Guy v Bank of New Zealand [2013] NZHC 836 (18 April 2013)

Last Updated: 30 June 2013

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-004366 [2013] NZHC 836

UNDER the Insolvency Act 2006

BETWEEN RICHARD HUGH CLEVELAND GUY Judgment Debtor

AND BANK OF NEW ZEALAND Judgment Creditor

Hearing: 18 April 2013

Appearances: Mr Guy in person

Mr Dillon for Judgment Creditor

Judgment: 18 April 2013

_{ORAL JUDGMENT OF ASSOCIATE JUDGE DOOGUE}

Solicitors:

Mr R H C Guy, R D 4 Pukekohe – [e-mail]

Turner Hopkins P O Box 33-237, Takapuna, Auckland – [e-mail]

GUY V BANK OF NEW ZEALAND HC AK CIV-2012-404-004366 [18 April 2013]

[1] The BNZ filed a creditor’s application for adjudication order on 5 March

2013. The act of bankruptcy that it relied upon was that a bankruptcy notice was served, the debtor sought to set the bankruptcy notice aside which was unsuccessful and the application was dismissed and further costs of $7,780.70 were ordered to be paid. Therefore the debtor Mr Guy owed the $32,475.06 which was the amount obtained by way of judgment in the District Court February 2012 as well as the costs that I have just mentioned.

[2] Mr Guy filed a notice of intention to oppose the making of an order of adjudication on 16 April 2013. The first part of the defence alleged that:

The debtor has paid in full the creditor’s settlement offer amount of

$40,852.06 to settle all outstanding creditor claims as set out in the bankruptcy notice 21 September 2012...

[3] He sought the dismissal of the application to adjudicate the debtor and he also sought a halt to the adjudication process.

[4] The first part of the grounds therefore concerned the question of whether there was a “settlement offer amount”. I will assume for the purposes of argument that the bank did in fact agree that the sum of $40,852.06 was what needed to be paid. The issue is whether as at today’s date the bank has the requisite status of a creditor of Mr Guy. In terms of s 13 of the Insolvency Act 2006 there has to be a debt owed to the creditor of $1,000 or more before the Court is able to exercise its power to adjudicate the debtor. Mr Guy apparently relies upon the fact as establishing that there has been satisfaction of the debt that he owes that he sent to the BNZ, the creditor, a document which he described as a “bill of exchange” purportedly dated 20 November 2012. It is not clear what the legal significance, if any of this document is. The Laws of New Zealand Volume “Negotiable Instruments” defines a bill of exchange in these terms:

A bill of exchange is defined by statute as an unconditional order in writing, addressed by one person to another and signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed determinate or future time a certain sum of money to a specified person, to the order of a specified person, or to the bearer.

[5] The document which I have been shown does not seem to bear those characteristics. But more importantly whatever is contemplated by the document can only be a payment in satisfaction of the debt as at 20 November 2062. Two points can be made. First, there is no evidence that the bank agreed to be paid

$40,852.06 in satisfaction of its debt as at 20 November 2062. Secondly while it has not been possible for me to undertake the requisite calculation it must be obvious that the present value of a payment of $40,852.06 as at 20 November 2062 will be very small and much less than the nominal amount of the bank’s debt. Even if the “bill of exchange” was an effective form of payment it does not extinguish the debt owed to the bank. The bank is still a creditor.

[6] Quite apart from anything else there is no indication that anyone has accepted the bill of exchange. I apprehend that the debtor’s position is that the fact that he sent this document by courier and obtained a receipt for the physical delivery of the document can be construed as acceptance by, presumably, the bank of the bill of exchange. I do not consider that such an assertion is correct. The bank would only accept a bill of exchange through a person with the appropriate authority to do so. The acceptance of a document by any employee at the bank’s premises (such as a receptionist) could not possibly be implied as an authorised acceptance by the bank not just of the receipt of the document but of the legal effect of the arrangements proposed in that document.

[7] The second ground that is set out in the notice of opposition is that the creditor is party to a High Court class action suit which has apparently been commenced or is to be commenced whereby bank customers as a class will seek to recover compensation for the identical overcharging and illegal fees charged to BNZ credit card accounts over a period which covers the point of time during which disputes that Mr Guy has raised emerged. This is put forward as a reason why the Court ought not to proceed with adjudication. In my view there is no substance to this defence either. The reason for that is that in the District Court the judgment which was entered was the result of a compromise of proceedings in which Mr and Mrs Guy both raised claims about over-charging. From the point when the compromise arrangement was entered into and judgment entered, the Guys lost the ability to claim in regard to alleged overcharging. For that reason, it cannot be the

case that the BNZ will as a result of the class action be required to provide compensation to Mr and Mrs Guy either jointly or individually.

[8] In any event, halting the adjudication process at this point could only be as a result of the Court making a discretionary decision which would have to involve the Court coming to the view that there was a reasonably arguable cross-claim which the debtor has against the bank and which might extinguish the debt in total or at least reduce it to a sum of less than $1,000. There is no evidence to support such a view and a fair-minded approach to the issue could not possibly result in the Court coming to the conclusion that the subscription to the class action was likely to have that result and for which reason the adjudication process ought to be halted.

[9] For all of those reasons I consider the Court would not be justified in declining to make an adjudication order on the basis of the defences which the debtor has put forward. The bank is entitled to an order for adjudication. I make such an order at 1 p.m. 18 April 2013. The bank will be entitled as creditor to costs

_{on a 2B basis and disbursements as fixed by the Registrar.}

J.P. Doogue

Associate Judge