Fistonich Building Removals Limited v Nicholls [2014] NZHC 505 (19 March 2014)

Last Updated: 6 September 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-004663 [2014] NZHC 505

BETWEEN	FISTONICH BUILDING REMOVALS LIMITED Plaintiff
AND	RODNEY JOHN NICHOLLS Defendant

Hearing:	19 March 2014
Appearances:	C Boell for the Judgment Creditor Judgment Debtor appears in Person
Judgment:	19 March 2014

_{JUDGMENT OF ASSOCIATE JUDGE SARGISSON}

This judgment was delivered by me on 19 March 2014 at 10.00 a.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors: Short & Partners, Auckland

R J Nicholls, Auckland

_{Case officer: Ana Ole}

FISTONICH BUILDING REMOVALS LIMITED v NICHOLLS [2014] NZHC 505 [19 March 2014]

[1] An application for an order of adjudication made by Fistonich Building Removals Limited, the judgment creditor, against Mr Nicholls, was the subject of a defended hearing before me this morning. I made an order for Mr Nicholls’ adjudication which was timed at 11.52 am. I also ordered that there would be no order for costs.

[2] I indicated at the hearing that I would give my reasons in writing later in the day. This judgment sets out my reasons.

Background and reasons for order of adjudication

[3] On 28 June 2011 the Disputes Tribunal entered judgment for Fistonich against Mr Nicholls in the sum of $6,059.37.

[4] On 18 November 2013 Fistonich served a bankruptcy notice dated

15 November 2013 on Mr Nicholls. The notice was based on that judgment sum which remained unpaid. The time for compliance with the requirements of the notice came and went but Mr Nicholls failed to comply or take steps permitted by the bankruptcy notice to satisfy the Court that he had a counter claim or cross-demand which equated to or exceeded the sum referred to in the notice, and which he could not put forward in the proceeding before the Disputes Tribunal.

[5] On 18 December 2013 Fistonich filed its application to have Mr Nicholls adjudicated bankrupt on account of his failure to comply with the bankruptcy notice.

[6] Mr Nicholls does not dispute his liability for the amount that the Disputes Tribunal ordered him to pay, though he says that he has paid about $2,500 pursuant to a summary instalment order that was made on his application on 23 March 2012. He acknowledges that the order was cancelled on 9 October 2013 because payments ceased on 6 May 2013.

[7] Counsel for Fistonich agrees that about $2,500 or a little less was paid pursuant to the summary instalment order but points out that Mr Nicholls was liable for two further judgment sums as a result of costs orders made against him when Fistonich found itself obliged to withdraw an earlier application for adjudication when Mr Nicholls successfully applied for the summary instalment order. Those

costs orders were made on 8 March and 18 July 2012 for $3,618.33 and $446.00 respectively. Collectively those sums exceeded $10,000 and whether the $2500 was applied to the judgment debt of $6,059.37 or to the costs order of $3,618.33, there is still a substantial amount owed on both the judgment debt and the costs orders. As the summary instalment order has been cancelled, Mr Nicholls is in default of his obligation for pay these sums. Additionally, counsel submits interest at

5% per annum continues to accrue on the balance of the costs orders and the judgment debt under the Judicature Act 1908 and the District Courts Act 1947, and Fistonich has an entitlement to additional allowable costs on the bankruptcy notice as set out in the notice. Therefore, whether the instalments that were paid reduced the judgment debt or reduced the amount of the costs orders, Fistonich is owed an overall amount of $9,343.54 that Mr Nicholls has neglected to pay.

[8] It is clear that the jurisdictional requirements for an order for adjudication as required by s 13 Insolvency Act 2006 have been satisfied. That section 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 to those creditors between them; and

b) the debtor has committed an act of bankruptcy within the period of 3 months before the filing of the application; and

c) the debt is a certain amount; and

d) the debt is payable either immediately or at a date in the future that is certain.

[9] It is not in dispute that:

a) Mr Nicholls owes Fistonich $1,000 or more;

b) He has committed an act of bankruptcy within the three months

preceding the filing of Fistonich’s application;

c) The debt is for a certain amount;

d) The debt is overdue.

[10] The remaining issue is whether or not I should exercise my discretion to adjudicate Mr Nicholls bankrupt. He submits that it would not be just and equitable to make an order of adjudication. He asks that I take into account a number of discretionary factors including that he is a superannuant who has no assets so no useful purpose will be served by bankrupting him; that he has no other creditors and he has borrowed $1,500 from his family which is available to Fistonich today; and that he can borrow from his family within a reasonably short period a total of between $3,000 and $4,000 to pay what he submits is the balance of the judgment debt. Additionally he says that he was not aware he would have to pay the two costs orders made against him in the High Court as he understood that because of the existence of the summary instalment order he could not be liable for such costs. He also asks that I take into account that it was the failure of an associate who accepted responsibility to make instalments that resulted in cancellation of the instalment order and he discovered the failure too late to avert the cancellation.

[11] Counsel for Fistonich accepts much of what Mr Nicholls contends. She accepts that Mr Nicholls has no other creditors and agrees that there will be no tangible benefit to Fistonich from an order of adjudication as Mr Nicholls has no assets that can be realised. She does not concede that the summary instalment order expunged the costs orders, and points out that, in any case, the order was cancelled and is no longer in effect.

[12] I am satisfied that making due allowance for the sums paid pursuant to the summary instalment order, Mr Nicholls owes in excess of $9,000 to the judgment creditor. The fact that one of his associates agreed to make payments under the summary instalment order does not absolve Mr Nicholls from personal responsibility to ensure the terms of the order were met, and even if Mr Nicholls is able to raise up to $4,000 from his family he has made clear that he cannot pay more and it still leave him substantially indebted to Fistonich. Realistically, Mr Nicholls is insolvent.

[13] I accept that there will be almost certainly be no monetary benefit to Fistonich if Mr Nicholls is adjudicated and that is a factor to weigh with others in the exercise of the discretion. Adjudication is not to be used as an instrument of oppression. Mr Nicholls argues Fistonich’s pursuit of adjudication suggests just that. However, there is a further factor to be weighed in the balance and it is the public utility in adjudication to relieve a debtor of the burden of debts that he has no prospect of paying.

[14] Overall, I am satisfied that the public interest in Mr Nicholls’ bankruptcy outweighs any private interest to the contrary and I think an order of adjudication is appropriate.

[15] I am satisfied that this is one of those rare cases where it is appropriate to make no order for costs. Relevantly, counsel for the judgment creditor realistically accepts that there is no prospect of an order being met given Mr Nicholls’ impecunious position, and that it is pointless to make a further order for costs.

Associate Judge Sargisson