Jefferies v Pagan
[2025] NZHC 1738
•27 June 2025
IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WAIHARAKEKE ROHE
CIV-2023-406-006
[2025] NZHC 1738
UNDER the Insolvency Act 2006 IN THE MATTER
of the bankruptcy of Walter Richard Pagan
BETWEEN
CLAIRE BRIDGET JEFFERIES
Judgment Creditor
AND
WALTER RICHARD PAGAN
Judgment Debtor
Hearing: 18 June 2025 Appearances:
S E England for Judgment Creditor
D G Dewar and T A Moore for Judgment Debtor
Judgment:
27 June 2025
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 27 June 2025 at 4.30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:
JEFFERIES v PAGAN [2025] NZHC 1738 [27 June 2025]
[1] The judgment creditor, Ms Jefferies, has filed a creditor’s application to adjudicate the judgment debtor, Mr Pagan, bankrupt in reliance upon a judgment she obtained in the District Court. The creditor’s application has been before the Court for a long time. Mr Pagan has not opposed the creditor’s application and it has been adjourned several times, including because of the possibility that Mr Pagan would pay the judgment debt from the proceeds of sale of his home.
[2] Mr Pagan has now applied under s 38 of the Insolvency Act 2006 to halt the creditor’s application. This is on the basis that the District Court has made an order under s 153 of the District Court Act 2016 (the Act) for payment of the judgment debt by instalments (the instalment payment order) which, he contends, amounts to an implied stay of the judgment.
[3] While Mr Pagan’s application seeks a halt of the creditor’s application for only three months with the intention to use the time to continue payments as well as to “explore settlement proposals in full”, his counsel advises that the halt sought is not limited as to time and Mr Pagan has no proposals for settlement.
[4] The issue is whether the Court should exercise its discretion to halt the creditor’s application on the basis the making of the order under s 153 of the Act operates as an implied stay of enforcement of the judgment.
The facts
[5] Ms Jefferies is 66 years old and works as a teacher. The money owed to her by Mr Pagan is her only substantial asset. She lives in rental accommodation.
[6] Mr Pagan is 69 years old. He suffers from a spinal condition and is waiting for surgery. He is in receipt of benefits, but is without other sources of income. He does own a home, which is subject to a mortgage in favour of ANZ Bank New Zealand Ltd.
[7] For a period Ms Jefferies and Mr Pagan were in a personal relationship. During the relationship Ms Jefferies sold her home and lent Mr Pagan a substantial sum which he did not repay. Following the separation, Ms Jefferies commenced proceedings to recover what was owed to her. On 22 March 2022, Ms Jefferies
obtained judgment by default against Mr Pagan. The amount of the judgment was corrected by the Court on 16 September 2022 and the judgment resealed. There has been no challenge to the judgment, which is for $84,140.41.
[8] On 6 July 2022, Ms Jefferies applied under s 147 of the Act for Mr Pagan to provide information concerning his means for satisfying the judgment. It appears information was not provided because on 1 August 2022 the District Court made an order under s 148 of the Act that Mr Pagan attend a financial means hearing.1 The financial means hearing was set down for 18 October 2022 and the Court noted “[t]he Creditor will be notified of the result once the hearing is completed”.
[9] On 27 September 2022, a lawyer for Ms Jefferies emailed the Court asking that she be permitted to attend the 18 October 2022 hearing by telephone, and that if telephone attendance was not possible consideration be given to cancelling the hearing. She also advised:
The debtor has advised he will be selling his home to repay our client. We will be seeking an update on the sale if possible, and anticipate applying to the [High Court] to place the debtor in bankruptcy.
[10] On 30 September 2022, the Court advised Ms Jefferies’ lawyer by email that neither the creditor, nor any person representing the creditor, could attend the hearing. The Court asked Ms Jefferies’ lawyer to “[p]lease advise how you would like to proceed”.
[11] On 13 October 2022, Ms Jefferies’ lawyer emailed the Court seeking confirmation that no orders would be made at the hearing and advising that such orders were not sought and were opposed by Ms Jefferies. The Court was also advised that Ms Jefferies simply sought information as to Mr Pagan’s financial situation and confirmation that his house was being sold, and that a certificate of judgment would be sought to transfer the proceedings to the High Court.
[12] On 18 October 2022, the Court held an in-person hearing at which Mr Pagan provided a statement of his financial means. Mr Pagan advised the Court that his
1 District Court Act 2016, s 148(1).
house was on the market and he could pay the judgment debt in full when it was sold, and that he should be fit to return to work in January or February 2023. The hearing was adjourned until March 2023, with a date to be set. This information was forwarded to Ms Jefferies’ lawyer on 1 November 2022.
[13] On 1 February 2023, Ms Jefferies’ lawyer sent an email to the Court seeking to cancel the application for assessment of Mr Pagan’s financial means as Ms Jefferies intended to pursue bankruptcy proceedings in the High Court.
[14] On 8 February 2023, the Court replied by email stating that the assessment of financial means had already been completed. No instalment payment order had been made at this point.
[15] On 27 February 2023, Ms Jefferies applied to the High Court for a bankruptcy notice which issued on 28 February 2023. It was served on Mr Pagan on 16 March 2023, and he accordingly committed an act of bankruptcy on 31 March 2023.
[16] On 21 March 2023, and contrary to the District Court’s advice that the assessment of financial means had been completed, there was a further hearing before the District Court which was again adjourned to 20 June 2023 at 10.00 am. The Registrar noted:
There is a pending a Bankruptcy application against debtor, Mr Pagan, at which time this matter can be determined with the Associate Judge.
[17] On 28 April 2023, Ms Jefferies filed her creditor’s application for an adjudication order, with a hearing date of 28 July 2023. That application was served upon Mr Pagan on 11 May 2023.
[18] On 20 June 2023, the assessment of financial means hearing was resumed yet again. The Court made an instalment payment order at the rate of $100 per fortnight, with the first payment to be made on 27 June 2023. Details of Ms Jefferies’ lawyer’s bank account were included for payments to be made. It appears these orders were made under s 153(2)(b) of the Act. Why the District Court made this order is not clear, particularly as it was noted:
High Court proceedings to commence on this matter 28 July 2023 at Blenheim.
[19] Neither Ms Jefferies nor her counsel attended the hearing of 20 June 2023, nor were they given the opportunity to do so, consistent with the advice given by the District Court that neither the creditor nor a representative of the creditor could attend.
[20] Ms Jefferies’ creditor’s application first came before this Court on 28 July 2023 and has been successively adjourned on an unopposed basis, including so that a resolution could be explored. Mr Pagan’s home was on the market from late September 2023 to early 2024 but did not sell.
[21] The creditor’s application came before the Court on 28 March 2025. Mr Pagan had a change of counsel and the making of an application to halt the creditor’s application was foreshadowed. Associate Judge Skelton made directions for that application to be filed and set down for hearing.
[22] Since the making of the instalment payment order, Mr Pagan has made payments under it but not strictly in accordance with the order. There have been missed payments and periods where payments were not made at all. In more recent times, Mr Pagan has overpaid amounts. Overall, in the period between the making of the instalment payment order on 20 June 2023 and 5 February 2025 the payments exceed the amount required by the order.
[23] Ms Jefferies, who has a registered caveat against Mr Pagan’s property, has received notice from Mr Pagan’s bank that he is in default under his mortgage. The bank has issued Mr Pagan with a s 119 Property Law Act Notice. He has not paid instalments of interest and principal from 6 June 2023 through to 22 April 2025, totalling $25,870.76. Mr Pagan was required to remedy the defaults by 9 June 2025, failing which the bank’s powers as mortgagee would become exercisable.
The District Court Act 2016
[24] Part 10 of the District Court Act is concerned with the enforcement of judgments. Within that part are ss 145 to 153 which provide for steps that can be taken to obtain information about a judgment debtor’s means.
[25]The provisions of the Act most relevant to this application are set out below:
147Court to request information about judgment debtor’s means
(1)If a judgment creditor makes an application in a form approved by the chief executive, the court must request the judgment debtor to provide the court with information about the judgment debtor’s means for satisfying the judgment debt.
…
...
148Court may order hearing if information about judgment debtor’s means not provided, etc
(1)This section applies if—
(a)no information about the judgment debtor’s means for satisfying the judgment debt is provided to the court following a request under section 147; or
…
(2)The court may issue a summons, in a form approved by the chief executive, requiring the judgment debtor … to attend a hearing and be questioned by the court about the judgment debtor’s means for satisfying the judgment debt.
…
(6)The court may cancel a hearing if, before the date of the hearing,—
(a)the court considers that a hearing is not needed because the judgment debtor has provided enough information about the judgment debtor’s means for satisfying the debt; and
(b)if the court so requests, the person providing the information verifies it on oath.
(7)If a hearing takes place,—
(a)the judgment debtor … must appear in person:
(b)the court may require the judgment debtor … to take an oath before giving evidence:
(c)the judgment debtor may be represented by a lawyer who may question the judgment debtor … and be heard on the matter of the judgment debtor’s means for satisfying the judgment debt:
(d)the judgment debtor or officer may be questioned by the court:
(e)any witness may be questioned by or on behalf of the judgment debtor or by the court.
(8)A hearing may from time to time be adjourned by the court to a time and place to be appointed.
...
153 Orders by court following filing of financial statement, etc
(1)This section applies if, after a judgment has been entered or an order made for the payment of money,—
…
(c) a hearing under section 148 or a financial assessment hearing takes place.
(2)The court may do any 1 or more of the following:
…
(b)order that the money owing under the judgment or order be paid in instalments:
(c)stay any proceedings to enforce the judgment or order:
…
(3)The court may do any of the things referred to in subsection (2) even if—
(a)no application is made for the direction, order, stay, or variation in question; or
(b)an application is made for a different direction, order, stay, or variation; or
(c)no hearing takes place; or
(d)in a case where a financial statement is filed in the court by 1 party, the other party has not had the opportunity to make representations to the court about the financial statement.
...
162 Review of Registrar’s decision
(1)Any person affected by any order or direction made by a Registrar under section … 153, …may apply to a Judge for a review of the order or direction.
(2)However, a judgment creditor may apply for a review of an order or a direction made by a Registrar under section 153 …only if a financial assessment hearing that was attended by the judgment creditor or his or her representative has taken place.
….
Judgment debtor’s submissions
[26] Mr Pagan’s case is that the making of the instalment payment order under s 153 acts as an implied stay of further enforcement of Ms Jefferies’ judgment and is an appropriate basis to halt her creditor’s application. In support of this, I was referred to Telke v Williamson where Master Venning held that an instalment payment order made under what was then s 84E of the District Courts Act 1947 (the 1947 Act) amounted to an implied stay of proceedings. He held that the judgment creditor was therefore unable to issue a bankruptcy notice based on the judgment and a creditor’s application based on such bankruptcy notice was defective.2
[27] Mr Pagan’s counsel also relies upon Milne v Seretis, where Associate Judge Faire refused to set aside a bankruptcy notice despite an order having been made under s 84E of the 1947 Act. This case is relied upon as authority that there will be an implied stay of proceedings where an instalment payment order is made as long as the judgment debtor complies with the order.3
[28] I was also referred to Robertson Bixley Ltd v Jolly, where Associate Judge Gardiner dismissed an application to set aside or stay a bankruptcy notice.4 It is submitted for Mr Pagan that this case is authority that the principles in Telke v Williamson and Milne v Seretis apply equally where an instalment payment order is made under s 153 of the Act.
[29] Mr Pagan’s counsel further submits it is appropriate that the Court halts the creditor’s application as the instalment payment order was made in response to an application by Ms Jefferies under s 147 and she should have been fully aware such an order might be made.
[30] Mr Pagan’s counsel submits there has been substantive compliance with the instalment payment order, and that it does not matter that Ms Jefferies was not
2 Telke v Williamson (1996) 9 PRNZ 658 (HC) at 661.
3 Milne v Seretis (2004) 17 PRNZ 485 (HC) at [7].
4 Robertson Bixley Ltd v Jolly [2023] NZHC 286.
involved in the hearing at which the order was made because s 153 allows the District Court to make an order even if there is no application for it or an application is made seeking a different order.
[31] It is also submitted that it is significant that in March 2024 Ms Jefferies’ former lawyers wrote to the Court asking it to stop directing Mr Pagan’s payments to them but to Ms Jefferies’ account.
My analysis
[32] Any analysis of this application must begin by recognising that Mr Pagan committed an act of bankruptcy and the creditor’s application was filed in accordance with s 13 of the Insolvency Act before the instalment payment order was made. There is no suggestion that the order acted as a stay of this bankruptcy proceeding. In applying to halt the creditor’s application, Mr Pagan asks the Court to exercise a discretion under s 38 of Insolvency Act, which reads:
38 Court may halt application
(1)The court may at any time halt the creditor’s application for adjudication.
(2)The court may halt the application on the terms and conditions (if any), and for the period, that the court thinks appropriate.
[33] Section 38 provides the Court a very wide and flexible discretion as to the circumstances in which it may halt a creditor’s application and the terms upon which it may do so. The Court has not formulated fixed rules as to the exercise of the discretion.5
[34] Telke v Williamson and Milne v Seretis are distinguishable from this case, both on their facts and because the instalment payment orders were made under a materially different statutory provision than applies here.6 Robertson Bixley Ltd v Jolly simply does not support Mr Pagan’s case.7
5 Bank of New Zealand v Koroniadis [2013] NZHC 2865 at [11]; Kim v Mao [2023] NZHC 3671 at [13]; and Smith v Wadman [2023] NZHC 3085 at [19].
6 Telke v Williamson, above n 2; and Milne v Seretis, above n 3.
7 Robertson Bixley Ltd v Jolly, above n 4.
[35] In Telke, the judgment creditor had filed a petition to adjudicate the judgment debtor bankrupt, relying on the debtor’s failure to comply with a bankruptcy notice issued in respect to a judgment of the District Court. Prior to the issue of the bankruptcy notice the judgment creditor had the debtor examined and at the conclusion of that the debtor was ordered to pay the judgment debt at the rate of $25 per week. An attachment order was made against the debtor’s invalid’s benefit for that purpose, and that arrangement was in effect at the time the bankruptcy notice was issued. The examination had been conducted under ss 84E of the 1947 Act, which at the relevant time provided:
(1) Upon completion of an examination under s 84B of this Act, the District Court may, after giving the Judgment Creditor and Judgment Debtor an opportunity to be heard, do any one or more of the following:
…
(b)Make an order that the money owing under the judgment be paid by such instalments payable at such times as the Court may fix:
(c)Stay any proceedings for the enforcement of the judgment.
[36] Master Venning referred to the case of Re Sturdee (a debtor) where Eichelbaum J considered that, in principle, a warrant for committal issued upon a judgment summons order in the District Court might lead to an implied stay of bankruptcy proceedings.8 Master Venning concluded that where a judgment debtor was making payment of a judgment debt by instalments under s 84E that amounted to an implied stay of proceedings for the purposes of s 19(1)(d) of the Insolvency Act 1967, which provided:
19 Acts of bankruptcy
(1) A debtor commits an act of bankruptcy in each of the following cases:
…
(d)If a creditor has obtained a final judgment or final order against the debtor for any amount, and, execution thereon not having been stayed, the debtor has served on him in New Zealand, or, by leave of the Court, elsewhere, a bankruptcy notice under this Act, and he does not, within 14 days after the service of the notice in a case where the
8 Re Sturdee [1985] 2 NZLR 627 (HC) at 630.
service is effected in New Zealand, and in a case where the service is effected elsewhere then within the time limited in that behalf by the order giving leave to effect the service, either comply with the requirements of the notice or satisfy the Court that he has a counterclaim, set-off, or cross demand which equals or exceeds the amount of the judgment debt or sum ordered to be paid, and which he could not set up in the action in which the judgment was obtained, or the proceedings in which the order was obtained:
[37] The rationale for the implied stay was the judgment creditor’s deemed agreement with the debtor to accept payments by instalment and not to enforce his or her rights to execute the judgment whilst those payments are made.9 Master Venning explained this as follows:
... A judgment creditor is not entitled to issue a bankruptcy notice whilst the instalments continue to be made in accordance with such an order. The instalment orders are only made after the judgment creditor and judgment debtor have an opportunity to be heard. If a judgment creditor does not wish to be prevented from exercising his rights to pursue bankruptcy proceedings he or she could ask that an instalment order not be made at the conclusion of the examination. In that case the examination process would simply be used to ascertain the debtor's financial situation. If the debt could realistically be paid over a short period of time by instalments the creditor may decide to seek an order for payment by instalments but if, on the other hand, it was apparent at the conclusion of the examination the debt could not realistically be paid over a short period of time then the judgment creditor might decide to pursue bankruptcy proceedings. In such event the creditor should advise the Registrar of that and no order would be made. If a Registrar made an order for payment by instalments but the creditor wished to pursue bankruptcy proceedings then s84N provides the creditor may seek a review of the Registrar’s decision by a District Court Judge. The judgment creditor has those rights, even if it is the judgment debtor that has applied for examination with a view to obtaining an order that the debt be paid by instalments.
(emphasis added)
[38] As I have said, Telke is distinguishable from the present case. First, it was not an application to halt a creditor’s application in the exercise of discretion, but to dismiss a creditor’s petition because no act of bankruptcy had occurred. The instalment payment order was made before the judgment creditor had applied for the issue of the bankruptcy notice. This meant the creditor was not entitled to issue the bankruptcy notice, and the creditor’s application based on it was defective. It followed that the creditor’s petition must be dismissed.
9 Telke v Williamson, above n 2, at 661.
[39] Second, the judgment creditor in Telke had the right to be heard before any instalment payment order was made and review any decision to do so. Ms Jefferies was not heard, nor did she have a right to review the order. This is because under s 162 of the Act, the right to review an order under s 153 exists “only if a financial assessment hearing that was attended by the judgment creditor or his or her representative has taken place”.
[40] Milne v Seretis also pre-dates the Act and is distinguishable on that basis.10 It concerned an application to set aside a bankruptcy notice on the ground it was an abuse of process in circumstances where an instalment payment order was made under s 84B of the 1947 Act. The judgment debtor had not made the payments ordered, and the Associate Judge held there was no basis for the argument that the bankruptcy notice was an abuse of process because:11
The implied stay, however, applies only so long as the judgment debtor pays the instalments that were ordered to be paid. In this case the judgment debtor frankly admitted to me that deductions had not been made from his bank account so that there had been no periodic payments as such made.
[41] Robertson Bixley Ltd v Jolly concerned an application to set aside a bankruptcy notice or, alternatively, that the bankruptcy proceeding be stayed.12 The District Court had ordered payment of the judgment debt by instalments pursuant to s 153 of the Act after the debtor had committed the act of bankruptcy. Associate Judge Gardiner noted that the judgment creditor had not been notified of the hearing or the orders that were made, and had applied for a review of that decision but the review had not been heard. She appears to have accepted that a right of review existed, but it would appear that the effect of s 162(2) was not drawn to her attention.
[42] Associate Judge Gardiner cited Telke v Williamson, but considered that decision did not apply as the creditor’s agreement to accept payment by instalments could not be implied when the creditor had not been given an opportunity to be heard.13 This was notwithstanding that under s 153 orders could be made even if no hearing
10 Milne v Seretis, above n 3.
11 At [7].
12 Robertson Bixley Ltd v Jolly, above n 4.
13 Telke v Williamson, above n 2.
took place or where the debtor’s financial statement was filed in the court by one party and the other party had no opportunity to make representations to the Court about it.14
[43] Associate Judge Gardiner also rejected a contention that upon receiving and not returning payments the judgment creditor was deemed to have agreed to the arrangement and said:15
I find that it has not, because it applied promptly, by way of interlocutory application dated 20 September 2022, to review the Registrar’s decision. Further, it is perhaps understandable that it has not returned the payments, as Mrs Jolly has objected to this previously.
[44] In addition, the Associate Judge distinguished Telke as the debtor had not strictly complied with the terms of the order.16
[45] In my view, there is no basis for holding that the making of the instalment payment order is a ground to halt the creditor’s application. The rationale for finding such an order acts as an implied stay of further enforcement of the judgment is that the creditor must be taken to have agreed to accept payment by instalments and the debtor has strictly complied with the order. While, here, the process which led to the making of the instalment payment order was initiated by Ms Jefferies’ application under s 147, she cannot be taken to have impliedly agreed to a stay in circumstances where:
(a)she had not sought such an order;
(b)she had directed the Court that she did not wish any order to be made;
(c)she advised the Court that she wished to cancel the financial means hearing;
(d)she advised the Court that she would be issuing bankruptcy proceedings in the High Court and requested a certificate of judgment for that purpose;
14 At [44].
15 At [47].
16 At [48].
(e)she was advised by the District Court that the financial means assessment had been completed before the instalment payment order was made; and
(f)she had no right to review the District Court’s decision once the order was made.
[46] I do not accept there is any significance in Ms Jefferies’ former lawyers directing the Court to change the bank account to which the payments were directed in circumstances where they were no longer acting for Ms Jefferies, would not be expected to receive payments for her, and she had already commenced bankruptcy proceedings.
[47] There are other reasons why it would not be appropriate to exercise the Court’s discretion to halt the creditor’s application. First, Ms Jefferies agreed to obtain adjournments of her creditor’s application on the basis that Mr Pagan intended to settle with her in full. The concern Mr Pagan expresses that Ms Jefferies is forgoing an arrangement to receive payment by instalments does not reflect what has occurred here. The creditor’s application has been adjourned, including for the reason that Mr Pagan intended to sell his home to pay Ms Jefferies. He acknowledges this in his affidavit. Even when making this application Mr Pagan said he was seeking time “to explore settlement proposals in full”. His position has now changed, and he is seeking a permanent halt to the proceeding with no intention of selling his home. It is unjust, in my view, that he should resile from his former position upon which Ms Jefferies has relied and, no doubt, incurred significant expense as a result.
[48] Second, the instalment payment order is hopelessly unrealistic. It is not an arrangement that any creditor in Ms Jefferies’ position can reasonably be expected to accept, particularly when Mr Pagan has the ability to pay his debts from the proceeds of sale of his home. At the rate of $100 per fortnight (and making no allowance at all for interest), Ms Jefferies will have to wait over 32 years before the judgment debt is repaid.
[49] In contrast to this case, in Re Sturdee (a debtor) the Court stayed a petition to adjudicate the debtor bankrupt where the debtor was paying creditors a weekly amount under a summary instalment order.17 Four of the creditors supported the application for a stay. Eichelbaum J considered that the arrangements that had been entered into by the judgment debtor to avoid bankruptcy were sensible and feasible, there had been no allegations of misconduct on the part of the debtor and all the creditors could expect to be paid in full within a year.
[50] Third, Mr Pagan has not complied strictly with the instalment payment order since it was made, and Ms Jefferies would have good reason to be concerned about his ability to continue to pay even fortnightly amounts of $100. He is receiving superannuation and government allowances. While he has increased payments to above what is ordered, he has acknowledged he is struggling to pay his mortgage and, indeed, it appears he has not been paying it since December 2022. It is apparent that Mr Pagan must sell his home and pay his creditors. If he does not do so, it is in both his and his creditors’ interests that an adjudication order be made so his affairs can be administered in an orderly fashion by the Official Assignee.
Result
[51]The application to halt the proceeding is refused.
[52] I understand that Mr Pagan is on legal aid. If any orders are sought in respect to costs Ms Jefferies may file a memoranda within 10 working days and Mr Pagan shall have five working days to respond. I will decide any matters on the papers.
[53] The Registrar is to set Ms Jefferies’ creditor’s application down for hearing in the next available list before the Blenheim High Court.
17 Re Sturdee (a debtor), above n 8.
[54] Finally, I raised with counsel whether s 14 of the Insolvency Act applied to the facts of this case. That is a matter Ms Jefferies will need to address if an order for adjudication is sought at the next hearing.
O G Paulsen Associate Judge
Solicitors:
England Law, Nelson
Thomas Dewar Sziranyi Letts, Lower Hutt
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