Water Babies International Limited v Williams
[2021] NZHC 2404
•14 September 2021
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2020-485-154
[2021] NZHC 2404
BETWEEN WATER BABIES INTERNATIONAL LIMITED
Plaintiff
AND
KELLY JANE WILLIAMS
Defendant
Hearing: 24 August 2021 (via telephone) Appearances:
S Carey for plaintiff
D G Dewar for defendant
Judgment:
14 September 2021
JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
[1] On 23 December 2020 the plaintiff obtained judgment against the defendant in the sum of $165,727.63. The factual background is largely irrelevant, but for contextual purposes I record my understanding that the parties entered into franchise arrangements, the plaintiff as franchisor and the defendant as franchisee, which, for some reason, failed giving rise to a liability owed to the plaintiff by the defendant. The plaintiff’s judgment was secured by default, the defendant having not entered a defence when proceedings were commenced. That too is immaterial as the defendant has not applied for an order setting the judgment aside, and appears to accept liability.
[2] As a first step in enforcing judgment, the plaintiff — a foreign concern — obtained an order for the examination of the defendant pursuant to sub-pt 2 of pt 17 of the High Court Rules 2016. That examination took place before the Registrar on 22 June 2021.
WATER BABIES INTERNATIONAL LIMITED v WILLIAMS [2021] NZHC 2404 [14 September 2021]
[3] Now, on the basis of the evidence that emerged during the course of the examination, the plaintiff applies pursuant to sub-pt 4 of pt 17 for an attachment order that would require the defendant’s employer — the Ministry of Education — to make regular deductions from her salary or wages in repayment of the judgment debt.
[4] The plaintiff asks the Court to set the protected earnings amount (the amount below which the defendant’s net earnings must not be reduced) and make an order pursuant to r 17.17(1)(a) charging the defendant’s salary.
[5]I have reviewed the transcript of the evidence taken before the Registrar.
[6] The defendant has a Kiwisaver account with a balance of a little under $23,000 and a life insurance policy in terms of which her life is insured for somewhere between
$300,000 and $320,000.
[7] The defendant earns a fortnightly salary of $1,252.40 net. On top of this she receives social welfare benefits totalling $315 a week. Her weekly income is therefore
$941.20 net.
[8] From that the defendant pays $430 (to her parents) for accommodation and in repayment of a loan or loans.
[9] That leaves the defendant with a balance of $511.20 per week from which she has to meet any other expenses. The evidence as to these is very vague. The defendant said under cross-examination that she had no disposable income, but did not itemise her weekly expenses in any comprehensive way.
[10] On the basis of that evidence Mr Carey submits on behalf of the plaintiff that “… the defendant is able to make payment at some level. Given the defendant’s unwillingness to pay any of her judgment debt voluntarily, the plaintiff asks that an attachment order be made … charging the defendant’s salary in the amount of $200 per week, or such other amount as the Court considers appropriate.”
[11]The working assumption on which that submission must be based is that
$311.20 per week ($511.20 less $200) is sufficient for the defendant to meet other
expenses. On its face, particularly having regard to the fact that the defendant has two school-age children, that seems implausible, but:
(a)There is little evidence contradicting it; and
(b)As already said, the defendant and her children live in a property owned by her parents, and it may be that that explains why her expenses are less than might be expected.
[12] The plaintiff adds that the defendant has or may have access to her Kiwisaver account, and the capacity to raise money against her insurance policy, to tide her over any difficult period(s).
[13] In response, Mr Dewar says that having paid her regular expenses the residue of $511.20 weekly is fully committed.
[14]Here is how Mr Dewar advances the defendant’s position:
3.The Defendant/Debtor is a 51-year-old woman whose husband, the father of her two children, abandoned her some time ago leaving for the United Kingdom. She receives no child support. She is working as a receptionist at a local Wellington school earning an extremely modest income and supporting two children; a 9-year-old and an 11-year-old. She is fortunate to have some support from her parents who provide accommodation at a concessional rental to her.
4.Her debt to the Plaintiff follows the disastrous failure of a franchise business she introduced to New Zealand. Following an injunction hearing last year, what business she was involved in was effectively shut down.
5.On 3 December counsel acting for the plaintiff creditor was asked by the undersigned what the intentions were towards this defendant. Rather than replying, judgment was entered by default. Although quantum might well have been in issue, such are the defendant’s circumstances that there seemed little point in seeking a further grant of legal aid to set aside the judgment. (She had earlier been the recipient of a grant of legal aid in respect of this initial proceeding.)
6.The memorandum on behalf of the Plaintiff, with respect, misrepresents the position to a great degree. The Debtor does not have a life insurance policy “worth” $300,000 (unless she dies). The analysis fails to take account of the ordinary living expenses of a family and ignores credit card debt which was disclosed to Counsel for the Plaintiff/Creditor on 30 June 2021 (that email is attached).
7.The Defendant simply has no disposal/discretionary income. If the Plaintiff were confident that there were assets and income beyond their reach, the option is to seek an order adjudicating her bankrupt with the Official Assignee to realise available assets and assess income needs as appropriate.
8.Any order that would take income from this impoverished family would only cause further hardship to them. The order would adversely affect a 9-year-old child and an 11-year-old child and should not be contemplated.
[15] As I am confident Mr Dewar would acknowledge, that submission takes some liberties with the evidence before the Court. But more importantly, to the extent that it is suggested that the defendant has no disposable income, it does not take matters any further in disclosing the full position.
[16] The proposition that the plaintiff should have taken a different route does not assist. A judgment creditor has a range of options available, and it is for that party to decide which path or paths to take. In this case, the plaintiff has chosen to seek an attachment order. It is not open to the defendant to criticise that.
[17] It is said that the plaintiff might have elected to commence bankruptcy proceedings. The bankruptcy option is one that is also open to the defendant. Indeed, if she is insolvent then the defendant has a wider range of options available to her.
[18] In the end, the Court must proceed on the basis of the available evidence. Standing back from the matter, and having regard to what Mr Dewar has said to the extent that I feel able to, the view I have come to is that the plaintiff is entitled to an order, but that its proposals as to the protected earnings amount and the quantum of the order are unrealistic.
[19] I make an order in the terms set out in the draft attached to Mr Carey’s memorandum of 20 August 2021 — including as to costs — except that:
(a)The protected earnings amount is set at $841.20 net per week;
(b)The order is to authorise deductions from the defendant’s salary at the
rate of $50 per week.
Associate Judge Johnston
Solicitors:
Stewart Germann Law Office, Auckland for plaintiff Thomas Dewar Sziranyi Letts, Lower Hutt for defendant
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