Denton v The Commissioner of Inland Revenus HC NAP CIV 2007-441-861

[2008] NZHC 2419

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV 2007-441-861

IN THE MATTER OF     the Insolvency Act 1967

ANDIN THE MATTER OF  of the bankruptcy of MARK DENTON WALFORD

AND IN THE MATTER OF  Judgment Debtor

ANDTHE COMMISSIONER OF INLAND REVENUE

Judgment Creditor

Hearing:         24 July 2008

Appearances: M. Wenley - Applicant

D. Kerr - The Official Assignee and Commissioner of Inland Revenue

Judgment:      25 July 2008

REASONS FOR DECISION

OF ASSOCIATE JUDGE D.I. GENDALL

Solicitors:           Willis Toomey Robinson, Lawyers, Private Bag 6018, Hawkes Bay Mail Centre, Napier

Elvidge & Partners, Solicitors, PO Box 609, Napier

M D WALFORD V THE COMMISSIONER OF INLAND REVENUE HC NAP CIV 2007-441-861  25 July

2008

[1]      When this matter was called before me at 10.40 am this morning I made an order annuling the adjudication of Mark Denton Walford (“the bankrupt”) in bankruptcy which order was made on 23 April 2008.

[2]      This annulment order was made on the basis that the bankrupt’s debts can now be fully paid and satisfied.

[3]      The order was made on the condition that the Official Assignee’s costs and disbursements totalling $6,920.59 are paid in full.

[4]      A further direction was made that the order was not to be sealed until the Court had received confirmation that all the bankrupt’s outstanding debts and the Official Assignee’s costs are paid in full from funds that are held in the trust account of the bankrupt’s solicitors.

[5]      In making that decision this morning I indicated that my detailed reasons for the decision would follow.  I now set out those reasons.

[6]      The  application  by  the  bankrupt  for  annulment  of  his  bankruptcy  was notionally made in terms of s. 119(1)(a) Insolvency Act 1967.  This section and its successor section deal with annulment on the grounds that the original order for adjudication should not have been made.  Although initially pleaded, an annulment based upon this  ground  is  not  appropriate  here.    This  is  because  there  was  no suggestion made before me that the original order for adjudication should not have been made.

[7]      Instead  the  application  before  me  was  effectively  one  made  under  s.

119(1)(b)  Insolvency Act 1967 and  its  successor  on  the  basis  that  an  order  for annulment should be made as the bankrupt now is in a position where his debts can be fully paid and satisfied.

[8]      Before the Court are two reports from the Official Assignee under s. 119

Insolvency Act 1967.

[9]      In the second report filed 23 July 2008 the Official Assignee notes that proofs of debt have been filed by various creditors which total $58,351.72.   This report confirms that funds are held in the trust account of the bankrupt’s solicitor, Willis Toomey Robinson, sufficient to pay these debts together with the Official Assignee’s costs and disbursements.

[10]     On this basis the Official Assignee does not object to an annulment of the bankruptcy provided the outstanding creditors are paid together with the Official Assignee’s costs and disbursements totalling $6,920.59.

[11]     So far as the outstanding creditors are concerned, counsel for the bankrupt has filed a memorandum dated 23 July 2008 which indicates that those creditors of the bankrupt other than the Commissioner of Inland Revenue (being Fletcher Steel Limited and Small Business Accounting) have consented to the annulment on the basis outlined by the Official Assignee.   In addition he confirms those creditors waive any claim for interest on their outstanding debts.

[12]     Mr Kerr appeared before me today on behalf of the Official Assignee and the Commissioner of Inland Revenue.  He confirmed that the Commissioner of Inland Revenue, the principal creditor of the bankrupt also consents to the annulment as outlined in the Official Assignee’s report.

[13]   This leaves outstanding the issue of the Official Assignee’s costs and disbursements.

[14]     Before me, Mr Wenley for the applicant objected to the level of these costs and disbursements noted in the second report of the Official Assignee at $6,920.59. He noted that in the Official Assignee’s first report under s. 119 Insolvency Act 1967 filed 3 July 2008, the costs and disbursements sought totalled only $5,521.09.  The additional $1,399.50 is said by Mr Wenley to be excessive particularly bearing in

mind the short additional period of time to which this relates and what he contends would have been minimal extra work required on the part of the Official Assignee.

[15]     Mr Wenley also contended that the bankrupt in any event should not be required to be saddled with the full magnitude of the Official Assignee’s costs and disbursements given that the Official Assignee is a publicly funded official with a public role to play.

[16]     On these aspects, Mr Kerr for the Official Assignee raised strong objection to a Mr Wenley’s query of the Official Assignee’s costs and disbursements.   He contended that these costs were all legitimately incurred by a properly appointed public official and there was no reason why they should not be met by the bankrupt whose outstanding debts after all caused the original order for adjudication to be made.

[17]     I accept these contentions from Mr Kerr.  The Official Assignee’s final costs and disbursements, shown in the second report and itemised at $6,920.59, are approved.

[18]     Finally, I confirm on the basis of all the material which is before the Court including the reports from the Official Assignee, the affidavit from the bankrupt, the various memoranda which have been filed including the consent and waiver documents filed for  the  creditor,  Small  Business  Accounting and  Fletcher  Steel Limited, that I am satisfied that the debts of the bankrupt and all costs can be fully paid and satisfied from the funds held in the bankrupt solicitor’s trust account.

[19]     That said, the annulment order and the further orders noted at paragraphs [1], [3] and [4] above, which were made today at 10.40 am are confirmed.

‘Associate Judge D.I. Gendall’