IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-000377 [2013] NZHC 330

IN THE MATTER OF	the Insolvency Act 2006
AND IN THE MATTER OF the bankruptcy of Allan Edward Copsey

BETWEEN	WESTPAC NEW ZEALAND LIMITED Judgment Creditor

AND	ALLAN EDWARD COPSEY Judgment Debtor

CIV 2013-404-000378

AND IN THE MATTER OF the Insolvency Act 2006
AND IN THE MATTER OF the bankruptcy of Raewyn Patricia
Copsey

BETWEEN	WESTPAC NEW ZEALAND LIMITED Judgment Creditor

AND	RAEWYN PATRICIA COPSEY Judgment Debtor

Hearing:	26 February 2013

Appearances: M A Powell for judgment creditor
R B Hucker for judgment debtors

Judgment:	26 February 2013

(ORAL) JUDGMENT OF ASSOCIATE JUDGE ABBOTT

Solicitors:
B J Upton/M A Powell, Simpson Grierson, Private Bag 92518, Auckland
R B Hucker, Hucker & Associates, PO Box 3843, Shortland Street, Auckland

WESTPAC NEW ZEALAND LIMITED V ALLAN EDWARD COPSEY HC AK CIV 2013-404-000377 [26
February 2013]

[1]       These related applications to set aside bankruptcy notices come before the

Court today for the first time.

[2]       The applications are in identical terms, and based on the same facts:

(a)	The judgment creditor obtained judgment against both applicants on

15  November  2012,  as  guarantors  of  a  loan  made  to  a  related company.

(b)	The  bankruptcy  notices  were  issued  to  require  payment  of  that judgment debt.

(c)	Each judgment debtor contends that the order to set aside should be made because:

(i)	He or she has secured the amount in the judgment sum.

(ii)      The liability arises under guarantee of a loan obligation used for the benefit of the judgment debtor A E Copsey’s brother (B Copsey), the brother has requested sale of some shares (traded in the London GXG market) which will release sufficient money to pay the judgment debt, and the Court ought to exercise its inherent jurisdiction to set aside the notices or adjourn the application pending realisation of the shares.

[3]       At the start of the hearing today, Mr Hucker, for the judgment debtors, sought an adjournment of the application to allow time for an updating affidavit to be filed, and in anticipation that the sale of shares would be completed within the coming week (or shortly thereafter). He refers to arrangements having been made for the sale to take place this coming Friday, 1 March 2013, subject to certain formalities in relation to the sale process being completed.

[4]       Mr Powell for the judgment creditor opposes any further adjournment.   He says that there is no question that the judgment debt is due, and has not been paid,

and  that  the  circumstances  do  not  constitute  any  basis  for  setting  aside  the bankruptcy notice.  He submits that the matters that the judgment debtors raise are more appropriately raised in any application for adjudication that may follow, in relation to the Court’s discretion in that respect.

[5]       There is clearly a history to this matter that is not before the Court. In some emails that had been produced there is reference to the judgment creditor having been seeking payment from the judgment debtors since about March 2012, and several promises having been made to pay within a relatively short period of time, which clearly have not been met.

[6]       To  succeed  on  an  application  to  set  aside  the  bankruptcy  notices,  the judgment debtors need either to pay the amount owing plus costs, or give security for the amount owing to the satisfaction of the Court ordered creditor, or to compromise the amount owing on terms satisfying the Court or creditor.

[7]       Clearly  the  judgment  debtors  have  not  paid  the  amount  owing,  nor compromised the debt.  Mr Hucker submits that the evidence shows that there is a proposal to provide security, in the form of putting up the shares currently belonging to Mr B Copsey.  However, there is no security in place.  That is at best a proposal which the judgment debtors are endeavouring to put into effect.

[8]       In   my   view   that   merely   leaves   the   question   of   whether   there   are circumstances here to warrant the Court exercising its inherent jurisdiction as contemplated in Re Wise.

[9]       Mr Powell accepts that the Court has an inherent jurisdiction, but says that it is made clear in Re Wise that this will not be exercised where the judgment debtor does not impugn the underlying judgment, save in very special circumstances.  He submits that this is not such a case.  He also relies on my judgment in Krukziener in
which I noted Re Wise and accepted that such special circumstances were separate to

any attack on the judgment, and a further judgment in Re Stockco where I took the view (again in circumstances where there was some uncertainty as to outcome of a proposal for payment and there was a history of broken promises) that these were matters better dealt with under the discretion on an application for adjudication.

[10]     Although it seems that it has taken some time for the judgment debtors to get to this point, I accept that they are now making real efforts to effect a sale of the shares offered by Mr B Copsey.  However, on the evidence before the Court, there is no guarantee as to the fact of sale (it seems the process that has been mentioned in email correspondence does not give an assurance as to timing – although I have no reason to suspect that the process is not underway).  The real issue in this case is whether these somewhat belated but apparently genuine efforts to effect a sale of the shares will now result in a sale, and more importantly, result in a payment of the judgment debt. As to the former I accept what Mr Hucker has put forward.  There is some third party verification that the transfer and sale process is underway (in emails produced to the Court), and that there is a possibility that the sale will be effected within a couple of weeks.

[11]     Ultimately, this comes down to a consideration of prejudice to the parties. Mr Hucker says that there is inherent prejudice to the judgment debtors in failing to set the bankruptcy notices aside, and allowing the judgment creditor to proceed to file an application for adjudication.  There is the possibility of having to incur costs in seeking to have any application for adjudication stayed.   There is also a wider prejudice, in a commercial sense, in the very fact of an application for adjudication being brought.

[12]     On the other hand, Mr Powell makes the point that the judgment creditor is being denied rights by not being allowed to proceed on bankruptcy notices to secure or to enforce an unquestionable judgment debt.  He says that the judgment creditor ought to be able to proceed, even if payment was made shortly after a subsequent
application for adjudication was filed.

[13]     I have to stand back and consider whether the matters advanced on behalf of the  judgment  debtors  amount  to  special  circumstances  sufficient  to  invoke  the Court’s inherent jurisdiction.   In that respect I can also take into account that the judgment debtors freely chose to guarantee these obligations, and in that sense any prejudice, in a commercial sense, can properly be visited on them.

[14]     I come to the view that these are not sufficient circumstances to warrant a setting aside of the bankruptcy notices.  I take into account that the judgment debtors will be able to raise these matters, if necessary, in the application for adjudication (should that follow).  However, it now lies very much in their camp to take steps as quickly as they can to complete the process that they say is now in train.  If they are correct  that  this  is  really a  matter of days,  there should  not  be  any significant prejudice to them.

[15]     The applications to set aside are dismissed.

[16]     The judgment debtors are to pay costs to the judgment creditor on a scale 2B basis.  Mr Powell accepts that apart from the disbursements that have been incurred on  the  separate  applications,  one  set  of  costs  only  is  payable  covering  both
applications.  Disbursements are payable on both applications.

Associate Judge Abbott