Highmark Homes Limited v Watkins - [2024] NZHC 2227

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-000800

[2024] NZHC 2227

BETWEEN
HIGHMARK HOMES LIMITED

Judgment Creditor

AND

NICOLA MAREE WATKINS

Judgment Debtor

Hearing: 25 July 2024

Appearances:

B Martelli on instructions from D Hayes for the Judgment Creditor / Respondent

N M Watkins, Judgment Debtor / Applicant in Person

Judgment:

9 August 2024

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 9 August 2024 at 10.30 a.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

Hunwick Law Ltd, Hamilton D Hayes, Hamilton
Copy to: N M Watkins

HIGHMARK HOMES LTD v WATKINS [2024] NZHC 2227 [9 August 2024]

[1] This judgment concerns the validity of an application to set aside a bankruptcy notice the judgment creditor, Highmark Homes Limited (Highmark Homes) served on the judgment debtor, Nicola Watkins. The application has its origins in earlier bankruptcy proceedings brought by Highmark Homes against Ms Watkins.

[2] The earlier bankruptcy proceedings arose after Ms Watkins did not comply with a bankruptcy notice demanding that she pay Highmark Homes $23,996.16 pursuant to an order of the Disputes Tribunal. Her appeal of that decision was dismissed by the District Court on 23 August 2021.1

[3] In a judgment delivered on 1 March 2023, this Court refused to halt the bankruptcy proceedings and indicated that an order would be made adjudicating Ms Watkins’s bankrupt if she did not pay the judgment debt.2 In a minute dated 16 March 2023, the Court warned Ms Watkins that even if she paid the judgment debt Highmark Homes was likely to seek an order that she pay its costs because it had been put to the expense of issuing the bankruptcy notice and bringing the proceedings.3 The Court encouraged Ms Watkins to attempt to agree a position on costs.4

[4] The bankruptcy proceeding was dismissed on 23 March 2023 because Ms Watkins had paid the judgment debt (on 8 March 2023). Highmark Homes sought costs. On 4 September 2023, the Court ordered Ms Watkins to pay Highmark Homes’ costs (on a 2B scale) of $12,786.50 and disbursements of $1,640 because she had opposed the application for adjudication and had not paid the judgment debt until after the judgment was issued following a full hearing.5

[5] Ms Watkins did not pay the costs order. On 11 April 2024, Highmark Homes obtained a bankruptcy notice against Ms Watkins. It is not apparent from the file when the bankruptcy notice was served on Ms Watkins, but Ms Watkins says in her application to set aside that it was served on her on 12 April 2024.

1      Nicola Watkins v Highmark Homes Ltd [2021] NZDC 16979.
2      Re Watkins, ex parte Highmark Homes Ltd [2023] NZHC 353.
3      Highmark Homes Ltd v Watkins CIV-2021-404-002268, 16 March 2023.
4      The Court was unaware that Ms Watkins had already paid the judgment debt on 8 March 2023.
5      Highmark Homes Ltd…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NZHC 2227
Decision Date: 9 August 2024

CaseChat Overview and Summary

This judgment addresses an application by Nicola Watkins to set aside a bankruptcy notice served on her by Highmark Homes Limited. The dispute originated from an earlier bankruptcy proceeding brought by Highmark Homes against Ms Watkins. Highmark Homes obtained a judgment against Ms Watkins in the Disputes Tribunal, which was later affirmed by the District Court. Ms Watkins did not comply with the resulting bankruptcy notice, leading Highmark Homes to initiate bankruptcy proceedings. The High Court initially refused to halt the proceedings and later dismissed them as Ms Watkins had paid the judgment debt. Highmark Homes then sought and was granted costs against Ms Watkins. Ms Watkins failed to pay the costs order, leading to the issuance of another bankruptcy notice, which she now seeks to set aside.

The key legal issue before the Court was whether Ms Watkins' application to set aside the bankruptcy notice was valid despite not being accompanied by the required affidavit. Under section 17 of the Insolvency Act 2006, a debtor commits an act of bankruptcy if they do not comply with the requirements of a bankruptcy notice within 10 working days of service. The prescribed form for the bankruptcy notice, Form B2, mandates that any application to set aside the notice must be supported by an affidavit. Ms Watkins filed her application to set aside the bankruptcy notice but did not include the required affidavit, which was only filed three months later.

The Court found that the application to set aside the bankruptcy notice was a nullity because it was not accompanied by the required affidavit. The Court noted that there is no discretion to extend the time for complying with the bankruptcy notice or for applying to set it aside. The Court cited previous cases which held that the application must be supported by affidavit within the stipulated time, and any failure to do so cannot undo the act of bankruptcy. Therefore, the Court dismissed Ms Watkins' application to set aside the bankruptcy notice.

The Court reserved the matter of costs to be dealt with on the final disposal of any subsequent bankruptcy proceedings.

Orders