Grey District Council v Banks

[2017] NZHC 190

IN THE HIGH COURT OF NEW ZEALAND GREYMOUTH REGISTRY

CIV-2016-418-000022 [2017] NZHC 190

IN THE MATTER	of the Insolvency Act 2006
AND
IN THE MATTER	of the bankruptcy of DOUGLAS BANKS
BETWEEN	GREY DISTRICT COUNCIL Judgment Creditor
AND	DOUGLAS BANKS Judgment Debtor

CIV-2016-418-000023

IN THE MATTER             of the Insolvency Act 2006

AND

IN THE MATTER             of the bankruptcy of CHRISTINE SANDRA BANKS

BETWEEN  GREY DISTRICT COUNCIL Judgment Creditor

ANDCHRISTINE SANDRA BANKS Judgment Debtor

Hearing:	17 February 2017 (Determined on the papers)
Counsel:	J Shackleton for Judgment Creditor Mr & Mrs Banks, Judgment Debtors, self-represented
Judgment:	17 February 2017

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1]      On 3 February 2017 I made orders adjudicating both Mr and Mrs Banks

bankrupt.     For  reasons  given  in  the  judgment  I  directed  that  the  orders  of

GREY DISTRICT COUNCIL v DOUGLAS BANKS [2017] NZHC 190 [17 February 2017]

adjudication would lie in the Court until 1.00 pm today and directed that if Mr and Mrs Banks had, by that time, paid their full indebtedness to the Council, the orders would not take effect.  I made further directions that the Council inform Mr and Mrs Banks by a certain deadline of the amount owing.

[2]      Mr and Mrs Banks have both filed an appeal to the Court of Appeal against these orders.  As the Court had not been given the Court of Appeal filing number for their appeals, I instructed the Case Officer to ask the Court of Appeal Registry to provide it so it could be included in this judgment.   I am informed by the Case Officer that although a document has been received by the Court of Appeal it has not yet been allocated a filing number as it has not yet been accepted for filing.

[3]      In this circumstance s 416 of the Insolvency Act 2006, referred to below, does not apply.   However, as the document may be accepted for filing by the Court of Appeal without this court being immediately informed, I proceed to determine the application on the basis that there is an appeal in place.

[4]      Mr and Mrs Banks have filed a joint memorandum in which they inform the Court  that  they  have  fully  paid  the  Council’s  claim  as  contained  within  the bankruptcy  notices,  the  application  for  adjudication,  the  summons  to  debtors attached to the notices and a memorandum filed by the Council in which it referred to the debt owing in the application for adjudication.  The sum paid, I am informed, is $44,321.22.  As a result, Mr and Mrs Banks seek, by way of their memorandum, an order staying or suspending the orders of adjudication, until the appeal is determined or otherwise disposed of.

[5]      Counsel for the judgment creditor filed a memorandum in response, on each proceeding.

[6]      All these documents were placed before me at 8.00 am this morning.  I am conscious that the orders made on 3 February are to take effect at 1.00 pm today. Accordingly, I will treat the memorandum from Mr and Mrs Banks as an application for a stay and the memorandum from the Council as a notice of opposition.

[7]      Section 416 of the Insolvency Act 2006 provides, to the extent presently relevant:

Suspension of adjudication pending appeal

(1)     If  an  appeal  has  been  filed  against  an  order  of  adjudication,  the bankrupt or any other interested person may apply to the Court or the Court of Appeal for an order suspending the adjudication until the appeal is decided.

(2)     The Court or Court of Appeal may suspend the adjudication on the conditions  that  it  thinks  appropriate,  including  conditions  as  to anything done or decided, or that ought to have been done or decided, by any person in the period between the adjudication and the order suspending adjudication.

(3)     …

[8]      In their memorandum Mr and Mrs Banks do not give any specific reason for seeking a stay of the adjudication.   I infer, therefore, that their reason is that they believe the adjudication orders to be unsound and do not wish the adjudications to take effect until that point is determined by the Court of Appeal.  Similarly, I infer that the reason they consider the adjudications to be unsound is the requirement imposed by the Court that the adjudications would come into effect at 1.00 pm today unless they repaid to the Council their entire debts, rather than just the sum referred to in the bankruptcy notice.

[9]      This issue was dealt with in argument before me on 3 February 2017.   I explained to Mr and Mrs Banks that the bankruptcy notice was based on just one of their debts to the Council, all of which are created by orders of this Court by way of adverse costs awards, and that the effect of the bankruptcy notice not having been met was that a presumption of insolvency on the part of both of them had arisen. That did not affect, however, their overall indebtedness to the Council.  The Council was entitled to proceed with the bankruptcy, based on the presumption of insolvency unless and until all indebtedness to the Council was paid.   I have no doubt that Mr and Mrs Banks understood this point, though plainly they take an opposing view. It was on the basis of this position that the orders of 3 February were made.  Further, Mr and Mrs Banks had told me that they had family members who were willing to assist them with clearing the remainder of the debt.   Because of that specific assurance, and the arrangements that they assured me were in place to pay the sum

owing on the bankruptcy notice (which turned out to be correct), I gave further time before the adjudication orders would take effect, even though it was clear both Mr and Mrs Banks were insolvent.

[10]     Therefore, there is nothing in the application for a stay which Mr and Mrs Banks now make which sets out any basis on which the Court might take a different view  from  that  which  it  has  already  taken  when  these  matters  were  raised  on

3 February.

[11]     It is also clear that if the adjudications take effect, Mr and Mrs Banks may still pursue their appeals to the Court of Appeal: Lindsay v Vaucluse Holdings Ltd.1

This approach has been applied in subsequent cases by this Court; see for example

Harrison v Harrison.2

[12]     A number of factors have been recognised as relevant to exercise of the Court’s power to stay a judgment, pending appeal, and some of these factors are relevant to the case before me.3   The first factor is the right of appeal would not be rendered nugatory if not suspended.  I have discussed this above.  Secondly, whilst I have no reason to suppose the appeal is not bona fide, because I can only draw inferences in relation to the basis upon which the appeal is brought as I have said, I

cannot on the facts of this case see that any novel or important point of law will be raised.   Whilst I accept that Mr and Mrs Banks will suffer a degree of injurious affection by being adjudicated bankrupt, that is the consequence of not paying the significant debts that they owe to the Council and is no more than the consequence of the insolvency laws which provide for those who do not pay established debts, and who are insolvent, to be adjudicated bankrupt.   Finally, there are no issues in relation to the validity of the underlying judgments giving rise to Mr and Mrs Banks’

indebtedness.

1      Lindsay v Vaucluse Holdings Ltd CA272/99, 13 December 1999.

2      Harrison v Harrison [2015] NZHC 1054.

3      Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd [1999] 13 PRNZ 48;

Kroon v Westpac Banking Corporation HC Auckland CIV-2006-404-4720, CIV-2006-404-1970,
15 May 2007.

[13]     For these reasons the application for a stay is dismissed.

J G Matthews

Associate Judge

Solicitors:

Simpson Grierson, Wellington

Mr and Mrs Banks, self-represented