Synnott v Wood - [2014] NZHC 1705

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2014-409-000200 [2014] NZHC 1705

IN THE MATTER OF the Insolvency Act 2006

AND

IN THE MATTER OF

the bankruptcy of LEON DEREK WOOD

BETWEEN

RICHARD JEFFREY SYNNOTT and TONY WILLIAM WHITE (as trustees of the R J Synnott No 2 Family Trust) Judgment Creditors

AND

LEON DEREK WOOD Judgment Debtor

Hearing: 17 July 2014

Appearances:

L D Wood (Judgment Debtor) as Applicant in Person
G M Downing and G C Engelbrecht for Judgment Creditors
(Respondents)

Judgment:

21 July 2014

JUDGMENT OF ASSOCIATE JUDGE OSBORNE
as to application to set aside bankruptcy notice

Introduction

[1] The judgment creditors obtained a judgment against the judgment debtor, Mr

Wood, upon formal proof on 3 April 2014. The judgment debt is $22,837.84. [2] The creditors issued a bankruptcy notice.
[3] Mr Wood applies for an order setting the bankruptcy notice aside.

SYNNOTT v WOOD [2014] NZHC 1705 [21 July 2014]

Setting aside of bankruptcy notice – the jurisdiction

[4] The Court’s jurisdiction to set aside a bankruptcy notice arises under s 17

Insolvency Act 2006.

[5] In order to avoid committing an act of bankruptcy, the debtor may file an application in order to satisfy the Court that he or she has a cross-claim against the creditor. “Cross-claim” is defined in s 17(7) to mean a counterclaim, set-off, or cross demand that is equal to or greater than the judgment debt which the debtor could not use as a defence in the proceeding in which the judgment was obtained.

[6] In dealing with an application to set aside a bankruptcy notice, the Court retains its inherent jurisdiction to prevent abuse of process. I adopt the conclusion of Master Kennedy-Grant in the leading decision on this aspect of jurisdiction, Re Wise.1 His Honour concluded:2

(a) I do have jurisdiction to grant relief to the debtors;

(b) The jurisdiction is the inherent jurisdiction of the Court to control the abuse of its process;

(c) The grounds on which the jurisdiction may be exercised are:

(i) procedural defect in the obtaining of the judgment in which the bankruptcy notice is based; and/or

(ii) the existence of arguable grounds of defence to the claim for which judgment was given;

(d) The grounds on which the jurisdiction may be exercised may extend beyond those stated in (d) to any ground on which the Court feels it necessary to intervene to prevent injustice but I make no finding on that point in this judgment;

(e) The correct procedure for invoking the inherent jurisdiction of the Court is not the filing of an affidavit under rule 41 but the filing of an interlocutory application to set aside the bankruptcy notice on one of the ground stated in (c) above or, possibly, the broader ground stated in (d) above;

1 Re Wise (alt cit Re Wise ex parte Benecke) HC Auckland B227/95, 21 June 1995.
2 At 6.

[7] Re Wise has been consistently recognised and applied.3

Grounds of Mr Wood’s…

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 Synnott v Wood

Details

AGLC: Synnott v Wood [2014] NZHC 1705
Case: [2014] NZHC 1705
Decision Date: 21 July 2014

CaseChat Overview and Summary

The judgment creditor, Mr Synnott, obtained a judgment against the judgment debtor, Mr Wood, on 3 April 2014, in the sum of $22,837.84. The creditors issued a bankruptcy notice. Mr Wood applied for an order setting the bankruptcy notice aside. The court was required to decide whether Mr Wood had a cross-claim against the creditors that was equal to or greater than the judgment debt which he could not use as a defence in the proceeding in which the judgment was obtained. The court also had to consider whether there was an abuse of process or an arguable defence to the claim for which judgment was given. The court found that Mr Wood did not have a cross-claim against the creditors that met the requirements of the Insolvency Act 2006. The court also found that there was no defect in the process or an arguable defence to the claim. The application to set aside the bankruptcy notice was dismissed, and the time for payment of the debt was extended to 1 August 2014. The judgment debtor was ordered to pay the judgment creditors' costs of the proceeding on a 2B basis, together with disbursements to be fixed by the Registrar.

Orders