Commissioner of Inland Revenue v Ashton HC Wellington CIV-2011-454-173

[2011] NZHC 1758

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2011-454-173

BETWEEN  THE COMMISSIONER OF INLAND REVENUE

Judgment Creditor

ANDGUY THEODORE ASHTON Judgment Debtor

Hearing:         17 November 2011

(Heard at Palmerston North)

Counsel:         E.M. Carpenter - Counsel for Judgment Creditor

G.T. Ashton - Judgment Debtor in person

Judgment:      17 November 2011 at 4:00 PM

ORAL JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment of Associate Judge Gendall was delivered on 17 November 2011 at

4.00 pm under r 11.5 of the High Court Rules.

Solicitors:           Inland Revenue Department, PO Box 1462, Wellington

THE COMMISSIONER OF INLAND REVENUE V GT ASHTON HC WN CIV-2011-454-173 17 November

2011

[1]      Before the Court is an application by the judgment creditor seeking an order to adjudicate the judgment debtor bankrupt.

[2]      In terms of the judgment creditor’s application for the adjudication order filed on 10 June 2011, the debt claimed from the judgment debtor at that point totalled the sum of $367,947.53.  As I understand the position it represented some $167,235.79 assessed income tax due from the judgment debtor for the years ending 31 March

1998 – 2010 inclusive together with shortfall and late payment penalties and interest.

[3]      Judgment was obtained by the judgment creditor against the judgment debtor in the District Court at Feilding on 16 September 2010 for the sum of $307,519.00. Subsequently on  28  March  2011  the judgment  creditor served  on  the judgment debtor a Bankruptcy Notice claiming this sum of $307,519.00 plus certain costs and disbursements.

[4]      The time for remedying the default claimed in the Bankruptcy Notice expired no effective steps of any kind were taken by the judgment debtor.   Certainly no application to set-aside the Bankruptcy Notice was filed by the judgment debtor.   On

31 March 2011 the judgment debtor did file a “Notice Requesting Deferment of any Action Pending Outcome of Negotiations with the CIR” but under this no effective steps were pursued.

[5]      Then, on 10 June 2011 the judgment creditor filed in this Court the present bankruptcy application and this, together with supporting material, was subsequently served upon the judgment debtor.

[6]      In response, the judgment debtor has filed various additional Memoranda and documents which merely seek further adjournments of this matter, without dealing in any real way with the underlying issue or insolvency.

[7]      The essential opposition from the judgment debtor to the present application is outlined in a Memorandum he has filed in this Court dated 14 November 2011. That Memorandum indicates that he is seeking to have what he describes as the

of his “Submission to the Ombudsman” which he may have submitted in the last few

days.

[8]     It is significant in my view that at page 1 of that “Submission to the Ombudsman” the judgment debtor acknowledges that the income tax arrears assessment of $129,465.00 made against him by the judgment creditor as at 14

December 2007 is correct, and he accepts liability for this amount.

[9]      His objection to the actions of the judgment creditor appear to relate almost exclusively to the claim against him for interest and penalties on this sum and his subsequent dealings with officers of the judgment creditor regarding these.

[10]     Before me today the judgment debtor again acknowledged and accepted that he owes to the judgment creditor this sum of $129,465.00 as assessed income tax. And it is clear also that he has placed no evidence before the Court of any kind as to his financial position to verify his solvency.  Instead, in response to requests I made at the hearing today, the judgment debtor indicated that he has minimal assets.  His family home is owned by a Trust, and he stated that he owns only furniture and personal effects and a motor vehicle which he says has a value of $15,000.00.

[11]     As  noted  above,  the  judgment  debtor  today  simply  sought  a  further adjournment of this  matter.   This,  he said,  was  to  enable him to  challenge the penalties and interest claim against him and then hopefully to put a proposal to the judgment creditor for some time payment arrangement to be entered into for the concluded tax liability.  On this the judgment debtor also contended that currently he is in the course of business negotiations which he believes might well lead to some income being available to him to meet such an arrangement.

[12]     In response, Ms Carpenter for the judgment creditor opposed any further adjournment of this matter and sought an order for adjudication today.

[13]     At  the  outset  I  note  that  since  the  filing  of  the  present  adjudication application, this matter has been called on three previous occasions being 28 July

adjournments were granted at the request of the judgment debtor to enable him to have discussions and meetings with the judgment creditor to discuss amongst other things what in his words were “settlement proposals”.

[14]     The call of this matter today, 17 November 2011 is the fourth call of the bankruptcy application.

[15]     As I have noted above, on his own admission the judgment debtor accepts that he owes to the judgment creditor at least the core income tax assessed amount of

$129,465.00.  In response to my question, the judgment debtor confirmed that he is not in a position to pay this debt and that effectively he is insolvent.  It is clear that he has failed to comply with the Bankruptcy Notice issued and served upon him on

28 March 2011.

[16]     As I see the position, the judgment debtor’s request to have time to pursue his complaint with the Ombudsman will not assist him here.  It simply relates in essence to the penalties and interest charged on the core income tax debt owing by him (which he acknowledges).

[17]     That said, there is effectively no defence open to the judgment debtor to the present application against him.

[18]     He has clearly committed an act of bankruptcy in terms of ss 16 and 17

Insolvency Act 2006 and on all the evidence before the Court the requirements of s

13 Insolvency Act 2006 are established and he is insolvent.

[19]     The judgment creditor’s application therefore must succeed in terms of s 36

Insolvency Act 2006.

[20]     An order is now made adjudicating the judgment debtor bankrupt.

[21]     Costs are awarded to the judgment creditor on a 2B basis together with disbursements as fixed by the Registrar.

‘Associate Judge D.I. Gendall’