THE OFFICIAL ASSIGNEE v CARRIM [2019] NZHC 1948

THE OFFICIAL ASSIGNEE v CARRIM [2019] NZHC 1948 [12 August 2019]IN THE HIGH COURT OF NEW ZEALANDINVERCARGILL REGISTRYI TE KŌTI MATUA O AOTEAROAWAIHŌPAI ROHECIV-2019-425-6[2019] NZHC 1948BETWEEN THE OFFICIAL ASSIGNEE in Bankruptcyof the property of Abraham Nicolaas van derWaltApplicantAND PENNY LOUISE CARRIMRespondentHearing: 30 July 2019Appearances: G E Slevin for the ApplicantR T Chapman for the RespondentJudgment: 12 August 2019JUDGMENT OF ASSOCIATE JUDGE LESTERThis judgment was delivered by me on 12 August 2019 at 12.30pmPursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy Registrar12 August 2019[1] The applicant seeks judgment under an admission of claim given by therespondent as part of a settlement documented on 18 December 2017. A settlementagreement and a separate admission of claim were executed on that date by the parties.[2] The settlement agreement provided at cl 2(g):In the event any payment due to be made by Ms Carrim under this agreementis not made on the date it falls due to be made Ms Carrim will have committedan act of default under this agreement ...[3] The agreement went on to record under cl 2:(h) In the event any such default has not been remedied within 5 workingdays the Assignee may immediately and in any order:(i) Issue proceedings to enforce the claims made in the statement of claim(the new proceedings)(j) Obtain judgment and the orders referred to in the Admission of Claimin reliance on it(k) Apply for costs [in CIV 2017-425-000081].(l) Recover interest on the judgment in CIV 2016-425-00137 [4] The dispute between the parties is whether Ms Carrim has defaulted in herobligations under the settlement agreement.[5] The settlement agreement was entered into to record how an amount payableunder a judgment obtained by the applicant in CIV-2016-425-00137 ("the 2016proceeding") would be paid by Ms Carrim and how a further sum accepted as due byMs Carrim under the admission of claim was also to be paid.[6] The settlement agreement set out that the amount due under the 2016proceeding was to be paid by way of an upfront lump sum, nine monthly payments of$2,000, with a final payment of $1,812 and it is common ground those payments weremade.[7] The separate amount of $62,329.45 payable under the admission of claim wasto be paid as follows:Upon the execution of this Deed Ms Carrim agrees to:(a) Consent to the transfer of $46,526.42 from her BNZ account02-0924-0119458-02 to the Assignee(b) Within 7 days, procure the assignment to the Assignee of the fullamount payable by the Southern District Health Board to Abrahamvan der Walt by way of reimbursement of travel expenses incurred byher (approximately $15,000)(c) Pay the difference between the payments to be made under (a) and (b)and the amount of $62,329.45 to the Assignee as a residual paymentunder this agreement(d) [omitted](e) Thereafter make 9 monthly payments of $2,000.00 towardssatisfaction of the judgment debt, commencing one month after thedate of execution of this Deed; and(f) One month after making the last of the payments referred to in (e),make one final payment comprising $1,812 plus the residual paymentreferred to at (c)[8] I have omitted (d) which related to payment of the lump sum payable under the2016 proceeding but included (e) as it relates to the monthly instalments which whilepart of clearing the debt under the 2016 proceeding is relevant to the timeframe set outin (f).[9] The issue between the parties concerns cl 2(b) and by extension cl 2(c) whichapplies if compliance with cl 2(b) produces a shortfall in respect of the $62,329.45.[10] Mr van der Walt who is referred to in cl 2(b) was a bankrupt. The amounts thatmay be payable to him by the Southern District Health Board as referred to in cl 2(b)are amounts that would in any event be recoverable by the Official Assignee. MsCarrim is the partner of Mr van der Walt.[11] Ms Carrim was required within seven days to procure an assignment in favourof the Official Assignee of the amount described in cl 2(b). It is common ground thatno legally enforceable assignment was procured.[12] Notwithstanding the absence of an assignment it appears that some smallpayments have been made by the Southern District Health Board in respect of travelexpenses and they have been passed on to the Official Assignee. Those amounts,however, do not total more than $3,520.[13] It is also common ground that notwithstanding that the amount that wasexpected to be recovered under cl 2(b) was not received in full by the Official Assigneethat no "top up" payment under cls 2(c) and 2(f) was made by Ms Carrim.[14] Mr Chapman met this apparent breach of the contract as follows. Hissubmission was that because the amount described in cl 2(b), approximately $15,000was recoverable by the Official Assignee in any event, the absence of an assignmentin fact made no difference to the Official Assignee.[15] I do not accept that submission. Ms Carrim committed to procure anassignment in favour of the Official Assignee within seven days. It would appear theOfficial Assignee wished to obtain Ms Carrim's co-operation in havingMr van der Walt assist in procuring the assignment from the Southern District HealthBoard of payment of travel expenses to the Official Assignee. That step was not taken.[16] Nor do I accept that the potential for that payment to be made can be treated asif it were in fact the receipt of funds by the Official Assignee.[17] Clauses 2(c) and 2(f) contemplate that there would be a "residual payment"made by Ms Carrim once the value of the travel expenses to be assigned was fixed.[18] Mr Chapman argued that where cl 2(c) refers to payments "to be made", itmeans that the payment contemplated by cl 2(b) may be deferred.[19] There may have been an argument that if a completed assignment of the travelexpenses for a sum certain had been obtained, that may have satisfied cl 2(b) on thebasis that the applicant had agreed to accept the assignment in lieu of cash. But forthat argument to get traction, there would have to have been an assignment completedfor a certain sum as such is required to give certainty to the value of washup payment(if any) required under cl 2(c) (that is the residual payment).[20] The payments under cl 2(e) were to commence one month after execution ofthe agreement, that is by 18 January 2018. There were then to be nine monthlypayments, that is until 18 October 2018, with the washup payment under cl 2(c)required to be made one month thereafter (cl 2(f)), that is by 18 November 2018.[21] No residual payment could be made as the amount to be paid was not quantifiedbecause the assignment required by cl 2(b) was not completed.[22] Accordingly, I do not accept Mr Chapman's argument that there was nota breach of the agreement. While the Official Assignee may not have taken issue withthe absence of an assignment within the seven days referred to in cl 2(b), all that meantwas that the residual payment had to compensate for the absence of the assignment.Ms Carrim had to pay the balance due without any credit for the amount that mighthave been covered by cl 2(b). That did not occur.[23] The alternative argument advanced by Mr Chapman was that in respect of the$62,329.45, Ms Carrim had in fact met her obligations because an overpayment by herof just over $4,000, when applied to the $62,329.45, meant she had cleared that debt.However, this submission also depended on treating the $15,000 estimated recoveryof travel expenses under cl 2(b) as if it had been paid. If the travel expense had beenpaid, but the top-up omitted because Ms Carrim believed she was in credit overallbecause of the earlier repayment, the outcome may have been different but that is notthe case.[24] For the reasons I have already given, I do not accept that Ms Carrim is entitledto approach her obligations under the settlement agreement as if the amount referredto in cl 2(b) had in fact been received by the Official Assignee.[25] Accordingly, I consider the Official Assignee has established that Ms Carrimwas in breach of the settlement agreement.Consequences of breach[26] Mr Chapman did not argue that the Official Assignee was not entitled toexercise the rights that arose in the event it was found Ms Carrim was in default.[27] Under the admission of claim, Ms Carrim admitted liability in terms of a draftstatement of claim annexed to the admission of claim. That statement of claim hadnot been filed at the time the admission of claim was given.[28] Accordingly, in order to obtain judgment on the admission of claim, that beingone of the consequences of a default by Ms Carrim under the settlement agreement,the Official Assignee filed in this Court the statement of claim that had been annexedto the admission of claim. This interlocutory application was brought seekingdetermination of whether the respondent was in breach of the settlement agreement.[29] Mr Slevin in the interlocutory application identified the amounts said to bepayable by Ms Carrim if she was held to be liable under the admission of claim andthe settlement agreement.[30] The amount for which judgment should be entered for the sum claimed in 1(a)of the statement of claim, that is the residual amount due of the $62,329.45, may havereduced due to further payments received by the Official Assignee. Judgment isentered for liability in respect of the claim with Mr Slevin to update the amountoutstanding by memorandum.[31] Mr Chapman did not take issue with the interest claims in the application.Mr Slevin advised that those interest calculations had been made by using the Ministryof Justice Civil Debt Interest Calculator.[32] There is judgment in terms of paras 1(a)(ii) to 1(a)(v) of the application, theybeing the various interest payments payable under the settlement agreement.[33] That leaves the issue of costs in this proceeding and costs on an earlierproceeding which became payable by Ms Carrim if the settlement agreement wasbreached. Those costs related to a proceeding CIV-2017-425-81 being a proceedingin which the Official Assignee obtained freezing orders in relation to a bank accountoperated by Ms Carrim[34] Costs are sought on a 2B basis. A schedule of costs was attached to theapplication. Costs have been sought on a 1A basis for various telephone conferencesand I consider that realistic. While Mr Chapman said he did not accept the schedule,he did not make detailed submissions in respect of it.[35] Given the Official Assignee was represented by external counsel, that scalecosts are sought with a reduction of costs to a 1A basis for certain steps, and that theOfficial Assignee was successful in obtaining a freezing order, there is no reason whycosts should not follow the event in that proceeding.[36] Accordingly, with the Official Assignee now being at liberty to apply for costsin CIV-2017-425-81, there is an order of costs in favour of the Official Assigneeagainst Ms Carrim in terms of Schedule A to the interlocutory application, thejudgment on admission dated 25 March 2019.[37] That leaves the issue of costs in this proceeding.[38] The statement of claim filed in this proceeding was prepared some time agoand was annexed to the admission of claim signed by Ms Carrim on18 December 2017. None of the causes of action in that statement of claim werematters that had to be brought in the High Court. There was a cause of action formoney had and received, a claim for knowing receipt and a claim for knowingassistance of breach of trust. The amount claimed was $62,329.45 being the amountthat carried over into the admission of claim.[39] In my view, the present proceeding seeking judgment in respect of thatstatement of claim could have been brought in the District Court.[40] While the fixing of costs in the freezing order proceeding (CIV-2017-425-81)would have to be completed in this Court, the fixing of those costs could have beensought by memorandum once there had been a determination in the District Court asto whether there had been a breach of the settlement agreement.[41] Accordingly, in respect of the costs claimed in this proceeding, including theinterlocutory application dealt with in this judgment, there is an award of costs to theOfficial Assignee against Ms Carrim in terms of Schedule B to the interlocutoryapplication for judgment on admission dated 25 March 2019, save that the Scheduleis to be calculated on the basis of scale costs on a 2B basis in the District Court andadopting the filing fees that would have been paid in the District Court.Conclusion[42] Accordingly, there is:(a) Judgment in the sum of $62,329.45 less any further payments receivedby the Official Assignee (in terms of [30] above).(b) Judgment in terms of paras 1(a)(ii) to 1(a)(v) of the interlocutoryapplication dated 25 March 2019;(c) Costs in terms of [36] above;(d) Costs in terms of [41] above._____________________________Associate Judge LesterSolicitors:Insolvency and Trustee Service, ChristchurchCopy to counsel: G E Slevin, Barrister, ChristchurchCruickshank Pryde, Invercargill