JDN Limited v Abdul-Jabbar
[2021] NZHC 3021
•9 November 2021
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE
CIV-2021-425-31
[2021] NZHC 3021
IN THE MATTER of the Insolvency Act 2006 AND
IN THE MATTER
of the bankruptcy of SILVIA ABDUL-JABBAR
BETWEEN
JDN LIMITED
Creditor
AND
SILVIA ABDUL-JABBAR
Debtor
Hearing: 26 October 2021 Appearances:
W D Hofer for Debtor
J S D Guest for Creditor (appearance excused)
Judgment:
9 November 2021
FURTHER INTERIM JUDGMENT OF ASSOCIATE JUDGE LESTER
JDN LIMITED v ABDUL-JABBAR [2021] NZHC 3021 [9 November 2021]
[1] The debtor, Ms Abdul-Jabbar, applies to annul her bankruptcy ordered on 29 July 2021 under s 309(1)(a) of the Insolvency Act 2006 (the Act).
[2] I issued an interim judgment on 21 October 2021. In error, I approached the application on the basis that it was made under s 309(1)(b) of the Act, that is, on the basis the bankrupt’s debts had been fully paid or settled.1
[3] The application under s 309(1)(a) is made on the basis that the adjudication order should not have been made.
[4] Counsel for Ms Abdul-Jabbar, Mr Hofer, drew the error to my attention and has filed memoranda addressing s 309(1)(a).
[5] The grounds relied on for submitting the order should not have been made are that:
(a)the debtor was not served with bankruptcy proceedings summonsing her to court on 29 July 2021;
(b)no debt is owed to the creditor as originally named in the application, JDM Ltd, when the current creditor was JDN Ltd, and the debtor’s name is misspelt in the Court documents; and
(c)the creditor’s application for adjudication and affidavit in support were dated 10 June 2021, post-dating the summons to debtor dated 24 May 2021.
Service
[6] In relation to the issue of service, I raised with counsel that given there was an affidavit of service the annulment application could not proceed on the basis of a failure to serve Ms Abdul-Jabbar. The conflict on the evidence could not be resolved on the papers. Cross-examination would be required. I will return to the issue of
1 Re Abdul-Jabbar, ex parte JDN Ltd [2021] NZHC 2835.
service later. However, Mr Hofer submitted that issue was overtaken for the following reason:
Notably, the above-mentioned summons to debtor pre-dates the judgment creditor’s application for adjudication and the affidavit in support. Therein lies a fatal flaw in the bankruptcy process because a summons to debtor can only be dated the same date or post-date the application under which it is issued. Any summons to debtor pre-dating the application under which it is issued is a nullity.
[7] Ms Abdul-Jabbar relies on Re Moss (a bankrupt).2 However, there the affidavit verifying the petition was sworn on 29 September 1993 whereas the petition was only signed on 18 October 1993. Further, the copy of the petition annexed to the verifying affidavit was not a true copy of the petition in that it was undated, never signed or witnessed, and the copy of the petition served on the debtor was dated 21 October 1993 not 18 October 1993.
[8] Here, the documents to commence the bankruptcy application against Ms Abdul-Jabbar were filed at the end of May 2021. The summons to debtor, creditor’s application for adjudication and affidavit in support were filed contemporaneously. The summons to debtor dated 24 May 2021 was issued with a first call date of 1 July 2021.
[9] The summons to debtor was validly issued. The old cases discussed in McGechan on Procedure provide that before the summons can issue, the application and verifying affidavit must be filed, which was the case here. There is, however, no obligation for those documents to be filed contemporaneously.3 Here, the summons to debtor was validly issued by the Court under r 24.14 of the High Court Rules 2016 (the Rules) as the summons was accompanied by the original application for adjudication and supporting affidavit. The copies of those documents remain on the Court file.
[10] However, it appears that the service copies of the application and affidavit in support went missing. The Court re-issued the creditor’s application which had been
2 Re Moss (a bankrupt) [1994] 3 NZLR 98 (HC).
3 Andrew Beck and others McGechan on Procedure (online ed, Thomson Reuters) at [HR24.12.01], citing Re Olsen [1919] NZLR 73.
filed with a re-sworn affidavit in support, this time both dated 10 June 2021 (the subsequent documents).
[11] The evidence is that the documents served upon Ms Abdul-Jabbar were the original summons to debtor dated 24 May 2021, showing a first call date of 1 July 2021, and the subsequent documents.
[12] I am satisfied that the issue of the subsequent documents did not invalidate the original summons to debtor. The original summons to debtor was correctly issued as it was supported by a creditor’s application and affidavit in support as required by the cases I have referred to.
[13] That the subsequent documents – both correct in form – were issued does not invalidate that prior step.
[14] Accordingly, I do not accept Mr Hofer’s submission that the fact the summons to debtor pre-dated the replacement creditor’s application and affidavit in support rendered the proceeding a nullity. I cannot see how a correctly issued summons to debtor is invalidated by the issue of a replacement application and affidavit which, for accuracy, were dated when issued rather than backdated to the date of the original filing.
[15] Mr Hofer also pointed out that on the file there are further summonses to debtor dated 14 June 2021 and 9 July 2021. Neither of those documents were served on Ms Abdul-Jabbar. Ms Abdul-Jabbar only learnt of those documents through obtaining a copy of the Court file. The fact those documents were issued by the Court is of no moment. They were not served on Ms Abdul-Jabbar and did not cause her any confusion. It seems there must have been some confusion as to what documents were held by the process server when in fact service was completed on 16 June 2021. The further summonses to debtor of 14 June 2021 and 9 July 2021 are red herrings which only serve to confuse the situation. When shorn of those extraneous documents, Ms Abdul-Jabbar was served with a properly issued summons to debtor and a regular creditor’s application and affidavit in support. This case is quite different from Re Moss. I find the proceedings were not a nullity.
[16] As to the identity of the creditor, the bankruptcy documents were issued with the creditor named as “JDM Limited”. The correct name of the creditor is “JDN Limited”. When I had understood (incorrectly) that the application was based on s 309(1)(b), I saw the error in the name of the creditor as being immaterial. I recorded at that time that the error in the creditor’s name was not claimed to have caused Ms Abdul-Jabbar any confusion – and that remains the case.
[17] As to the spelling of the debtor’s name in the bankruptcy papers as issued, the debtor’s name was spelt “Silvia Abdul-Jabber” when the correct spelling is “Abdul-Jabbar”. Again, I consider this typographical error to be of no consequence and again, no confusion is claimed.
[18] As to the validity of service, Ms Abdul-Jabbar’s evidence on this issue might be said to be carefully worded. She does not deny receiving the summons to debtor requiring her to attend Court on 1 July 2021, she only says that she does not recall receiving it. That is not evidence she was not served.
[19]Mr Hofer then says:
Even if the summons to debtor dated 24 May 2021 is not a nullity, there is simply no evidence adduced by the judgment creditor verifying that the applicant was summonsed to court on 29 July 2021.
[20] That is literally true, but it does not assist Ms Abdul-Jabbar. The application for adjudication was called on 1 July 2021 and Ms Abdul-Jabbar did not appear. The application was adjourned to 29 July 2021 because proof of service was not available. Had proof of service been available, an adjudication order would have been made on 1 July 2021. That the proceeding was adjourned on 1 July 2021 did not require the creditor to serve the debtor again with the adjourned date. Once Ms Abdul-Jabbar was served, the onus was on her to appear on 1 July 2021 or to enquire what happened on that day.
[21] The summons to debtor issued by the Court on 9 July 2021 did refer to a hearing date of 29 July 2021 but was not served as service of the original summons had already occurred. Mr Hofer says:
… the failure to serve the summons to debtor dated 9 July 2021 deprived the applicant of notice of the 29 July 2021 hearing and an opportunity to appear before the Court or procure payment of the debt prior to hearing.
[22] That is not correct. Ms Abdul-Jabbar had notice of the original call date and took no steps. I also note Ms Abdul-Jabbar does not deny receiving the bankruptcy notice served on her earlier in May 2021.
[23] Accordingly, I conclude that a valid summons to debtor was issued by the Court and served on Ms Abdul-Jabbar requiring her to appear on 1 July 2021. The evidence is that the summons to debtor, along with a properly issued replacement creditor’s application and affidavit in support, was served on her. She did not appear on the first call date or the adjourned date and accordingly she was adjudicated bankrupt. I cannot conclude that the adjudication order should not have been made.
[24] If Ms Abdul-Jabbar wishes her application for annulment to be considered under s 309(1)(b) of the Act then counsel is to advise accordingly. Once the issue with the Inland Revenue Department debt that came to counsel’s attention late in the piece is clarified, annulment on that basis will be available.
Associate Judge Lester
Solicitors:
Downie Stewart, Dunedin Tompkins Wake, Hamilton
Copy to:
The Official Assignee
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