IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2013-441-334 [2013] NZHC 2150

IN THE MATTER	of the Insolvency Act 2006

BETWEEN	ARTHUR ERNEST BRITTON Judgment Creditor

AND	PETER ANDREW NEE HARLAND Judgment Debtor

Hearing:	19 August 2013

Appearances:	Mr Gilmour for A E Britton
Mr Nee Harland in person

Judgment:	19 August 2013

ORAL JUDGMENT OF ASSOCIAE JUDGE J P DOOGUE

BRITTON v NEE HARLAND [2013] NZHC 2150 [19 August 2013]

[1]       A bankruptcy notice was issued by the High Court at Napier on 12 June 2013 and served in July.  The bankruptcy notice stated that the amount sought, (the sum of
$7,500 plus additional interest etc) was due on a final judgment obtained in the High

Court at Napier on 25 July 2003.

[2]       The  next  stage  in  the  litigation  was  that  Mr  Nee  Harland  filed  an interlocutory application with the proceeding number on it which was the same as that  which  had  been  allocated  by the  Registry  to  the  bankruptcy notice.    That application was intituled “Interlocutory application on notice application pursuant to Section 5 Limitation Act 2010 to raise statutory defence to enforcement action”.  In that application Mr Nee Harland asserted that the judgment dated 25 July 2003 was not enforceable because pursuant to the Limitation Act 2010 enforcement of a judgment by the filing of proceedings must be commenced before the lapse of six
years “unless an application has been made to adjudicate the debtor bankrupt”.   The

application went to state that no application had been made for adjudication and that “the present proceedings” were filed outside the six year time limit.  The last appears to be a reference to the fact that the bankruptcy notice was obtained and perhaps served more than six years after the original judgment was entered.

[3]       A notice of opposition was filed to the application which essentially said that Mr Nee Harland had misunderstood the effect of s 35 of the Limitation Act 2010 and had, in any event, “acknowledged liability for the debt and made part payment”.  The reference to the debt liability is that arising from the judgment entered in 2003.

[4]       When he made his submissions to me I asked Mr Nee Harland to explain what it was that he was intending to obtain from the Court.  I am afraid I have not received a satisfactory explanation about that.  Mr Nee Harland did not try to conceal from me the problems he has had with formulating his position in response to the
bankruptcy notice – he does not practice in this particular area he tells me.

[5]       Mr Nee Harland I gather has the following concern.  He is of the view that the creditor was not entitled in June of this year to file and then subsequently serve a bankruptcy notice based  upon  a  judgment  from  2003  because,  in  his  view,  the creditor was precluded by the provisions of the Limitation Act 2010 from doing so. Mr Nee Harland wanted to draw attention to the fact that the bankruptcy notice, while referring to 2003 judgment, did not make reference to any subsequent part payment.  It appears to be common ground that a part payment of the debt was in fact made in 2011.  As I understand it Mr Nee Harland is trying to get it conclusively established that the only way that the creditor can seek an adjudication order is based upon the bankruptcy notice and, because the bankruptcy notice does not include the reference to part payment, the argument goes, the creditor would not now be able to raise that issue if he proceeded to apply for an adjudication order.

[6]       In my view the ‘interlocutory application” ought not to have been filed.  It is not an interlocutory application because it does not seek directions in the course of a proceeding.   Had Mr Nee Harland followed the normal route in these matters he might have considered filing an originating application to set aside the bankruptcy notice.    I make  no  comment  upon  whether  such  an  application  would  succeed because of the point that he takes about the failure to mention the part payment of the debt.   Alternatively,  such a point could be taken in any opposition that he ultimately filed should the creditor elect to commence adjudication proceedings.  On any view of matters though I am satisfied that the present interlocutory application is misconceived and must be dismissed.

[7]       Mr Gilmour, whose client was served with the application, has sought costs. The starting point in the High Court costs rules regime is that the party who succeeds should normally receive costs.  I see no reason for departing from that approach in the circumstances of this case.  Mr Nee Harland, I should add, has mentioned that he remains willing to negotiate with the creditor to reach some arrangement with him. That  however, in  my view,  cannot  be  a matter  that  affects  the  exercise  of the discretion that the Court has whether or not to award costs on the dismissal of the interlocutory application.

[8]       In  my  view  an  award  of  costs  on  a  2B  basis  is  justified  and  I  order accordingly.   As well, Mr Nee Harland is to pay any reasonable disbursements incurred by the defendant as fixed by the Registrar.  Mr Nee Harland has asked that an order be made staying my order for payment of costs.  Essentially his grounds are that he is likely to succeed if he files an originating application to set aside the bankruptcy notice.

[9]       Applications for stay have to be approached in a principled way.  Sometimes applications for stay are made where there is an appeal against the Court’s order and a stay of the substantive order and any ancillary costs orders are sought pending the outcome of the appeal, to give one example.  I cannot see that there are any grounds here for ordering a stay.  The interlocutory application, as I have pointed out, is not interlocutory to any extant proceeding.  It is not a matter that is going to come back before the Court.   Costs ought to be dealt with now and equally they ought to be enforceable  on  the  application  of  the  judgment  debtor,  failing  some  overall settlement of the dispute between the parties.

[10]     Before I leave this matter I make one further observation which may be of assistance.  A claim of any kind which is brought outside a limitation period is not invalid.  What the limitation legislation enables is for a defendant to raise the point of limitation as a defence.  The defendant is not obliged to raise such a point and the Court is not required to take it if the defendant does not.  If a defendant does raise a limitation point then it commonly occurs that a plaintiff will raise as an answer to the limitation defence the fact that it is not applicable for some reason such as that the party charged with the debt has acknowledged its existence or made a part-payment of  it.    This  may  throw  some  light  upon  the  absence  of  any  reference  in  the
bankruptcy notice to the party payment issue.

J.P. Doogue
Associate Judge