Strachan v Moodie [2013] NZHC 2022 (9 August 2013)

Last Updated: 22 August 2013

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2013-454-000064 [2013] NZHC 2022

IN THE MATTER of the Insolvency Act 2006

BETWEEN ELIZABETH GRACE STRACHAN Judgment Creditor

AND ROBERT ALEXANDER MOODIE Judgment Debtor

Hearing: 9 August 2013 (at Wellington) Counsel: J O Upton QC for Judgment Creditor

Judgment Debtor in person (via AVL at Palmerston North High

Court) Judgment: 9 August 2013

_{JUDGMENT OF COLLINS J}

Introduction

[1] This judgment explains why I am declining Ms Strachan’s application for

security for costs.

Context

[2] Ms Strachan and Dr Moodie are embroiled in protracted litigation. One tranch of their litigation has resulted in Ms Strachan obtaining judgment for

$222,239 in the Employment Court.

[3] On 4 February 2013 Ms Strachan commenced bankruptcy proceedings against Dr Moodie. Dr Moodie responded with an application to counterclaim, set- off or cross-demand against Ms Strachan. That application was filed on 21 February

_2013.

STRACHAN v MOODIE [2013] NZHC 2022 [9 August 2013]

[4] On 20 March 2013 Ms Strachan filed an application for security for costs in relation to Dr Moodie’s application to counterclaim, set-off or cross-demand. She also applied to strike out portions of Dr Moodie’s application and parts of his supporting affidavit on the grounds that:

(1) The portions of the application which Ms Strachan objects to are an attempt by Dr Moodie to re-litigate the Employment Court decision.

(2) The portions of the affidavit which Ms Strachan objects to are a scandalous attack on the Chief Employment Court Judge whose decision forms the basis of Ms Strachan’s bankruptcy proceeding.

Security for costs application

[5] The security for costs application is based upon two pieces of evidence:

(1) In a letter dated 17 December 2012 addressed to Ms Strachan’s

solicitors Dr Moodie said:

...

This letter is to provide you and your client with prior advice that I am unable to satisfy the amount of the judgment or any material lesser amount, and there is no prospect whatsoever of that situation altering.

...

(2) In a newspaper article published on 27 November 2012 Dr Moodie is reported to have said that Ms Strachan’s judgment against him “will probably lead to his bankruptcy”.

[6] In his affidavit in response to the security for costs application Dr Moodie has explained that in the financial year ending 31 March 2012 his net income was

$163,129. He also properly explains that he has recently suffered from ill-health and that this will impact upon his earning abilities.

[7] Thus, the issue I have had to resolve is whether Dr Moodie’s inability to pay

$222,239 or any material part thereof justifies ordering security for costs in relation to his application to counterclaim, set-off or cross-demand against Ms Strachan.

[8] Dr Moodie submits that any security order should be no more than $5,000. Ms Strachan seeks an order of $15,000 by way of security for costs.

[9] I have determined, that even if the amounts sought by Ms Strachan were appropriate, the evidence does not meet the threshold required for me to order security for costs. That is to say, I am not satisfied there is sufficient reason to believe that Dr Moodie will not be able to pay any costs that might be awarded

against him in relation to his application to counterclaim, set-off or cross-demand.[1]

[10] Dr Moodie’s letter of 17 December 2012 does not constitute an admission that he is unable to pay costs if costs are ordered against him in relation to his counterclaim, set-off or cross-demand. All Dr Moodie has said is that he cannot pay the judgment debt or any material part thereof. His evidence of his earning capacity, limited though it may be by his ill-health, further negates the basis of the security for costs application.

Application to strike-out portion of Dr Moodie’s counterclaim, set-off and cross-demand

[11] Mr Upton QC, counsel for Ms Strachan helpfully explained that the purpose of the application to strike-out portions of Dr Moodie’s application and affidavit was to protect the Chief Employment Court Judge from the scurrilous attacks made against him by Dr Moodie.

[12] Mr Upton also explained that it did not matter when the application to strike out the offending portions of Dr Moodie’s pleadings and affidavit were heard. Mr Upton said this in response to my suggestion that the strike-out could be effectively dealt with when the application to have Dr Moodie adjudged bankrupt is

_{heard. Dr Moodie agreed with this course of action.}

Next steps

[13] It is clear that the bankruptcy application will be defended and that Dr Moodie proposes raising a number of issues that will need to be considered by the Associate Judge who hears the bankruptcy application. For this reason I anticipate that the bankruptcy application should be allocated a half-day hearing. If counsel have contrary views could they please file memoranda within the next seven days explaining how much time will be required for the hearing of the bankruptcy application, counterclaim, set-off or cross-demand. This information is required in order to ensure appropriate resources can be allocated to hear and determine the

_{bankruptcy application.}

_{D B Collins J}

Solicitors:

Rainey Collins, Wellington for Judgment Creditor

Moodie & Co, Feilding for Judgment Debtor

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[1] HR 5.45; A S McLachlan Ltd v MEL Network Ltd [2002] NZCA 215; (2002) 16 PRNZ 747 (CA) at [13].