Toresen v Murphy

[2016] NZHC 1187

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-000364 [2016] NZHC 1187

IN THE MATTER

of the Insolvency Act 2006

AND

IN THE MATTER

of the bankruptcy of John Patrick Murphy

BETWEEN

DANIEL JAMES TORESEN AND PAUL JOHN DALE

Judgment Creditors

AND

JOHN PATRICK MURPHY Judgment Debtor

Hearing:	2 June 2016
Appearances:	E Telle for Judgment Creditors No appearance for Judgment Debtor
Judgment:	2 June 2016

JUDGMENT OF VENNING J

Solicitors:           Neilsons Lawyers, Auckland

Copy to:            Judgment Debtor

TORESEN & ANOR v MURPHY [2016] NZHC 1187 [2 June 2016]

[1]      This is an application by Mr Murphy to set aside a bankruptcy notice issued against him by the judgment creditors.

[2]      The matter was called before Associate Judge Sargisson on 5 May 2016.  The Judge noted that while the application stated it was an application to set aside a bankruptcy notice the body of the document sought a wholly different order, namely it sought an order “the costs order made in the District Court be set aside”.  As the Judge correctly noted the grounds in the application were not recognisable grounds for an order setting a bankruptcy notice.  Those grounds are provided for in s 17 of the Insolvency Act 2006.

[3]      Mr Murphy sought time to instruct a lawyer.   While the Judge was not inclined to adjourn the matter to enable Mr Murphy to proceed with a request to have the notice set aside based on the current application as it was deficient, she allowed the adjournment because she had been told by counsel for the judgment creditors that they had appealed the District Court judgment on which the bankruptcy notice was based.  In the circumstances she wanted to be satisfied the creditors’ appeal did not deprive the judgment creditors of their entitlement to issue the bankruptcy notice. The issue was whether the District Court’s costs judgment could be said to be a final judgment.

[4]      Counsel for the judgment creditors has filed a memorandum addressing those issues.    There  has  been  no  further  papers  or  documents  filed  on  behalf  of  the applicant Mr Murphy.  Mr Murphy has not appeared before the Court to support his application this morning.

[5]      Having  reviewed  the  file  I  am  clear  in  my  judgment  that  the  fact  the judgment creditors have appealed the costs judgment does not affect its status as a final judgment.  Section 17 of the Insolvency Act provides:

17       Failure to comply with bankruptcy notice

(1)      A debtor commits an act of bankruptcy if—

(a)      a creditor has obtained a final judgment or a final order against the debtor for any amount; and

(b)      execution of the judgment or order has not been halted by a court; …

[6]      The status of the costs order as a final judgment is not lost by an appeal either by the judgment creditor or by the judgment debtor.  The status or the effect of it as a final judgment is only affected if the circumstances provided under s 17(1)(b) apply, namely that execution of the judgment has been halted or in modern terms stayed. That has not occurred.

[7]      In addition Mr Telle has provided two authorities to the Court which confirm the fact that an appeal was later started does not rob the decision of its finality:  Hair v  Schmidt  and  Harrison  &  Ors  v  Harrison.1      I  respectfully  agree  with  those decisions.

[8]      On that basis, as the Judge indicated earlier in her minute, there is no basis for the application to set aside the bankruptcy notice.  The application is dismissed.

[9]      Costs to the judgment creditors on a 2B basis together with disbursements as fixed by the Registrar.

Venning J

1      Hair v Schmidt [2014] NZHC 2476 and Harrison & Ors v Harrison [2015] NZHC 244.