ASB Bank Limited v Garvin

[2012] NZHC 1456

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2012-419-99 [2012] NZHC 1456

IN THE MATTER OF     the Insolvency Act 2006

AND

IN THE MATTER OF the bankruptcy of RW Garvin

BETWEEN  ASB BANK LIMITED Judgment Creditor

ANDROBERT WILLIAM GARVIN Judgment Debtor

Hearing:         25 June 2012

Counsel:         RB Annandale for judgment creditor Appearance:      RW Garvin, judgment creditor in person Judgment:          25 June 2012

(ORAL) JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for adjudication order]

Solicitors:           Buddle Findlay, PO Box 2694, Wellington 6140

And To:             R Garvin, 1/2 Ascot Place, Te Awamutu

ASB BANK LIMITED V GARVIN HC HAM CIV-2012-419-99 [25 June 2012]

[1]      The  judgment  creditor  applies  for  an  order  adjudicating  Robert  William Garvin a bankrupt.  The proceeding was called on 28 May 2012.  Mr Neimand of counsel appeared for the judgment debtor.  I recorded the following minute on the file:

Adjourned to 10am on 25 June 2012.  It is a condition of the adjournment that a notice of opposition and affidavits be filed and served by 20 June

2012.   The court will review same and if appropriate either deal with the matter on 25 June or give directions for a fixture.

[2]      Mr Neimand appeared before me this morning and advised that he had no current instructions and sought leave to withdraw.  Mr Garvin advised me that he did not oppose his application for leave to withdraw.

[3]      The judgment debtor has filed a document.  The document makes no sense. Reference is made to a mortgage.  I cannot locate anything in it which might provide a basis for resisting an order of adjudication in this case.  If there was any basis at all, it would have to be way of an application challenging the judgment on which this proceeding is based. That step, however, has not been taken.

[4]     The jurisdictional requirements which must be met before an order of adjudication is made are contained in ss 13 and 36 of the Insolvency Act 2006. Section 13 provides:

13       When creditor may apply for debtor's adjudication

A creditor may apply for a debtor to be adjudicated bankrupt if—

(a)       the  debtor  owes  the  creditor  $1,000  or  more  or,  if  2  or  more creditors join in the application, the debtor owes a total of $1,000 or more to those creditors between them; and

(b)       the debtor has committed an act of bankruptcy within the period of 3 months before the filing of the application; and

(c)       the debt is a certain amount; and

(d)       the debt is payable either immediately or at a date in the future that is certain.

Section 36 provides:

36.      Court may adjudicate debtor bankrupt

The  Court  may,  at  its  discretion,  adjudicate  the  debtor  bankrupt  if  the creditor has established the requirements set out in section 13.

[5]      The jurisdictional requirements are met in this case.

[6]      I must now consider s 37 of the Insolvency Act 2006.   Section 37 provides:

37.      Court may refuse adjudication

The Court may, at its discretion, refuse to adjudicate the debtor bankrupt if—

(a)       the applicant creditor has not established the requirements set out in section 13; or

(b)       the debtor is able to pay his or her debts; or

(c)       it is just and equitable that the Court does not make an order of adjudication; or

(d)       for any other reason an order of adjudication should not be made.

[7]      In Eide v Colonial Mutual Life Assurance Society I summarised the general principles involved in the exercise of the discretion under s 26 of the Insolvency Act

1967 (which is now s 37 of the Insolvency Act 2006) and noted that the important matters were the following:[1]

[1] Eide v Colonial Mutual Life Assurance Society Ltd [1998] 3 NZLR 632 (HC) at 635.

1)“A creditor who establishes the jurisdictional facts set out in s 23 is not automatically entitled to an order. On the other hand, it is for an opposing debtor to show why an order should not be made.” McHardy v Wilkins & Davies Marinas Ltd (Court of Appeal, Wellington, CA 54/93, 7 April 1993) at p 3.

2)“. . . in the exercise of the discretion under s 26 it is proper for the Court to consider not only the interests of those directly concerned – the petitioner, other creditors, the debtor – but also the wider public interest.” McHardy v Wilkins & Davies Marinas Ltd (supra) at p 3.

3)In determining whether an order should be made, the wider public interest   must   be   taken   into   account   to   determine   whether adjudication is “conducive or detrimental to commercial morality and the interests of the general public.” Re Nisbett, ex parte Vala [1934] GLR 553 at p 556.

4)        “. . . on a bankruptcy petition the Court must have regard to public

interest in a way which transcends the interest of the immediate

parties to the proceeding. . . . The public interest in exposing and controlling an insolvent debtor is one which exists quite independently of  the  separate  question  of  debt  collection  by  his immediate creditors.” Re Fidow [1989] 2 NZLR 431 at p 444.

5)        Absence of assets is a factor but:

“. . . even the undoubted absence of assets will not necessarily preclude an order, for the circumstances may be such that the debtor ought in the public interest to be visited with   the   disqualifications   that   go   with   bankruptcy.” McHardy v Wilkins & Davies Marinas Ltd (supra) at p 3.

6)        Another matter:

“. . . is the potential for further investigation. A bankruptcy makes available to creditors an array of procedures for investigating  the  financial  circumstances  of  the  debtor. Those procedures are likely to prove more effective than an investigation conducted by other means.” Re Fidow (supra) at p 444.

7)        There is a need:

“. . . for the Court to balance the various considerations relevant to the case, and to determine whether in the end the debtor has succeeded in showing that an order ought not to be made”. McHardy v Wilkins & Davies Marinas Ltd (supra) at p 4.

[8]      I have carefully considered this case.  There is no basis for the exercise of the discretion not to adjudicate.   Accordingly, I order that Robert William Garvin is adjudicated bankrupt.

[9]      The  judgment  creditor  is  entitled  to  costs  based  on  Category  2  Band B

together with disbursements as fixed by the Registrar.

[10]     This order is made at 2:40pm on 25 June 2012.

JA Faire

Associate Judge