Dennis v Goode

[2023] NZHC 1883

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2022-409-000593

[2023] NZHC 1883

IN THE MATTER

of the bankruptcy of Bevan John Goode

BETWEEN

PETER RAYMOND DENNIS, PAUL STUART GOOBY and

DEIRDRE McNABB, as executors of the Estate of PHYLLIS LORRAINE FRANCES DENNIS

Judgment Creditors

AND

BEVAN JOHN GOODE

Judgment Debtor

Hearing:

17 July 2023

Appearances:

H M Cassin for Judgment Creditors

Mr Goode - Judgment Debtor in person

Judgment:

19 July 2023

JUDGMENT OF ASSOCIATE JUDGE LESTER

DENNIS v GOODE [2023] NZHC 1883 [19 July 2023]

[1]On 16 July 2018 Judge Neave entered judgment against Mr Goode for

$16,658.19  plus   costs   of   $6,780.00   and   disbursements   of   $1,043.00.   On   9 December 2022 the judgment creditors  obtained  a  bankruptcy  notice  against  Mr Goode, which was served on 14 March 2023 pursuant to orders for substituted service. Under the terms of the substituted service order, service was treated as being complete three working days after service, being 17 March 2023.

[2]The bankruptcy notice contains the following advice:

If you consider you have a counterclaim, set-off, or cross-demand against the judgment creditor that comes within paragraph 1.3, or you wish to seek the court’s approval of terms of payment, you must, within 10 working days from the date of receiving this notice, apply to the High Court. Your application must be supported by affidavit.

You must, within the same time, also serve a copy of the application and supporting affidavit on the judgment creditor.

[3]        On 24 March 2023, Mr Goode filed an application to set aside the bankruptcy notice. The evidence is that Mr Goode did not serve his application until 4 April 2023, when he personally delivered the application to the reception of the creditors’ solicitor. There is no real challenge to the evidence as to when the application was served.

[4]        Mr Goode did not file an affidavit in support of the application and none was served with the application – he has since filed submissions that cover his view of events but this is not sworn evidence.

[5]        The application to set aside the bankruptcy notice is opposed on a number of grounds including that it was served out of time — the bankruptcy notice expired after 10 working days on 31 March 2023, taking into account the three working days stated above before service was complete. Accordingly, service took place after the expiry of the bankruptcy notice.

[6]        On 28 April 2023 Associate Judge Paulsen issued a Minute, noting that: “The judgment creditors argue that Mr Goode’s application is out of time and must necessarily fail.”

[7]        The Judge recommended that Mr Goode take legal advice. Mr Goode has not done so.

[8]        “It is well-established that the court has no discretionary power to extend the time for complying with a bankruptcy notice, nor does the court have any discretionary power to extend the time for applying to set aside the bankruptcy notice”.1

[9]        It is also well-established that an application to set aside a bankruptcy notice must not only be filed within 10 working days but must  also be served within         10 working days.2

[10]      Here, because the application was served outside the 10 working day period, the application is  ineffective as  a  challenge to  the bankruptcy  notice.  Because  Mr Goode’s application was served out of time,  an act of bankruptcy occurred on  31 March 2023. The effect of the authorities is that late service cannot cure or undo the act of bankruptcy — that had already happened.3

[11]      In addition, the High Court Rules 2016 require that the affidavit in support be filed and served at the same time as the application to set aside. If the application is not accompanied by the affidavit in support then there is no valid application.4 While material has subsequently been filed by Mr Goode, late filing and service of that informal material does not alter the effect of the application not being supported by an affidavit when filed.

[12]      As Mr Goode’s application is out of time the Court cannot set aside the bankruptcy notice and Mr Goode’s application is therefore dismissed.

[13]Costs are reserved.

1      Reynolds v Bartlett [2014] NZHC 447 at [16].

2      Above n 1 at [18]; Re Guthrie ex parte Buildwest Ltd HC Auckland B92/02, 23 August 2002.

3      Prescott v Auckland Council [2017] NZHC 2698.

4      West Coast Holdings Ltd v Murray [2019] NZHC 2913; Re Memelink ex parte SANCO (NZ) Ltd

HC Wellington CIV 2008-485-2691, 10 March 2009 at [13].

Addendum

[14]      Pursuant to Associate Judge Paulsen’s Minute of 3 July 2023, the Registrar was directed to accept the creditors’ application for filing to preserve the judgment creditors’ position pending the hearing of Mr Goode’s application to set aside the bankruptcy notice.

[15]      Mr Goode opposes the adjudication application. It is clear from the matters raised by Mr Goode in his challenge to the bankruptcy notice that he needs to file     a comprehensive affidavit addressing his primary defence to the creditors’ claim, namely that the judgment debt  was  compromised  and  paid,  at  least  in part,  by Mr Goode.

[16]      Mr Goode asserts that Mr Peter Dennis agreed to accept payment of the costs judgment awarded in the District Court in settlement of the judgment. Mr Goode points to evidence that he paid his half of the costs noting that the original judgment was against him and a co-guarantor.   However, at the hearing on 17 July 2023,     Mr Goode acknowledged that his co-guarantor had not paid his half of the costs and Mr Goode accepted that under the deal he asserts, he would have to pay the remaining half of the costs.

[17]      Mr Goode also raised questions about the GST content of the original judgment and Ms Cassin, counsel for the creditors, is to look into that and outline the basis upon which GST was included in the original District Court judgment.

[18]      Ms Cassin also needs to look into Mr Goode’s claim that he has made a part payment representing Mr Goode’s half share of the costs awarded in the District Court. The papers filed in this proceeding by the creditors do not record a part payment.

[19]      Mr Goode is to file a full affidavit outlining the details of the compromise he says he reached with Mr Peter Dennis. That should include as many contemporaneous documents, including copies of text messages and emails, as possible. That document is to be filed and served by Monday 7 August 2023 and the creditors have until Monday 21 August 2023 to file a reply.

[20]      There will be a hearing to determine Mr Goode’s defence to the adjudication application at 2:15pm on Monday 18 September 2023.

[21]      Mr Goode is to file his written submissions 10 working days before the hearing (that is by Monday 4 September 2023). The creditors are to file their written submissions   five   working   days   before   the   hearing   (that   is   by   Monday   11 September 2023).

Associate Judge Lester

Solicitors:
Cavell Leitch, Christchurch

Copy to:
Mr B Goode