Tyres4U (NZ) Limited v Bruce - [2020] NZHC 1497

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2334

[2020] NZHC 1497

UNDER THE

AND
Insolvency Act 2006

IN THE MATTER OF

the bankruptcy of DYLAN IAN BRUCE

BETWEEN

TYRES4U (NZ) LIMITED

Judgment Creditor

AND

DYLAN IAN BRUCE

Judgment Debtor

Hearing: 22 June 2020

Appearances:

T Mahood & S Cachopa for the Judgment Creditor TJ Herbert for the Judgment Debtor

Judgment:

30 June 2020

JUDGMENT OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 30 June 2020 at 12 noon pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Hudson Gavin Martin, Auckland Gregory Simon Law, Auckland

Tyres4U (NZ) Ltd v Bruce [2020] NZHC 1497 [30 June 2020]

[1] The judgment creditor (Tyres4U) applies for an order adjudicating the judgment debtor (Mr Bruce) bankrupt. The bankruptcy application is based on a judgment for $283,548.06 obtained by Tyres4U on 24 September 2019, and Mr Bruce’s subsequent failure to comply with, or apply to set aside, a bankruptcy notice served on him on 2 November 2019.

[2] Mr Bruce has filed a notice of opposition, and an affidavit in opposition. On 19 June 2020 he purported to file a brief further affidavit, to which he attached a “will say” statement signed by Mr Vincent Jones in the District Court proceeding which I refer to below as “the TCL proceeding”. While Mr Mahood did not object to the filing of the affidavit per se, the “will say” statement of Mr Jones is unsworn, and is substantially comprised of hearsay evidence. I have not taken it into account in the judgment that follows.

Background

[3] On 23 January 2013 Mr Bruce signed an unconditional guarantee of payment for all money due and owing to Tyres4U in respect of credit extended by Tyres4U to a company called Tyre City Newmarket Limited (TCNL), and any money owing by TCNL to Tyres4U under Tyres4U’s terms of trade.

[4]At the time the guarantee was given, Mr Bruce was a director of TCNL.

[5] On 12 July 2018, Tyres4U commenced a proceeding against Mr Bruce under the guarantee, claiming $268,581.26 (the Debt Proceeding). Mr Bruce instructed a solicitor and filed a statement of defence in the Debt Proceeding, and later participated in a settlement conference.

[6]TCNL was placed in liquidation on 9 November 2018.

[7] On 12 September 2019, Tyres4U and Mr Bruce signed a joint memorandum in the Debt Proceeding, consenting to judgment being entered against Mr Bruce for the
$268,581.26 claimed together with interest and costs.

[8] Mr Bruce did not challenge the bankruptcy notice served on him on 2 November 2019.

Applicable law

[9]Section 13 of the Insolvency Act 2006 (the Act) provides:

13 When creditor may apply for debtor’s adjudication
A creditor may apply for a debtor to be adjudicated bankrupt if—
(a) the debtor owes the creditor $1,000 or more or, if 2 or more creditors join in the application, the debtor owes a total of $1,000 or more…

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: [2020] NZHC 1497
Decision Date: 30 June 2020

CaseChat Overview and Summary

In the case of Tyres4U (NZ) Limited v Bruce, the High Court was asked to adjudicate Mr Bruce bankrupt on the basis of a judgment debt of $283,548.06. The debt arose from a personal guarantee Mr Bruce signed in relation to debts owed by Tyre City Newmarket Limited to Tyres4U. Mr Bruce opposed the application, arguing that the debt was not owing, or might be substantially reduced by claims he believed Tyre City Limited (TCL) could bring against Tyres4U. The Court rejected the opposition, finding that Mr Bruce had not discharged the onus of showing why an adjudication order should not be made. The Court found that Mr Bruce had failed to provide a credible explanation for his failure to defend the original proceeding, and that it was not just and equitable to look behind the judgment as entered. The Court also found that the claims TCL was making against Tyres4U were unlikely to benefit Mr Bruce, and that any delay in making an adjudication order would serve no useful purpose. The Court granted a short adjournment to allow Mr Bruce to pay the debt, if he could, and ordered Tyres4U to costs on a 2B basis.

Orders