Hertz New Zealand Limited v Martynor HC Wellington CIV-2010-485-2404

[2011] NZHC 635

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2010-485-2404

IN THE MATTER OF     the Insolvency Act 2006

AND IN THE MATTER OF the Official Assignee in Bankruptcy

AND IN THE MATTER OF the bankruptcy of VALERY MARTYNOV also known as VALERY MARTYNOR

BETWEEN  HERTZ NEW ZEALAND LIMITED Judgment Creditor

Hearing:         24 May 2011

(Heard at Wellington)

Counsel:         J. Johnson for the Applicant - Official Assignee

No appearance for Judgment Creditor
No appearance for Judgment Debtor

Judgment:      26 May 2011

Reasons:        26 May 2011

REASONS FOR DECISION OF ASSOCIATE JUDGE D.I. GENDALL

Solicitors:           Kevin McDonald & Associates, Solicitors, DX BP66086, Auckland

Official Assignee, Private Bag 4714, Christchurch

HERTZ NEW ZEALAND LIMITED v V MARTYNOV HC WN CIV-2010-485-2404 26 May 2011

[1]      Before  the  Court  on  24  May  2011  was  an  Application  on  Notice  for Annulment of the Bankruptcy of Valery Martynov also known as Valery Martynor (the judgment debtor) who was adjudicated bankrupt in this Court on 21 March

2011.

[2]      The application which was brought by the Official Assignee was advanced on the sole ground contained in s 309(1)(a) Insolvency Act 2006 which states:

309       Court may annul adjudication

(1)        The Court may, on the application of the Assignee or any person interested, annul the adjudication if –

(a)         the Court considers that the bankrupt should not have been adjudicated bankrupt ...

[3]      The application succeeded and on 24 May 2011 I made an order at 10.08 am annulling that adjudication in bankruptcy.  In doing so, I indicated that my detailed reasons for this decision would follow.  I now set out those reasons.

[4]      In  the  present  case  the  judgment  creditor,  Hertz  New  Zealand  Limited, brought this bankruptcy proceeding on the basis of an unsatisfied Bankruptcy Notice for $9,567.21 served on the judgment debtor on 22 December 2010.  The amount claimed related to a Certificate of Judgment issued by the District Court at Christchurch on 17 November 2010 for $9,403.81 certifying an order of the Disputes Tribunal  at  Christchurch  against  the  judgment  debtor  made  unopposed  on  16

September 2010. The judgment debt related to an account for substantial repair costs incurred in rectifying significant damage caused to a rental car rented in Invercargill by the judgment debtor from Hertz New Zealand Limited over one year ago on 9

April 2010 and returned at Queenstown on 12 April 2010.

[5]      In response to the original bankruptcy application by the judgment creditor, which was filed in this Court on 17 February 2010 no opposition or defence was filed by the judgment debtor.  In addition, when that matter was called before this Court on 21 March 2011 there was no appearance for the judgment debtor although, as  I understand  the  position  now,  earlier  that  day  someone  had  telephoned  the Registry office of this Court claiming that the judgment debtor was a diplomat

employed by the Embassy of the Russian Federation to New Zealand and thus he had diplomatic immunity.   No confirmation of this telephone call nor any written material from or on behalf of the judgment debtor was provided to this Court at the time however.

[6]      In the face of this, and there being no independent confirmation of any kind of the earlier telephone call purporting to be from or on behalf of the judgment debtor, and there being no evidence before the Court to confirm that the incurring of the judgment debt with Hertz New Zealand Limited had not in any way related to professional or commercial activity carried out  by  the judgment debtor in New Zealand, there was no alternative but for an order for adjudication to be made.

[7]      That order for adjudication was made at 10.20 am on 21 March 2011.

[8] The Official Assignee on 27 April 2011 then brought the present application to annul that adjudication on the ground outlined at [2] above.

[9]      An Affidavit of Service has been filed by the Official Assignee to confirm that the application and supporting material have been served on both the judgment debtor and the judgment creditor.  Acknowledgements of that service from both the judgment debtor and the judgment creditor are before the Court.   Neither the judgment debtor nor the judgment creditor have indicated a wish to be heard with respect to the present application.

[10]     I now turn to consider the sole ground advanced in the present application, which  is  that  effectively  the  order  of  adjudication  should  not  have  been  made because the judgment debtor is entitled to immunity from the jurisdiction of the New Zealand Courts under Article 31 of the Vienna Convention on Diplomatic Relations

1961 (the “Vienna Convention”).

[11]     Section 5(1) Diplomatic Privileges and Immunities Act 1968 provides that the provisions of Articles 1, 22-24 and 27-40 of the Vienna Convention shall have the force of law in New Zealand.

[12]     Article 31 of the Vienna Convention states in part:

Article 31

1.        A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the  receiving State.    He  shall  also  enjoy immunity from  its  civil  and administrative jurisdiction, except in the case of:

(a)        a real action relating to private immovable property situated in the territory of the receiving State, unless he holds it on behalf of the sending State for the purposes of the mission;

(b)       An action relating to succession in which the diplomatic agent is involved as executor, administrator, heir or legatee as a private person and not on behalf of the sending State;

(c)        An  action  relating  to  any  professional  or  commercial  activity exercised by the diplomatic agent in the receiving State outside his official functions.

[13]     From the affidavit evidence of the Deputy Official Assignee, Judith Anne Johnson (Ms Johnson) filed in support of the present application, it is confirmed now that  the judgment  debtor holds  a  position  as  Consul  and  First  Secretary  to  the Embassy of the Russian Federation to New Zealand.  This is confirmed in a letter dated 11 April 2011 from the Ministry of Foreign Affairs and Trade annexed to the first affidavit of Ms Johnson.  This letter states that the judgment debtor is a Russian diplomat accredited to New Zealand and is designated as Consul and first secretary to the Embassy of the Russian Federation to New Zealand.  As such, the letter notes he has diplomatic rank and therefore has the benefit of the immunities under Article

31 of the Vienna Convention.  I accept that is the position.

[14]     Turning now to Article 31 itself, noted at para [12] above, the only remaining issue before me would seem to be whether the one exception to the immunity from civil jurisdiction held by the judgment creditor here outlined in Article 31(1)(c) has any application.   There is no doubt that the other exceptions contained in Article

31(1)(a) and (b) do not apply here.

[15]     So far as this Article 31(1)(c) exception to diplomatic immunity (actions relating to professional or commercial activity exercised by the diplomatic agent .... outside his official functions), is concerned, the Official Assignee has now provided

a second affidavit of Ms Johnson sworn 24 May 2011 confirming that both the rental of the vehicle by the judgment debtor from Hertz New Zealand Limited in the present case and also its use were clearly for the purposes of holiday and leisure activities undertaken by the judgment debtor during the course of a trip to Queenstown  and  the  lower  South  Island  of  New  Zealand,  and  thus  for  purely personal and private use and not related to any professional or commercial activity of the judgment creditor.   To some extent, this is confirmed in the 11 April 2011 letter to the Official Assignee from the Ministry of Foreign Affairs and Trade noted above which states:

As this Ministry understands the situation, the circumstances of this matter do not relate to any professional or commercial activity by Mr Martynov, so this exception (in Article 31(1)(c)) would not apply.

[16]     Given these matters, for the purposes of the present application I am satisfied that, although these facts were not known or established at the time the adjudication order was made in this proceeding, the judgment debtor is a diplomatic agent who enjoys immunity from the civil jurisdiction of this Court relating to the present judgment debt and further that none of the exceptions to this immunity outlined in Article 31 of the Vienna Convention apply here.

[17]     And, finally, as Article 31(3) of the Vienna Convention goes on to provide that:

(3)       No measures of execution may be taken in respect of a diplomatic agent except in the cases coming under sub-paragraphs (a), (b) and (c) of para 1 of this Article ...

the order for adjudication made on 21 March 2011 should not have been made.

[18]     It is for all these reasons that the decision noted at para [3] above was made on 24 May 2011.

[19]     I  confirm  the  order  made  at  10.08  am  on  24  May  2011  annulling  the adjudication in bankruptcy of Valery Martynov (also known as Valery Martynor), that adjudication order being dated 21 March 2011.

[20]     If there are any issues regarding costs in this matter, they may be the subject of memoranda from all parties filed in this Court and served within the next 30 working days. Any such memoranda are to be referred to me for a decision.

‘Associate Judge D.I. Gendall’