of the Fair Trading Act and he ordered Mr Clode and Synergy Management Ltd to pay the trustees of the Sullivan Family Trust $150,000 plus interest and costs. Costs were later fixed at $60,380.00. Mr Clode had been required to pay security for costs. Once those were taken into account the unpaid amount of costs is some $35,000. Mr Clode is also liable for a costs order for about $4,000 made on the security for costs application. These are all final judgments or orders. There has been no order staying execution. I was advised that the total amount of
outstanding under all the judgments and orders is some $225,000.

[3] The creditors’ bankruptcy notice is based only on the judgment of $150,000 plus interest. Mr Clode did not comply with the bankruptcy notice served on him in December 2016. The creditors filed their application in February 2017. Mr Clode filed his application under s 42 to halt the proceeding in April this year.

[4] In the meantime, Mr Clode has appealed against the judgment of Palmer J. He filed the appeal in August 2016 and paid security for costs in September 2016. He filed his case on appeal in November 2016 and an amended notice of appeal. He has filed his submissions for the appeal. It is to be heard on Monday, 4 September
2017.

[5] The creditors’ application and the halt application were set down for hearing
on 25 July 2017. I adjourned the case until today because Mr Clode said he would pay the debt into court. That payment was to be made by 15 August 2017. If it were

1 Clode v Sullivan [2016] NZHC 1561.

paid the bankruptcy application would be halted pending…

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 Sullivan v Clode

Details

AGLC: Sullivan v Clode [2017] NZHC 1973
Case: [2017] NZHC 1973
Decision Date: 17 August 2017

CaseChat Overview and Summary

The case of Sullivan v Clode involves creditors seeking to have Brent Douglas Clode adjudicated bankrupt and Mr Clode seeking to halt the bankruptcy application pending his appeal against the underlying judgment. The High Court of New Zealand, Auckland Registry, presided over by Associate Judge R M Bell, delivered its judgment on 17 August 2017. The primary legal issues were whether the court should exercise its discretion under section 42 of the Insolvency Act 2006 to halt the creditors’ bankruptcy application, and if so, under what conditions. The court found that the creditors had satisfied the requirements for an adjudication of bankruptcy under the Act, but Mr Clode's appeal against the underlying judgment was bona fide and had a reasonable prospect of success. The court balanced the creditors' need for timely execution of the judgment against the potential for undue prejudice if the appeal were to fail. It concluded that halting the bankruptcy application pending the appeal outcome would not unduly prejudice the creditors and ordered the application be put on hold subject to certain conditions, including that Mr Clode provide an undertaking to not release funds held in his solicitor's trust account without court approval and that his associate provide an undertaking to pay the creditors if the appeal fails. The court reserved costs pending the outcome of the appeal.

Orders