Bridgecorp
receivers were playing within the rules said the Supreme Court when they
obtained judgement for over $65,000 against a lawyer without a court hearing. The lawyer had previously signed an admission
of liability and given the receivers permission to file it in court should
agreed debt rescheduling not be honoured.
Lenders benefit from
any shortcuts which reduce time and expense in court procedures. Chief Justice
Elias expressed concern that this shortcut will be misused in the future, to
the prejudice of “the poor and ignorant”.
Consumers can be signing away their rights to notice, a hearing and a
defence without any appreciation of what they are doing.
The Supreme Court was
told the $65,000 court judgement followed attempts by a lawyer to bail out a
cousin who owed money to Bridgecorp. The
lawyer’s name was supressed. He came to
the rescue after Bridgecorp threatened to bankrupt his cousin over an unpaid $91,000
debt. New terms for payment of a lesser
sum were settled. The lawyer agreed to
accept liability for the cousin’s debt by paying a discounted amount of $50,000
and offering as security a mortgage over his family home which he part-owned
with another. But in giving the mortgage
he forged documents to give security over the co-owners’ share as well. The fraud became apparent when Bridgecorp,
still unpaid, tried to sell the home in a mortgagee sale. Facing these complications, Bridgecorp’s
receivers negotiated another round of rescheduling: the debt was to be repaid
by instalments, with the lawyer signing an admission of liability which would
be used in court proceedings if payments were not made. The lawyer was given a copy of a draft statement
of claim which would be filed in court if he did not make the rescheduled
payments and he gave the receivers written authority to file the claim should
he default.
The Supreme Court
ruled that judgment could be granted on the basis of the lawyer’s admission
signed at a time before any court proceedings were filed. The precise sum claimed did not have to be
spelt out, provided there was a formula in the admission enabling the amount
due to be calculated.
P.
v. Bridgecorp – Supreme Court (19.12.13)
14.005