Commissioner of Inland Revenue v Su'a

[2012] NZHC 501

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2011-485-2395 [2012] NZHC 501

IN THE MATTER OF     the Insolvency Act 2006

AND

IN THE MATTER OF      the bankruptcy of PETERU POPO SU'A

BETWEEN  THE COMMISSIONER OF INLAND REVENUE

Judgment Creditor

ANDPETERU POPO SU'A Judgment Debtor

Hearing:         20 March 2012

(Heard at Wellington)

Counsel:         J. Uddstrom - Counsel for Judgment Creditor

A. Beazer - Counsel for Judgment Debtor

Judgment:      20 March 2012

ORAL DECISION OF ASSOCIATE JUDGE D.I. GENDALL

Solicitors:           Inland Revenue Department, PO Box 1462, Wellington

THE COMMISSIONER OF INLAND REVENUE V PP SU'A HC WN CIV-2011-485-2395 [20 March 2012]

[1]      Before the Court is  an  application by the judgment  creditor to have the judgment debtor adjudicated bankrupt.

[2]      The debt in question which relates to outstanding Income Tax, GST, Student Loan deductions and other payments due from Mr Su’a presently totals $94,852.86. This represents core tax assessments of $49,234.55 together with interest and penalties.

[3]      Mr Uddstrom appeared as counsel for the judgment creditor before me today and indicated that the judgment creditor seeks an order adjudicating the judgment debtor bankrupt and is not prepared to agree to any further adjournment of this matter.

[4]      The  application  significantly in  my view  relates  to  a  judgment  obtained against the judgment debtor against the District Court at Porirua nearly 5 years ago on 23 November 2007.  This related to core tax and other payments then due to the judgment creditor totalling some $23,929.02.

[5]      Ms Beazer appeared today as counsel for the judgment debtor.  She indicated that her instructions to act on his behalf which  were given only as recently as yesterday 19 March 2012 being relatively new meant that she has only just been able to obtain information from the judgment debtor regarding his position.

[6]      That information provided to the Court by Ms Beazer today confirms that the judgment debtor, as I understand it, is acting as a contractor in various matters and has both work on hand at present and for the future, although details of income and profitability were not provided.

[7]      Ms Beazer confirms however that the judgment debtor’s wife is employed on

a full time basis and is earning some $68,000.00 p.a.

[8]      Ms Beazer also says that the judgment debtor and his wife together own a house property which has a rating valuation of $350,000.00.  This property is subject

to  a  mortgage  to  the  Bank  of  New  Zealand  which  secures  $230,000.00.    The mortgage I am told is due for renewal in June or July of this year and at that stage the Bank of New Zealand has indicated it would consider an application for a top-up in the amount secured.

[9]      Effectively, Ms Beazer indicates that there is some $130,000.00 equity in the

judgment debtor’s house property and that it is hoped something approaching $45-

50,000.00 by way of additional advance might be available from the BNZ in June or

July of this year to apply towards reduction of the debt due to the judgment creditor.

[10]     In addition, Ms Beazer for the judgment debtor indicated today that he has discussed with her a possible repayment plan with regard to this acknowledged debt to the judgment debtor.

[11]     Ms Beazer confirms that the judgment debtor and his wife owe no other monies on hire purchase or to other creditors and indeed there only outstanding debt is the present debt owing to the judgment creditor.

[12]     As to the repayment plan noted above Ms Beazer suggests that the judgment debtor  might  accept  an  arrangement  whereby  the  judgment  debtor  is  to  pay

$1,000.00 per month for the months of April, May and June 2012 with the balance of the core debt in question (totalling about $46,000.00) being repaid from the intended BNZ mortgage refinancing in July 2012.

[13]     This proposal of course would require the judgment creditor to forego any claim for interest and penalties and to accept the core tax only in settlement of the debt outstanding.

[14]     On this aspect, Mr Uddstrom for the judgment creditor indicated he had no instructions regarding foregoing of any monies due.  Again, he repeated his request that an order for adjudication be made today.

[15]     Finally, Ms  Beazer for  the judgment debtor urged  me today to  grant  an adjournment  of  this  matter  on  the  basis  that  it  would  give  some  time  for  the

repayment plan to be both put in place and discussed with the judgment creditor and the initial $1,000.00 monthly payment made.  Ms Beazer suggested that there would be a far greater recovery to the judgment creditor if this repayment plan was allowed to proceed (even though it related only to the core income tax with nothing towards interest and penalties) than if the judgment debtor was adjudicated bankrupt today.

[16]     All this leaves the Court in somewhat of a dilemma.  What is clear is that this debt owing by the judgment debtor relates to an original judgment given on 23

November 2007 nearly 5 years ago.  What has happened in the meantime is unclear. It is a fair assumption that the judgment debtor may well have simply buried his head in the proverbial sand hoping that this matter might go away.   The fact that the judgment creditor took no steps to bankrupt the judgment debtor before now is also somewhat puzzling given the length of time that this judgment has been outstanding.

[17]     Leaving all those matters on one side, however, by a rather fine margin I am prepared to give the judgment debtor one last chance to avoid the stigma of bankruptcy by putting before the judgment creditor a feasible repayment plan with regard to repayment of his debt.  I say this bearing in mind that the judgment creditor has not in any way agreed to accept only what has been proposed by Ms Beazer today, which is about one-half of the total debt currently outstanding to the judgment creditor.

[18]     Notwithstanding these matters, I now adjourn the current application to a call at 10.00 am on 2 April 2011.   This is on the basis that by that date, the April

$1,000.00 monthly payment promised by the judgment debtor will be made to the judgment creditor and in addition a firm repayment plan will be put before the judgment creditor and the Court for consideration.

[19]     This is not in any way to confirm at this stage that any such repayment plan which might involve clearance of only part of the debt in question would be acceptable, but it is purely to give the judgment debtor one last chance to have this matter resolved in a satisfactory fashion.

[20]     I repeat again that this matter is adjourned on this basis to a call at 10.00 am on 2 April 2012.  If matters are not satisfactorily resolved at that stage then an order for adjudication is likely given particularly the length of time that this debt has been outstanding.

‘Associate Judge D.I. Gendall’