Auckland City Council v Patel HC Auckland CIV 2010-404-1392

[2010] NZHC 1539

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2010-404-1392

IN THE MATTER OF     the Insolvency Act 2006

AND

IN THE MATTER OF     THE BANKRUPTCY OF RAMAN RANCHHODJI PATEL

BETWEEN  AUCKLAND CITY COUNCIL Judgment Creditor

ANDRAMAN RANCHHODJI PATEL Judgment Debtor

Appearances: B Martelli for judgment creditor

B G Allen for judgment debtor

Judgment:      31 August 2010

ORAL JUDGMENT OF ASSOCIATE JUDGE ABBOTT

Solicitors:

Heaney & Co, PO Box 105391, Auckland 1143 for judgment debtor

Davenports West Lawyers Limited, PO Box 21248, Waitakere City 0612 for judgment creditor

AUCKLAND CITY COUNCIL V  PATEL HC AK CIV 2010-404-1392  31 August 2010

[1]      The  judgment  creditor,  Auckland  City Council,  has  applied  for  an  order adjudicating the judgment debtor Raman Ranchhodji Patel bankrupt.

[2]      The application is made on the basis of an unmet bankruptcy notice.   That bankruptcy notice sought payment of a judgment obtained on 5 December 2009 for a contribution towards the costs of remedial work on properties developed by Mr Patel.  The Council has paid the sum of $346,769.33 in settlement of an adjudication in the Weathertight Homes Tribunal, when its share of the adjudication (as found by the adjudicator) was only $88,708.43.

[3]      Mr Patel did not take steps to challenge the bankruptcy notice, but yesterday filed notice of opposition to this application.  The essence of that opposition is that he has made an offer to settle his debt to the Council, enlisting the support and resources of his family.

[4]      He has filed an affidavit showing that apart from household chattels (of a modest nature) he has only a motor vehicle and a bank account worth in total just less than $15,000.  He says that he is not in a position to settle the debt, or even pay as much as could otherwise be available with the assistance of his family.   He is unemployed and receiving New Zealand Superannuation.

[5]      Mr Allen appears for Mr Patel.  He invites the Court to exercise its discretion not to adjudicate Mr Patel bankrupt.  He acknowledges the issues that cases like this present, in the form of the wider public interest, but invites the Court in effect to make the decision that the Council feels unable to make because of its duty to ratepayers as a whole, namely accept that in the circumstances of this case the Council is likely to be substantially better off by accepting the settlement offered.

[6]      It may well prove to be the case that Mr Patel has no assets other than those disclosed.  I am prepared to proceed on that basis for the purpose of the application. Judged in that light the proposed settlement could be seen to be in the public interest, and reflect a wish on the part of Mr Patel to respond to the commercial morality aspects of the present judgment.  However, on balance, I am not persuaded that this

is an appropriate case for the Court to exercise its discretion in that way.  The factors that I take into account in coming to this decision are:

a)       This proposal appears to be very much as one made “at the eleventh hour”.  The adjudication was issued on 5 December 2008.  There is no evidence  before the Court  that  Mr  Patel  has  sought  to  make  any contribution until very recently.

b)There is a wider public interest in persons engaging in the commercial sector being accountable for the steps that they take, and particularly for the losses and distress caused to other members of the public in the form of leaky buildings created in the course of their commercial enterprise.

c)       The Council also has a wider obligation to the public to explore every possible means of recovery.  It may be that the investigation that will follow adjudication may help to identify other possible sources of recovery.

[7]      In  the  end,  balancing  the  various  factors  I  come  to  the  view  that  it  is appropriate to make the order for adjudication as sought by the Council.

[8]      I make an order adjudicating Raman Ranchhodji Patel bankrupt.  This order is made at 12:17pm.

[9]      The Council is entitled to costs of this application on a 2B basis together with disbursements as fixed by the Registrar.

Associate Judge Abbott