ANZ Bank New Zealand Ltd v Edwards

[2013] NZHC 2756

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-3979 [2013] NZHC 2756

BETWEEN  ANZ BANK NEW ZEALAND LIMITED Judgment Creditor

ANDJANINE JOY EDWARDS Judgment Debtor

Hearing:                   18 October 2013

Counsel:                  N Moffatt for Judgment Creditor

Judgment Debtor in person

Judgment:                22 October 2013

JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 22 October 2013 at 11.00 a.m., pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Solicitors:           Bell Gully, Auckland

ANZ BANK NEW ZEALAND LTD v EDWARDS [2013] NZHC 2756 [22 October 2013]

[1]      In her application, the Judgment Debtor applies for orders:

(a)      to set aside a bankruptcy notice issued by the Judgment Creditor, that is based on a default judgment entered in the District Court at Waitakere for $177,237.52 on 4 July 2013.

(b)      to set aside that default judgment.

[2]      Counsel for the Judgment Creditor has raised as a preliminary point that the Judgment Debtor’s application must be dismissed, because it is effectively a nullity. He relies on two key reasons:

(a)      Insofar as  the  application  seeks  an  order  setting aside  the default judgment of the District Court, it should be brought in that Court and not the High Court;

(b)Insofar as the application seeks an order to set aside the bankruptcy notice, it was not served within the period allowed under the Insolvency Act 2006, and this is fatal to the application.

[3]      At today’s hearing, I indicated to Ms Edwards that I agree with counsel for the creditor’s position that the court that has jurisdiction to set aside the default judgment is the court in which that judgment was made, the District Court at Waitakere, and that this court does not have jurisdiction to make an order setting aside the judgment.  It is pursuant to District Court Rule 12.34 that the application should be made.

[4]      Turning to the second point raised by the Judgment Creditor, it is based on the wording of s 17(1)(d) of the Insolvency Act 2006.  Relevantly, s 17(1)(d) states:

17       Failure to comply with bankruptcy notice

(1)      A debtor commits an act of bankruptcy if—

(a)      a creditor has obtained a final judgment or a final order against the debtor for any amount; and

(b)      execution of the judgment or order has not been halted by a court; and

(c)      the debtor has been served with a bankruptcy notice; and

(d)      the  debtor  has  not,  within  the  time  limit  specified  in subsection (4),—

(i)       complied with the requirements of the notice; or

(ii)      satisfied the Court that he or she has a cross claim against the creditor.

…

(4)       The time limit referred to in subsection (1)(d) is,—

(a)      if the debtor is served with the bankruptcy notice in New

Zealand, 10 working days after service;

…

[5]      Rule 24.10 of the High Court Rules sets out that applications to set aside bankruptcy notices before this Court must follow the rules dealing with interlocutory applications and that the form that a bankruptcy notice is to be issued in is now required to follow form B2 in the High Court Rules.  This notice is required to state in the notes to the Judgment Debtor:

If you consider you have a counterclaim set off or cross demand against the judgment creditor that comes within paragraph 1(c), or you wish to seek the Court’s approval of terms of payment you must, within 10 working days from the date of receiving this notice apply to the High Court.   Your application must be supported by affidavits.

You must within the same time also serve a copy of the application and supporting affidavit on the Judgment Creditor.  (emphasis added)

[6]      It is not in dispute that though Ms Edwards’ application to set aside the bankruptcy notice was filed on time on 25 September 2013 (the bankruptcy notice having been served on her on 11 September 2013).  She did not serve a copy of the application on the Judgment Creditor until 11 October 2013.

[7]      Accordingly,  service  has  not  been  effected  within  the  ten  working  days allowed,  with  the  result  that  Ms  Edwards  had  committed  bankruptcy.     The opportunity to seek to have the bankruptcy notice set aside has passed.

[8]      The Court’s decision in Re Memelink ex parte Sanco (NZ) Ltd is apposite.1   In that judgment, Associate Judge Gendall (as he then was), states that it is clear from a number of judgments that once the tenth day after service of a bankruptcy notice has passed, an act of bankruptcy occurs.  As he pointed out, any provisions, be they in the Act or elsewhere which provide for some extension of time for bringing in serving applications, will not assist.  Simply put, they cannot undo an event which has occurred, namely the act of bankruptcy.

[9]      As the debtor was required by the bankruptcy notice to both file and serve any application to set the notice aside within the ten day statutory time period allowed, she has failed to comply with the bankruptcy notice as required by s 17. As it is clear from  the wording of the Act  and the provisions in  Form  B2, that  a Judgment Debtor has only ten working days from the date the bankruptcy notice is served on him or her to apply to this Court to set aside the notice, the application is a nullity and must be struck out.

[10]     The Court has no power to extend the time within which such an application must be made.   In that last respect, the Court’s decision in  Russell v Attorney- General,2 remains apposite.

[11]     For the above reasons the Judgment Debtor’s application is struck out in its entirety.

[12]     Costs

[13]     Costs follow the event.  I award costs to the creditor on a category 2 basis, together with disbursements as fixed by the Registrar.

[14]     For completeness I note that:

(a)       the Judgment Creditor is entitled to file an application for an order for adjudication based on the bankruptcy notice.

1      Re Memelink ex parte Sanco (NZ) Ltd HC Wellington CIV-2008-485-2691, 10 March 2009.

2 Russell v Attorney-General [1995] 1 NZLR 749 at 760.

(b)The Judgment Debtor retains the rights available to her under the Insolvency  Act,  and  Part  24  of  the  High  Court  Rules,  to  file documents in opposition to such application if she considers she has proper grounds to oppose an order of adjudication.

H Sargisson
Associate Judge