Goodwin v Copland

• Jurisdiction: New Zealand
• Judge: Judge Matthews
• Judgment Date: 03 September 2015
• Neutral Citation: [2015] NZHC 2124
• Docket Number: CIV-2013-412-000124
• Court: High Court
• Date: 03 September 2015

Between

Wayne Ernest Goodwin

Plaintiff

and

Brian Stewart Copland

Defendant

[2015] NZHC 2124

CIV-2013-412-000124

IN THE HIGH COURT OF NEW ZEALAND

DUNEDIN REGISTRY

Application by the plaintiff, for an order assigning a cause of action to him under either s119 (Position of person who suffers loss as a result of disclaimer) or s221 (Assignee may assign right to sue under this Act) Insolvency Act 2006 (IA) — applicant also sought the setting aside of a notice of discontinuance of the proceeding — cause of action had passed to the Official Assignee (OA) on his adjudication in bankruptcy — Court had previously described the proceeding as tenuous — OA decided not to proceed with the action — an insolvency officer issued a disclaimer notice on the computer system, but instead of printing it out so that it could be signed by the Assignee, he sent it automatically by email — although described as a notice of disclaimer, suggesting that it was a notice under s117(3) IA, the opening sentence of the document said it was a statement of disclaimer — OA then filed a notice of discontinuance as the cheapest way of dealing with the proceeding — whether the officer's decision to disclaim was all that was required for the effective exercise of the power given to the OA by s117 IA (Assignee may disclaim onerous property) — whether the Court had power to set aside the notice of discontinuance as an abuse of process as it would be manifestly unfair not to do so.

Appearances:

A Beck for Plaintiff

J C D Guest for Defendant

G E Slevin for Official Assignee (written submissions only)

JUDGMENT OF ASSOCIATE Judge Matthews

1 Mr Goodwin applies for an order under either s 119 or s 221 of the Insolvency Act 2006 assigning to him the cause of action in the present proceeding, which passed to the Official Assignee on his adjudication in bankruptcy.

Background

2 In 2004 Mr Copland filed a proceeding in the High Court against Mr Goodwin arising from a number of investments he had made in a company controlled by Mr Goodwin, which failed resulting in the loss of the investments. The proceeding was due to be tried in May 2006, but shortly before that the parties reached a settlement agreement. Apart from providing that Mr Copland would receive an agreed sum of money and a contribution towards costs, the agreement also reflected concerns Mr Goodwin had about material which had been posted on a website by providing for that material to be removed. The relevant clause of the agreement is in the following terms (with the name of the website deleted for the purposes of this judgment):

The Plaintiff will cause the present reference to the Defendant on the website [deleted] together with all accompanying documents, to be removed immediately as soon as reasonably practicable.

3 The payments agreed to in settlement were not made, so as permitted by the settlement agreement, judgment was entered for Mr Copland on an admission of claim on 11 October 2006. Mr Copland took enforcement steps which resulted in his recovering part of the judgment debt.

4 In March 2010, Mr Goodwin applied for an order setting aside the judgment on the ground that he had learned of an entry about him on the same website, which he maintained amounted to a breach of the settlement agreement. Full details of the facts which led to this application are contained in the judgment of this Court by Associate Judge Faire. 1 The Court refused to set aside the judgment either under the High Court Rules or under the Court's inherent jurisdiction. Argument on the latter basis revolved around a submission on behalf of Mr Goodwin that the obligation on Mr Copland in relation to removal of material from the website was a continuing one, not one confined only to removing the material immediately after the settlement agreement was reached. The learned Judge found that the material before the Court did not enable him to undertake a careful consideration of the interpretation of the terms of the settlement or even to rule on what material might be admitted, taking into account the principles in Boatpark Ltd v Hutchinson. 2 The Judge also said that if Mr Goodwin could mount a case for breach of the memorandum, the appropriate way to do so was by way of a proceeding alleging breach of contract. 3

5 Notwithstanding this, in 2012 Mr Goodwin again applied unsuccessfully to have the judgment set aside, invoking the Court's inherent jurisdiction. 4 As well, in May of that year, Mr Goodwin applied to stay both the 2006 judgment, and enforcement proceedings taken by Mr Copland on a separate proceeding. The Court rejected the stay application, observing in relation to Mr Goodwin's claim that “the position as advanced by (counsel) on behalf of the defendant [Mr Goodwin] as to his

claims is very tenuous, to say the least, and unlikely to succeed”. 5 His Honour went on to conclude on the stay application: 6

I am satisfied by a wide margin that this attempt is a collateral last-gasp attack on the entry of judgment on the same basis that was asserted and failed before Associate Judge Faire.

6 Shortly before that application was heard, Mr Copland had applied for an order adjudicating Mr Goodwin bankrupt. After the release of the judgment on the second application to set aside the judgment, this application was allocated a fixture date, as it was opposed by Mr Goodwin. He maintained he had a counterclaim against Mr Copland. As the judgment of 28 March 2013 on the bankruptcy application (the bankruptcy judgment) records, Mr Goodwin issued the present proceeding against Mr Copland on 25 February, three weeks before the fixture was due to be heard. 7

7 The bankruptcy judgment speaks for itself. Suffice it to say in the present context that the Court found little merit in Mr Goodwin's pleaded claims in the present proceeding, and found that it was not an abuse of process for Mr Copland to proceed with the bankruptcy application. After balancing all factors, the Court found that there was no sound basis on which to exercise the discretion given by s 37 of the Insolvency Act not to adjudicate Mr Goodwin bankrupt, and made an order of adjudication.

8 Mr Goodwin appealed unsuccessfully to the Court of Appeal. The Court of Appeal said: 8

[35] Mr Beck argued the Associate Judge erred in declining to exercise this discretion in Mr Goodwin's favour. We reject that submission, which rests on three interrelated grounds. The first is Mr Goodwin's claim that Mr Copland breached the settlement agreement which is the basis for the judgment debt. Mr Goodwin has put that argument unsuccessfully to two different Associate Judges in his successive applications to set aside the judgment. A third Judge, Gendall J, was dismissive of the merits of one of those applications to set aside. Associate Judge Matthews again analysed the claim and found it had no substance. The claim forms the third cause of action in the proceeding Mr Goodwin finally filed against Mr Copland on

25 February 2013. The pleading is that Mr Copland was required to cause the offending material to be deleted permanently from the website. As Associate Judge Matthews pointed out, that pleading is at odds with the wording of the settlement agreement and alleges a position Mr Copland “was powerless to maintain”.

9 After recording the High Court analysis of the causes of action brought by Mr Goodwin, the Court noted that the present proceeding had been filed six years after the entry of judgment, and shortly after Mr Copland filed his application to have Mr Goodwin adjudicated bankrupt. The Court said: 9

That delay and timing is difficult to reconcile with a claim that has compelling merit. Rather, it strongly suggests a last ditch attempt to avert bankruptcy.

10 Finally, the Court of Appeal endorsed the observation of the High Court that as the present cause of action would vest in the Official Assignee, it would be for that officer to assess the claim and determine whether it should proceed.

11 This has in fact occurred. The Official Assignee has notified Mr Goodwin that she will not proceed with the present claim against Mr Copland. This has resulted in the application now before the Court.

The present application

12 Mr Goodwin relies on ss 119 and 221 of the Insolvency Act as presenting different pathways by which he may obtain an order assigning his cause of action against Mr Copland from the Official Assignee to himself. Although the Official Assignee ostensibly maintains a neutral stance in this matter, and did not appear at the hearing, nonetheless she filed a memorandum, an affidavit from Mr R G McDonald (an insolvency manager and deputy assignee in the Christchurch office of the Insolvency and Trustee Service) and written submissions from counsel, Mr G E Slevin.

13 As the two statutory provisions relied on by Mr Goodwin are distinctly different it is necessary to consider these separately.

Application under s 119

14 Section 119 provides:

119 Position of person who suffers loss as a result of disclaimer

• (1) A person suffering loss or damage as a result of disclaimer by the Assignee may –

  • (a) claim as a creditor in the bankruptcy for the amount of the loss or damage, taking account of the effect of an order made by the Court under paragraph (b):

  • (b) apply to the Court for an order that the disclaimed property be delivered to, or vested in, that person.

• (2) The bankrupt may also apply for an order that the disclaimed property be delivered to, or vested in, the bankrupt.

• (3) The Court may make an order under subsection (1)(b) or (2) if it is satisfied that it is fair that the property should be delivered to, or vested in, the applicant.

15 Before an order can be made under s 119, it is necessary to establish that the Official Assignee has disclaimed the property in respect of which assignment is sought. Disclaimer is provided for in ss 117 and 118. Section...