Khan v Westpac New Zealand Limited HC Auckland CIV 2011-404-003778

[2011] NZHC 1747

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2011-404-003778

IN THE MATTER OF     the Insolvency Act 2006

AND IN THE MATTER OF of the bankruptcy of SOPHIA KHAN

BETWEEN  SOPHIA KHAN Judgment Debtor

ANDWESTPAC NEW ZEALAND LIMITED Judgment Creditor

Hearing:         29 November 2011

Appearances: Judgment Debtor in person

N R Frith for Judgment Creditor

Judgment:      29 November 2011

ORAL JUDGMENT OF ASSOCIATE JUDGE ABBOTT

Solicitors:

Minter Ellison Rudd Watts, Auckland for Judgment Creditor

SOPHIA KHAN V WESTPAC NEW ZEALAND LIMITED HC AK CIV 2011-404-003778 29 November 2011

[1]      This application for adjudication came before the Court for the first time at

10 am today. Although there is no notice of opposition yet on the Court file, I am informed by Ms Khan that she filed notice of opposition, together with an affidavit in support of that opposition, this morning. A copy has been passed up to me.

[2]      The judgment creditor, Westpac, wishes to proceed. In effect it says that there is no valid basis advanced for contesting the application.

[3]      I will deal first with the background to the application, and then consider the matters of opposition.

[4]      Westpac relies on Ms Khan's failure to comply with a bankruptcy notice served on her on 13 July 2010. At that point Ms Khan, through a legal representative, filed  a  document   described   as   'notice  of   opposition   ...   against   bankruptcy application', rather than an application to set aside the bankruptcy notice. There is no evidence as to whether this document was served on the creditor within the 10 working days required, but in any event the application has not been pursued (and there must be some doubts as to whether the document filed could be accepted as an application to set aside).

[5]      The bankruptcy notice sought payment of a judgment entered on 7 December

2010. Ms Khan appeared in person at the time that that judgment was entered.

[6]      The present application for adjudication was filed on 19 October 2011. It was served by Westpac on Ms Khan (pursuant to an agreement between them) on 11

November 2011. As already mentioned, notice of opposition was filed only this morning.

[7]      The notice of opposition raises two broad grounds:

(a)      The judgment debt represents the shortfall on a loan after sale of security properties. Ms Khan contends that Westpac was negligent in the steps it took to exercise its powers under a mortgagee sale (there

is also a further vague allegation of fraud which appears to relate to the valuation obtained ahead of the mortgagee sale).

(b)Ms Khan contends that she has no assets and there can be no point to an order for adjudication.

[8]      The first of these grounds has to be considered in context. Westpac brought its summary judgment application on 9 July 2010. Ms Khan was present when judgment was entered on 7 December 2010 (five months later). Although Ms Khan contends that she did not have funds to obtain legal representation at that point, there is nothing before me to suggest that she could not have raised these matters herself in opposition to the summary judgment application.

[9]      I find that Ms Khan has had ample opportunity to raise these contentions. I also take into account that, even now, there is no detailed evidence to support her contentions, which really are nothing more than assertions. I also take into account that she went to the extent of obtaining some legal representation in July of this year (when the bankruptcy notice was served on her), and could easily have taken advice (and perhaps did) as to steps that might then have been available to her either to oppose the bankruptcy notice properly or to apply, even if belatedly, to challenge the judgment.

[10]     Equally, I see no merit in the argument that adjudication in bankruptcy would be pointless. There is no evidence before me as to the circumstances by which this debt was incurred, but it appears that Ms Khan has acted as a property investor, and went into this loan with 'her eyes wide open'. There is a public interest factor which needs to be taken into account in bankruptcy matters.

[11]     I regret to say that the notice of opposition just filed indicates desperation rather than a substantive basis for any defence to this application. In her affidavit in support of the opposition, Ms Khan acknowledges the likelihood that there would have been a shortfall even if the matters that she complains about had not occurred, and that there is no security to Westpac for the debt. As I have already said, she has acknowledged that she has no assets with which to meet the debt.

[12]     I am satisfied on all that is before me today that it is appropriate to make an order for adjudication.

Decision

[13]     The judgment debtor, Sophia Khan, is adjudicated bankrupt. She is to pay costs  to  the  judgment  creditor,  Westpac,  on  a  scale  2B  basis,  together  with

disbursements as fixed by the Registrar. These orders are made at 11.55 am.

Associate Judge Abbott