Commissioner of Inland Revenue v Makuru

[2020] NZHC 2563

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2020-409-204

[2020] NZHC 2563

IN THE MATTER

of the Insolvency Act 2006

AND

IN THE MATTER

of the bankruptcy of JOHN NGATAE MAKURU

BETWEEN

COMMISSIONER OF INLAND REVENUE

Judgment Creditor

AND

JOHN NGATAE MAKURU

Judgment Debtor

Hearing:	Determined on the papers
Counsel:	V L D A G Diefenbach for Judgment Creditor
Judgment:	30 September 2020

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 30 September 2020 at 4.00pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 30 September 2020

COMMISSIONER OF INLAND REVENUE v MAKURU [2020] NZHC 2563 [30 September 2020]

[1]    The judgment creditor, the Commissioner of Inland Revenue (the Commissioner), applies for an order for substituted service as against the judgment debtor, Mr John Makuru.

[2]    I am satisfied, having regard to the evidence of Uma Kolluru, that reasonable efforts have been made to serve the bankruptcy notice on the judgment debtor and that it cannot be promptly served. The Commissioner has been handicapped in trying to serve  the  bankruptcy  notice,  given  Mr  Makuru  left  for  the  Cook  Islands  on  29 February 2020. Enquiries made by the Commissioner, as detailed in the affidavit of Ms Kolluru, have not been successful in finding a physical address for Mr Makuru in the Cook Islands.

[3]    I  am further satisfied that the  following directions  which I make  represent  a method of service likely to bring the documents to the attention of the judgment debtor.

Orders

[4]I direct the following:

(1)personal service on the judgment debtor with the bankruptcy notice and all other bankruptcy documents filed (the Documents) is dispensed with;

(2)service on the judgment debtor will be deemed to be effected upon completion of the following steps:

(a)an advertisement in the terms provided by the Commissioner and annexed to this judgment, is to be placed in the Cook Islands newspaper on a Saturday edition;

(b)a photocopy of the bankruptcy notice and this order is to be posted to Mr Makuru, care of 15 Torwood Road, Khandallah, Wellington 6035; and

(c)a text message is to be sent to the cell phone number held by the Commissioner for Mr Makuru advising him that an order for substituted service has been made and of the date that the advertisement will be placed in the Cook Islands newspaper.

[5]    The  Documents  will  be  treated  as   served   three   working   days  after the completion of the above steps.

[6]    The application for substituted service is adjourned with leave to the Commissioner to request, by memorandum, a further order as to substituted service in the event any adjudication application cannot be promptly served (in which event the memorandum should contain counsel’s confirmation either that the judgment debtor can still not be located, or attaching evidence as to subsequent difficulties of service).

[7]    The costs of the application for substituted service are fixed and are with disbursements to be costs in the cause.

[8]    In addition, the Commissioner seeks leave to serve the bankruptcy notice outside of New Zealand. The Cook Islands are not part of New Zealand for the purposes of the Insolvency Act 2006.1

[9]    McGechan on Procedure provides “[a] bankruptcy notice is a document that may be served outside New Zealand only pursuant to leave granted under r 6.30.”2

[10]   Under s 17(3) of the Insolvency Act a  bankruptcy  notice  must  be  served on a debtor in New Zealand  unless  permission  of  the  court  is  granted  for  service outside  New Zealand.  His  Honour  Associate  Judge  Bell  in  Westpac  New Zealand Ltd v Boulton, when considering an application to serve a bankruptcy notice outside of New Zealand set out the approach he adopted which was to look ahead to any future bankruptcy application by the creditor relying on non-compliance with the bankruptcy notice.3 His Honour had regard to the criteria under r 6.28(5) of the High Court Rules 2016 when considering whether leave would be granted to serve

1      See s 29 of the Interpretation Act 1999, definition of “New Zealand”.

2      Andrew Beck (ed) McGechan on Procedure (online ed, Thomson Reuters) at [HR6.30.02].

3      Westpac New Zealand Ltd v Boulton [2014] NZHC 693.

an adjudication application out of New Zealand.4 The Judge then considered whether it is appropriate for any bankruptcy of the debtor to be administered in New Zealand. If he was satisfied on those factors, he would generally give leave for the bankruptcy notice and the bankruptcy application at the same time. I adopt his approach in relation to this application.

[11]   Under r 6.28(5), the court may grant leave for an originating document to be served out of New Zealand if the claim has a real and substantial connection to    New Zealand, there is a serious issue to be tried on the merits and New Zealand is the appropriate forum for the trial.

[12]   The debt, which is the foundation of the bankruptcy notice in this case, relates to tax indebtedness incurred by the judgment debtor in New Zealand. It appears the judgment debtor has a close connection with New Zealand, regularly travelling between the Cook Islands and Auckland. He is also listed as the director of a company called “Experience The Cook Islands Limited”, incorporated on 1 April 2020 for which the Khandallah, Wellington address is given.

[13]   I am satisfied it is appropriate that leave be granted under r 6.30 for the bankruptcy notice to be served outside of New Zealand and I grant leave, if necessary, for the originating documents in this matter, that is the application for adjudication, to be served out of New Zealand.

[14]   The Commissioner seeks, pursuant to s 17(4)(b) of the Insolvency Act , the court extend the time for Mr Makuru to comply with the bankruptcy notice from    the standard 10 working days, to 20 working days. That is appropriate and there is an order accordingly.

Associate Judge Lester

Solicitors:
Inland Revenue Legal Services, Christchurch

4 At [14].

ADVERTISMENT FOR SERVICE OF BANKRUPTCY NOTICE

TO:JOHN NGATAE MAKURU formerly of Cook Islands (previously of Christchurch, New Zealand).

TAKE NOTICE that the Commissioner of Inland Revenue (New Zealand) has issued a Bankruptcy Notice under the Insolvency Act 2006 out  of  the  High  Court  of New Zealand at Christchurch under CI NI-2020-409-204.

And further take notice that this Court has ordered that personal service be dispensed with and that service of the Bankruptcy Notice be effected by publication of this advertisement.

You are required to pay the Commissioner of Inland Revenue (the Creditor) the sum of $75,505.80 within ten (20) working days after date of this advertisement, either to her agent in person at any Westpac New Zealand Branch, or at the address for service PO Box 1782 Christchurch.

If you wish to defend the Creditor's claim you must file in the High Court of Christchurch, New Zealand and serve on the Creditor an application to set aside the bankruptcy notice within 10 working days of publication of this advertisement. If you fail to do so the Creditor may proceed to take bankruptcy proceedings against you.

A copy of the Bankruptcy Notice and the sealed Order may be obtained from Virginia Diefenbach, Solicitor, Inland Revenue Department, PO Box 1782 Christchurch, phone [phone], email [email protected].

Any person knowing the whereabouts of JOHN NGATAE MAKURU is asked to bring this Notice to his attention.

Dated this [date] of 2020