Keenan v Smith

[2022] NZHC 970

IN THE HIGH COURT OF NEW ZEALAND GREYMOUTH REGISTRY

I TE KŌTI MATUA O AOTEAROA MĀWHERA ROHE

CIV-2022-418-4

[2022] NZHC 970

IN THE MATTER

of the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of ANTHEA ROSE KEENAN

BETWEEN

ANTHEA ROSE KEENAN

Appellant

AND

RAYMOND BRUCE SMITH

Respondent

Hearing:

9 May 2022

Appearances:

A R Keenan self-represented

D W King for Respondent (Leave granted to not appear) Official Assignee (Leave granted to not appear)

Judgment:

9 May 2022

REASONS FOR JUDGMENT OF ASSOCIATE JUDGE LESTER

KEENAN v SMITH [2022] NZHC 970 [9 May 2022]

[1]    The bankrupt, Mrs Keenan, applied under ss 309(1)(a) and (b) of the Insolvency Act 2006 (the Act), for an order annulling her bankruptcy. Those sections of the Act provide:

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; or

(b)the court is satisfied that the bankrupt’s debts have been fully paid or satisfied and that the Assignee’s fees and costs incurred in the bankruptcy have been paid; or

…

[2]    I was satisfied an order under s 309(1)(b) of the Act should be made and such an order was made when Mrs Keenan’s application was called on 9 May 2022. I now set out the reasons for that and why the order under s 309(1)(a) is not appropriate.

Section 309(1)(a) of the Act

[3]    Mrs Keenan was bankrupted by a Judgment of Associate Judge Paulsen dated 30 March 2022.1

[4]    My discussion on s 309(1)(a) assumes an understanding of that Judgment. In short, Mrs Keenan was bankrupted because she refused to pay a costs award of this Court. While Mrs Keenan had filed an appeal against the Judgment resulting in the costs award, that appeal was  not  pursued.  Prior  to the appeal  being abandoned,  the judgment creditor issued a bankruptcy notice and while Mrs Keenan sent an email to the Court denying she owed the debt, no challenge to the bankruptcy notice was made. The judgment creditor’s application to adjudicate Mrs Keenan bankrupt was filed in March 2022 and was opposed.

[5]    Associate Judge Paulsen, in his reserved Judgment released 30 March 2022, considered each of the grounds raised by Mrs Keenan and concluded none of them justified declining the order for adjudication sought.

1      Smith v Keenan [2022] NZHC 618.

[6]    Two of the grounds not accepted by Associate Judge Paulsen are relied on by Mrs Keenan in her application under s 309(1)(a). One is that the bankruptcy notice resulting in Mrs Keenan’s adjudication was issued while the appeal against the costs award was alive. As Associate Judge Paulsen noted, no stay of enforcement was sought and an appeal does not operate as a stay.2 While Mrs Keenan may have felt aggrieved that the bankruptcy notice was issued while the appeal was alive, no challenge to the bankruptcy notice was made and the judgment creditor was within his rights to ask the Court to issue a bankruptcy notice. I do not accept this point supports the making of an order under s 309(1)(a)

[7]    The second point is that Mrs Keenan says she swore an affidavit for the adjudication hearing where she said she was not insolvent and therefore bankruptcy was not appropriate. Associate Judge Paulsen dealt with this point as follows:3

Solvency

[17]      With respect to a debtor’s ability or otherwise to pay her debts, the Court has held that evidence of sufficient weight and clarity must be provided by the debtor.⁴

[18]      In her notice to oppose the adjudication order, Ms Keenan states “Courts are advised that I am not insolvent”. That assertion is repeated in her affidavit. However, apart from the bare assertion she is not insolvent, there is no other evidence as to her financial means or ability to pay the judgment debt. At the hearing, Ms Keenan asserted that she operates a business, owns her own home, and has good financial management skills, but there is no evidence about any of that before me. It follows that Ms Keenan has failed to establish that she is solvent.

[8]    An application under s 309(1)(a) does not “… provide a forum for a bankrupt to relitigate the merits of the adjudication application”.5 The hearing of the application for adjudication was the time for Mrs Keenan to prove she was not insolvent. The authorities confirm a s 309(1)(a) application is not a chance to re-run the arguments not accepted at the adjudication hearing. That is what Mrs Keenan attempts to do by again asserting she was not insolvent at the time of the order.

2      Smith v Keenan, above n 1 at [25].

3      Smith v Keenan, above n 1.

4      Re Clarke, ex parte Commissioner of Inland Revenue HC Whangarei B151/95, 1 October 1996.

5      Norris Ward McKinnon v Kaye [2016] NZHC 3089 at [38] noted in Brookers Insolvency Law & Practice (online ed, Thomson Reuters) at [IN309.06(1)].

[9]I decline Mrs Keenan’s application to be annulled under s 309(1)(a) of the Act.

Section 309(1)(b) of the Act

[10]Brookers Insolvency Law & Practice states:6

The court may annul the adjudication if the court is satisfied that the bankrupt’s debts have been fully paid or satisfied and the Assignee’s fees and costs incurred in the bankruptcy have been paid.

[11]   The Official Assignee’s Report (the Report) was prepared at short notice so that Mrs Keenan’s application could be considered at the earliest possible hearing.7 The Report confirms the judgment debt together with costs have been paid. The Report refers to a debt disclosed by the bankrupt to a building company and material provided since the Report confirms that debt has also been paid in full. The Report also refers to the existence of another judgment debt relating to costs. Again, since the Report, confirmation that debt has been paid has also been provided.

[12]   No other debts have been identified. Provided the Official Assignee’s costs and disbursements are met, the Official Assignee has no objection to annulment.

[13]   The judgment creditor and the Official Assignee were granted leave not to appear at the application. No other creditor has appeared and no other creditor appeared in support of the application for annulment.

[14]   As noted earlier, I was satisfied an order annulling Mrs Keenan’s bankruptcy under s 309(1)(b) of the Insolvency Act 2006 was appropriate and I made that order. The order was on the condition that the Official Assignee’s costs and disbursements identified at paras 17 and 18 of the Report dated 2 May 2022 are to be paid from the funds held by the Official Assignee before the balance is returned to Mrs Keenan.

6      Brookers Insolvency Law & Practice, above n 5 IN309.06(2)].

7      While Mrs Keenan sought that her application be dealt with on the papers, s 411 of the Act requires that an application for annulment be dealt with in open court.

[15]   Mrs Keenan, on 9 May 2022, told me she was concerned at the level of fees charged by the Official Assignee. I said I would record her concerns. Mrs Keenan is free to take up that issue with the Official Assignee.

[16]   Accordingly, Mrs Keenan’s adjudication was annulled pursuant to s 309(1)(b) of the Insolvency Act 2006 from 9 May 2022.

Associate Judge Lester

Solicitors:
Lane Neave, Christchurch

Copy to:

Mrs A Keenan, self-represented, Hokitika Official Assignee