UDC Finance Limited v Whittington

[2021] NZHC 1141

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2020-441-000076

[2021] NZHC 1141

BETWEEN

UDC FINANCE LIMITED

Judgment Creditor

AND

MARK ANTHONY WHITTINGTON

Judgment Debtor

Hearing:

13 May 2021 (Napier List by AVL)

Appearances:

S C D A Gollin for Judgment Creditor

M A Whittington, Judgment Debtor, in person

Judgment:

21 May 2021

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 21 May 2021 at 12.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

UDC FINANCE LTD v WHITTINGTON [2021] NZHC 1141 [21 May 2021]

[1]    On 25 March 2021, Associate Judge Lester made an order adjudicating the judgment debtor (Mr Whittington) bankrupt upon the application of the judgment creditor (UDC). Mr Whittington has filed an appeal from that decision. This ruling concerns Mr Whittington’s application for a stay of the adjudication order until his appeal has been heard. The application is opposed by UDC.

[2]    Mr Whittington is self-represented. I explained to him I considered it would be in his interests if the hearing was adjourned so that he could seek legal advice and file evidence. I pointed out to him his application is not supported by any affidavit evidence and with the benefit of legal advice he might be able to advance matters not presently relied upon in support of it. Mr Whittington did not want an adjournment. He was insistent that the hearing proceed.

Facts

[3]    Mr Whittington commenced a proceeding against Bayswater Vehicles Ltd and UDC in relation to the purchase of a vehicle. It appears the vehicle was purchased by Mr Whittington’s mother. She passed away in September 2019. The proceeding was discontinued against UDC. UDC made an application for costs which was considered by Associate Judge Johnston. Mr Whittington made submissions to Associate Judge Johnston in relation to UDC’s application for costs. Associate Judge Johnston awarded UDC costs. UDC sealed judgment for $4,590.98 (inclusive of disbursements) on 7 July 2020 (the costs judgment).

[4]    It was not until 13 August 2020 that the Court advised Mr Whittington by email of the costs judgment. On around 19 September 2020 he received the sealed costs judgment and a demand for payment from UDC. Mr Whittington did not pay the costs judgment.

[5]    There has been much email correspondence between Mr Whittington and the Court.  Some  of  it  was  referred  to  Associate  Judge  Johnston.  In  a  minute  of 25 September 2020, Associate Judge Johnston noted that if Mr Whittington wished to appeal from the costs judgment “he will have to take forward steps in that regard.” In a further minute of 29 October 2020, Associate Judge Johnston noted recent emails

from Mr Whittington and stated as the Court had dealt with UDC’s costs application there was nothing further it could do.

[6]    I am satisfied Mr Whittington understood the need to file an appeal if he wished to challenge the costs judgment. He did not file an appeal. He says this was because he did not understand how to do so and was grieving the death of his mother. I do not accept these explanations. Mr Whittington apparently had no difficulty in filing his appeal from the adjudication judgment.

[7]    UDC commenced bankruptcy proceedings against Mr Whittington in the usual fashion. A bankruptcy notice was issued in respect of the judgment which was served upon Mr Whittington on 2 December 2020. Mr Whittington did not take steps to set the bankruptcy notice aside.

[8]    UDC then filed a creditor’s application for adjudication and this was served upon Mr Whittington. The creditor’s application came before Associate Judge Lester in the Insolvency List on 25 March 2021. Prior to the hearing, Mr Whittington filed a notice of opposition in which he raised several grounds for opposing the making of an adjudication order.

[9]    I have a transcript of the hearing before Associate Judge Lester. He heard from Mr Whittington at length. He did not consider Mr Whittington had raised any valid ground to oppose an adjudication order. Mr Whittington would not tell the Judge whether he had the means to pay the costs judgment. Associate Judge Lester made an order adjudicating Mr Whittington bankrupt. He advised Mr Whittington he would issue written reasons for his decision so that Mr Whittington could file an appeal if he wished (which was his expressed intention).

[10]On 26 March 2021, Associate Judge Lester issued reasons for his decision.1

[11]   On 30 March 2021, Mr Whittington filed an appeal to the Court of Appeal from the adjudication judgment. He tells me he has applied for an order dispensing with the requirement to provide security for costs.

1      UDC Finance Ltd v Whittington [2021] NZHC 627.

[12]   On 9 April 2021, Mr Whittington filed his application for a stay of the adjudication judgment. It appears the grounds advanced in support of the application are:

(a)Associate Judge Lester did not deal with the grounds advanced in his notice of opposition to the creditor’s application;

(b)Associate Judge Lester adjudicated him bankrupt because he had not appealed the costs judgment yet, on 25 September 2020, Associate Judge Johnston had granted leave to appeal the costs judgment;

(c)an appeal from the adjudication order has been filed; and

(d)Mr Whittington is unrepresented and seeks counsel to represent him on the appeal.

[13]   Before me, Mr Whittington referred to correspondence with the Court that was not on the file. I reserved my decision so that I could obtain the correspondence and consider it.

The law

[14]   The relevant statutory provision is s 416 of the Insolvency Act 2006 which provides:

416     Suspension of adjudication pending appeal

(1)If an appeal has been filed against an order of adjudication, the bankrupt or any other interested person may apply to the Court or the Court of Appeal for an order suspending the adjudication until the appeal is decided.

(2)The Court or Court of Appeal may suspend the adjudication on the conditions that it thinks appropriate, including conditions as to anything done or decided, or that ought to have been done or decided, by any person in the period between the adjudication and the order suspending adjudication.

(3)The Court or the Court of Appeal may at any time make an order as it thinks appropriate as to anything done or decided,

or that ought to have been done or decided, by any person in the period between the adjudication and the date when the appeal is decided if---

(a)the adjudication has been suspended and the appeal fails; or

(b)the adjudication has not been suspended and the appeal succeeds.

[15]   In Kroon v Westpac Banking Corp, Ronald Young J held the fact a debtor will suffer consequences of bankruptcy until an appeal is resolved is not a ground for a stay of the bankruptcy unless something beyond the ordinary is revealed in the circumstances.2

[16]   In Bioletti v Commissioner of Inland Revenue the Court of Appeal set out the matters that are relevant to applications under s 416.3 They are as follows:4

(a)whether the applicant’s right of appeal will be rendered nugatory if no stay is given;

(b)the bona fides of the applicant as to the prosecution of the appeal;

(c)whether the successful party will be injuriously affected by the stay;

(d)the effect on third parties;

(e)the novelty and importance of the questions involved;

(f)the public interest in the proceedings;

(g)the strength of the appeal;

(h)the overall balance of convenience.

2      Kroon v Westpac Banking Corp HC Auckland CIV-2006-404-4720, 15 May 2007 at [9].

3      Bioletti v Commissioner of Inland Revenue [2013] NZCA 465.

4      At [4]-[10].

Analysis

Will Mr Whittington’s right of appeal be rendered nugatory?

[17]   It has been held that a failure to suspend the adjudication of a bankrupt does not prevent the bankrupt from pursuing an appeal against adjudication thereby rendering the appeal rights nugatory.5 Mr Whittington has not suggested otherwise in this case.

Bona fide appeal

[18]   Mr Whittington was bankrupted because he had committed an act of bankruptcy and would not pay the costs judgment. He has not taken any steps to appeal the costs judgment despite being advised that was the course open to him. He intends to raise irrelevant matters on his appeal, relating to his mother’s purchase of the vehicle, as a collateral attack on the costs judgment. He is not entitled to do this. His  appeal  will  do  nothing  to  achieve  his  objective.   I  am  not  satisfied  that Mr Whittington’s appeal is bona fide

Will the successful party be injuriously affected by the stay?

[19]   I questioned Mr Whittington as to whether there would be any adverse consequences for him if his application was not granted. He told me there would be none. He explained he is in receipt of a benefit, has no debts, lives within his means and has no intention of raising any credit.

The effect on third parties

[20]   Mr Whittington has put no evidence before me as to his financial circumstances. He tells me that he has no debts but that is not sufficient. It is unclear to what extent other parties may be affected by an order suspending the adjudication order.

5      Lindsay v Vaucluse Holdings Ltd CA272/99, 13 December 1999; Harrison v Harrison [2015] NZHC 1054 at [21].

The novelty and importance of the questions involved

[21]Mr Whittington’s appeal raises no important questions of law.

Public interest in the proceeding

[22]   There is no public interest in the issues raised in Mr Whittington’s appeal. There is however a public interest which lies in the prompt commencement of the Official Assignee’s investigations into the assets and liabilities of bankrupts.

[23]   Here, there is also an added dimension. Mr Whittington tells me that his mother died intestate but owning property. He says he is his mother’s next of kin. It appears  no  one  has  applied  to  administer  the  estate.    There  is  a  need  for    Mr Whittington’s entitlements to such property to be identified by the Official Assignee for the benefit of UDC and any other creditors he may have. Ultimately that has the potential to also benefit Mr Whittington.

The merits of the appeal

[24]   Mr Whittington considers Associate Judge Johnston granted him leave to appeal the costs judgment on 25 September 2020. The Judge’s minute of that date does not do so.

[25]   That Mr Whittington has filed an appeal is not of itself a ground to suspend the adjudication judgment.

[26]   That Mr Whittington wants counsel for his appeal is an irrelevant matter in this present context. As noted earlier, he insisted the hearing before me proceed without him having the benefit of counsel.

[27]   Mr Whittington raises a plethora of other matters. A matter upon which he placed significance was that according to the notes attached to UDC’s bankruptcy notice he was entitled to have UDC’s costs fixed before an adjudication order was made. I explained to him the notes referred to costs of issuing the bankruptcy notice only.

[28]   He argues that Associate Judge Lester did not consider his grounds for opposing an adjudication order. Having read the transcript of the hearing and the Judge’s written reasons, all relevant matters were considered.

[29]   He raises the dispute with Bayswater Vehicles Ltd and UDC over the car purchased by his mother, none of which is relevant in the present context.

[30]   He argues he is not an insolvent person and should not have been declared bankrupt, but he committed an act of bankruptcy when he failed to comply with UDC’s bankruptcy notice. Furthermore, he has provided no evidence of his financial circumstances to establish he is not insolvent.

[31]   As noted earlier, Mr Whittington advances reasons why he did not appeal the costs judgment which I reject.

[32]   I do not consider Mr Whittington’s appeal has any reasonable prospect of success.

The overall balance of convenience

[33]   The balance of convenience is against suspending the adjudication order for the following reasons.

[34]   Mr Whittington simply refuses to accept the costs judgment and make payment to UDC. The costs judgment was regularly obtained.

[35]   UDC has followed the correct procedures required to obtain the order adjudicating Mr Whittington bankrupt and incurred the costs of that.

[36]   Mr Whittington has filed an appeal from the adjudication order but his grounds of appeal are not strong.

[37]   Mr Whittington will not be injuriously affected by the refusal of an order suspending the adjudication order. On the other hand, there are public interest considerations supporting the refusal of his application.

Result

[38]Mr Whittington’s application is dismissed.

[39]   UDC is entitled to costs which are to be on a 1A basis plus reasonable disbursements as fixed by the Registrar.

O G Paulsen Associate Judge

Solicitors:

Minter Ellison Rudd Watts, Auckland Judgment Debtor, in person