Khatri v Tomar
[2024] NZHC 3217
•6 November 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-1383
[2024] NZHC 3217
UNDER the Insolvency Act 2006 IN THE MATTER OF
the bankruptcy of VIN TOMAR
BETWEEN
MONIKA KHATRI
Judgment Creditor
AND
VIN TOMAR
Judgment Debtor
Hearing: 1 October 2024 Appearances:
Judgment creditor is self-represented Judgment debtor is self-represented
Judgment:
6 November 2024
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
Application for annulment of adjudication order and for leave to appeal
This judgment was delivered by me on 6 November 2024 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
Copy for: Ms Khatri. Mr Tomar.
KHATRI v TOMAR [2024] NZHC 3217 [6 November 2024]
Introduction
[1]Mr Vin Tomar, the judgment debtor, (Mr Tomar) filed two applications:
(a)an application pursuant to s 309(1) of the Insolvency Act 2006 to annul an adjudication order made against him on 30 November 2023; and
(b)an application for leave to appeal the Court’s judgment issued on 17 November 2023 (the Judgment).1
[2] Both applications were opposed by Ms Monika Khatri, the judgment creditor, (Ms Khatri).
[3] Both Mr Tomar’s applications were heard on 1 October 2024. Both parties were self-represented.
Mr Tomar’s application for annulment of his bankruptcy
[4] Mr Tomar seeks an order under s 309(1) of the Insolvency Act 2006 to annul the adjudication order made against him by the Court on 30 November 2023. Mr Tomar filed submissions dated 17 September 2024 in support of his application for annulment of the adjudication order.
[5] Ms Khatri filed submissions in opposition dated 24 September 2024 (also relying on her earlier submissions filed on 12 August 2024).
Procedural background
[6] The application by Ms Khatri for an adjudication order against Mr Tomar arises from a debt derived from a 20 January 2022 costs judgment of Judge D A Burns in the Family Court at Auckland (the Costs Judgment).2 The debt owed is $56,106.25 (the debt) being the scale costs calculated by Ms Khatri and accepted by the Judge, Mr Tomar providing no opposition to the calculation.3
1 Khatri v Tomar [2023] NZHC 3240.
2 Khatri v Tomar [2022] NZFC 423.
3 Above n 1, at [10].
[7] Ms Khatri served on Mr Tomar in accordance with the substituted service order4 a bankruptcy notice issued by this Court. Mr Tomar’s application to set aside the notice was declined by Associate Judge Gardiner on 30 March 2023 (Associate Judge Gardiner’s Judgment).5 She ordered Mr Tomar to comply by paying the debt by the end of 30 March 2023. Mr Tomar failed to do so.
[8] Ms Khatri then made an application for an adjudication order on 30 June 2023, Mr Tomar’s act of bankruptcy and the non-compliance with the Associate Judge’s order occurring on 31 March 2023, being within three months of that date. The Judgment made the following orders:
(a)Mr Tomar’s application for an order refusing the adjudication order under s 37 of the Insolvency Act 2006 or to halt the bankruptcy under s 38 of the Insolvency Act was dismissed, and Ms Khatri was entitled to an order adjudicating Mr Tomar bankrupt;
(b)Ms Khatri’s application for the adjudication order was to be listed in the first available bankruptcy list for an order to be made in open court.
[9] On 30 November 2023, Ms Khatri’s application for an adjudication order was called in the bankruptcy list and an order adjudicating Mr Tomar bankrupt was made. Mr Tomar’s application to annul the bankruptcy relates to this adjudication order.
Legal principles
[10]Section 309 of the Insolvency Act 2006 provides as follows:
309 Court may annul adjudication
(1)The Court may, on the application of the Assignee or any person interested, annul the adjudication if—
4 Khatri v Tomar CIV-2022-404-1383, 13 September 2022 (Minute of Associate Judge Gardiner) at [3]; affidavit of Monica Khatri as to substituted service on the judgment debtor dated 30 June 2023; affidavit of Nicholas Mayer as to substituted service on the judgment debtor dated 19 July 2023, a bankruptcy notice dated in 16 August 2022, and the Minute allowing substituted service on Mr Tomar, on 14 September 2022.
5 Khatri v Tomar [2023] NZHC 684.
(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
(c)the Court considers that the liability of the bankrupt to pay his or her debts should be revived because there has been a substantial change in the bankrupt’s financial circumstances since the date of adjudication; or
(d)the Court has approved a composition under subpart 1of Part 5.
(2)In the case of an application on one of the grounds specified in subsection (1)(a) to (c) by an applicant who is not the Assignee,—
(a)a copy of the application must be served on the Assignee in the manner and within the time that the court directs; and
(b)the Assignee may appear on the hearing of the application as if the Assignee were a party to the proceeding.
(3)The adjudication is annulled—
(a)from the date of adjudication, in the case of an application on the ground specified in subsection (1)(a):
(b)from the date of the Court’s order of annulment, in the case of an application on one of the grounds specified in subsection (1)(b) to (d).
(4)In the case of an application for annulment on the ground that the adjudication should not have been made because of a defect in form or procedure, the Court may, in addition to annulling the adjudication, exercise its powers under section 418 to correct the defect and order that the application for adjudication be reheard as if no adjudication had been made.
(5)If the Court annuls the adjudication on one of the grounds specified in subsection (1)(a) to (c),—
(a)the Court may, on the Assignee’s application, fix an amount as reasonable remuneration for the Assignee’s services and order that it be paid, in addition to any costs that may be awarded:
(b)that amount must be paid into a Crown Bank Account:
(c)the Assignee is not entitled to remuneration under section 406 for those services.
Mr Tomar’s submissions
[11] Before dealing with the detail of Mr Tomar’s submissions, the applicable grounds on which the adjudication order can be annulled need to be considered. Section 309(1)(b) to (d) do not apply in the present case because:
(a)as to s 309(1)(b), Mr Tomar’s debts have clearly not been fully paid or satisfied and the Official Assignee’s fees and costs incurred in the bankruptcy have not been paid. Mr Tomar has not produced a statement of affairs; creditors’ claims filed with the Official Assignee total
$232,682.39 and the Official Assignee’s fees as at the date of the latest report were $42,807.50.6
(b)as to s 309(1)(c), there is no evidence of any substantial change in Mr Tomar’s financial circumstances since the date of the adjudication;
(c)as to s 309(1)(d) there has been no composition under subpart 1 of Part 5 of the Insolvency Act.
[12] Consequently, Mr Tomar’s application is under s 309(1)(a), the grounds of which are that the Court must consider that Mr Tomar should not have been adjudicated bankrupt.
[13] From his submissions, I understand Mr Tomar’s reasons for seeking an annulment of the adjudication order to be:
(a)abuse of the stay order made by Downs J;7
(b)unfairness by Judge Burns in relation to the Family Court decision;8
(c)misappropriation by Ms Khatri of funds relating to release of funds from the solicitor, Mr Snedden’s trust account;
6 Report of the Official Assignee dated 29 July 2024.
7 Khatri v Tomar [2021] NZHC 3091.
8 Khatri v Tomar FAM.2018-004-000053.
(d)the Costs Judgment was unlawful;
(e)inconsistent practice in the Auckland High Court in respect of his insolvency proceedings.
I deal with each of these grounds in turn.
Downs J’s stay order / Woolford J’s direction
[15] Mr Tomar alleges that the stay order made by Downs J restricted him from filing an appeal against the Costs Judgment. He also alleges that as a result Woolford J’s direction, Ms Khatri was permitted to file her bankruptcy proceedings against him in breach of the stay order. Mr Tomar submits that he should be granted the necessary time extension to appeal the decision of Downs J.
[16] This point has already been dealt with in Associate Judge Gardiner’s Judgment9 where the Associate Judge made it clear that Mr Tomar did not seek to appeal the Costs Judgment when it was made and that the Costs Judgment remained a final enforceable order unless and until it is overturned. It was noted by Associate Judge Gardiner that any attempt to secure leave to appeal the Costs Judgment is severely out of time.
[17] As to the complaint that Woolford J allowed Ms Khatri to bring the bankruptcy proceedings against Mr Tomar in breach of Downs J’s order, this has again already been dealt with in Associate Judge Gardiner’s Judgment10 where the Associate Judge made it clear that Mr Tomar had a misunderstanding of the stay order granted by Downs J, and the order prevented Mr Tomar from bringing further proceedings against Ms Khatri, but did not prevent Ms Khatri issuing the bankruptcy proceedings against Mr Tomar.
9 Khatri v Tomar [2023[ NZHC 684 at [49].
10 At [27] and [28].
[18] These issues have already been dealt with by this Court previously in Associate Judge Gardiner’s Judgment and also in the Judgment.11 Consequently these grounds cannot be relied upon by Mr Tomar for annulment of his bankruptcy under s 309(1)(a).
Issues with the Family Court judgment
[19] The grounds put forward by Mr Tomar in relation to the Family Court judgment relates to prejudice Mr Tomar claims to have suffered as a result Judge Burns failure to allow him sufficient time to present submissions. This issue has already been dealt with in the decision of Lang J dismissing Mr Tomar’s two appeals against the Family Court judgment.12
[20] This issue has already been determined by this Court and cannot be relied upon by Mr Tomer as grounds to annul his bankruptcy under s 309(1)(a).
Misappropriation of funds
[21] Mr Tomar raised again a point that has been already litigated. He complains that Ms Khatri accessed $800,000 worth of funds from the trust account of the solicitor, Mr Snedden, and he complains that Ms Khatri has been paid the sums specified in the bankruptcy notice before it was issued.
[22] This point has been dealt with in Associate Judge Gardiner’s Judgment13 explaining that this payment represented Ms Khatri’s share of the relationship property according to orders of the Family Court (upheld by the High Court). Consequently, the release of funds to Ms Khatri did not represent payment of the Costs Judgment, but rather Ms Khatri receiving her share of the relationship property as determined by the Family Court.
[23] This issue has already been determined by this Court and cannot be relied upon by Mr Tomar as grounds to annul his bankruptcy under s 309(1)(a).
11 Above, n 5 at [52]
12 Tomar v Khatri [2021] NZHC 2353 at [31] to [34].
13 Above, n 12 at [54].
Inconsistent practice of the Auckland High Court in this proceeding
[24] At [31] to [49] of his submissions, Mr Tomar lists his complaints regarding the treatment of the proceedings in the Auckland High Court. All of these issues have been dealt with in previous judgments of Lang J and Associate Judge Gardiner. None of them amount to reasons which justify a conclusion that Mr Tomar should not have been adjudicated bankrupt, and therefore cannot be relied upon by Mr Tomar as grounds for annulment of his bankruptcy under s 309(1)(a).
Conclusion in relation to s 309(1)(a)
[25] Mr Tomar’s main ground for seeking annulment of the adjudication order is that the stay order made by Downs J prevented him from appealing the Costs Judgment which he should have been entitled to do. The answers to this issue are:
(a)Downs J, in making the stay order, was clearly satisfied that Mr Tomar’s conduct up to that point justified the stay order, and therefore it is Mr Tomar’s own conduct that led to the stay order being granted. In any event, Mr Tomar consented to the stay order.14
(b)the stay order remains in place until Mr Tomar paid the amount of
$98,998.15 which Mr Tomer owes Ms Khatri. It was Mr Tomar’s default in paying the amount owed to Ms Khatri which caused the stay order to remain in place and it was within his control to pay the amount he owed and have the order lifted, allowing him to appeal the Costs Judgment if he wished. Consequently, there is no injustice suffered by Mr Tomar.
[26] It is clear from the above analysis that all of the grounds put forward by Mr Tomar as supporting an order that his adjudication order should be annulled under s 309(1)(a) have been previously dealt with by judgments in the High Court and the Court of Appeal. These matters have already been determined and in my view do not
14 Above, n 7 at [61].
form any basis to make an order under s 309(1)(a) that Mr Tomar should not have been adjudicated bankrupt.
Leave to appeal application
[27]Mr Tomar has sought leave to appeal the Judgment.
Legal principles
[28] No appeal15 lies from any order or decision of the High Court made on an interlocutory application in respect of any civil proceeding unless leave to appeal to the Court of Appeal is given by the High Court or by the Court of Appeal following the High Court’s refusal of leave.16
[29] The relevant principles are set out in the decision of the Court of Appeal in Greendrake v District Court where the Court of Appeal identified the following considerations:17
(a)a high threshold exists;
(b)the applicant must identify an arguable error of law or fact;
(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;
(d)the circumstances must warrant incurring further delay; and
(e)the ultimate question is whether the interests of justice are served by granting leave.
[30] The Court of Appeal in that decision also approved the observations of Fitzgerald J in Finemore Upholstery Ltd v Vaughan to the effect that the requirement
15 Except for those appeals provided for under s 56(4) of the Senior Courts Act (the Act).
16 Section 56 of the Act.
17 Greendrake v District Court of New Zealand [2020] NZCA 122 at [6].
for leave was a filtering mechanism to ensure that unmeritorious appeals of no great significance do not unnecessarily delay the proceedings in which the orders had been made.18
Mr Tomar’s submissions
[31] Mr Tomar’s refers to his submissions in support of his application for annulment of the adjudication order as supporting his application for leave to appeal the Judgment. In addition, he makes the further submissions summarised below.
Public interest
[32] Mr Tomar submits that this matter holds a significant public interest as it addresses key issues relating to procedural fairness, the proper use of bankruptcy proceedings, and the adherence to legal principles that affect the rights of individuals in similar situations. He submits that the resolution of these proceedings could have broader implications for the integrity of the legal process and protection of rights under the Property (Relationships) Act 1976.
Administrative defects
[33] Mr Tomar submits that the High Court’s refusal to accept his judicial review application and appeal against the Cost Judgment, based on the stay order and order under s 166 of the Senior Courts Act 2016 by Downs J prevented him from challenging the Costs Judgment, which was unfair.
[34] He submits that the acceptance of Ms Khatri’s application for bankruptcy proceedings was a procedural anomaly and contradicted the stay order and denied him opportunity to contest the validity of the Costs Judgment. He submits that the Judgment allowed the bankruptcy proceedings to continue, which led to the adjudication order on 30 November 2023 without providing him a fair opportunity to present his defence or challenge the Costs Judgment.
18 Greendrake v District Court of New Zealand, above n 4, referring Finemore Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].
Breach of fair trial and natural justice
[35] Mr Tomar submits that the actions of the High Court in refusing to accept his judicial review application and appeal application, while simultaneously allowing the bankruptcy proceeding to continue, was based on the same uncontested costs order, was a breach of s 27 of the Bill of Rights Act 1990 which guarantees him a right to a fair trial. He submits that this was a breach of the principles of natural justice and that the adjudication order made on 30 November 2023 was issued without due consideration of the procedural irregularity and his right to challenge the underlying Costs Judgment.
[36] Mr Tomar refers to the decision of M v H19 which he cites as authority for the proposition that bankruptcy proceedings cannot be used to undermine rights of protection under the Property (Relationships) Act 1976. He submits that the bankruptcy proceedings were pursued by Mr Khatri as an abuse of process and the bankruptcy adjudication order is therefore invalid.
Errors in the Judgment
[37] Mr Tomar in his application for leave to appeal the Judgment dated 7 December 2023 purports to identify errors in the Judgment. However, in reality these are the same arguments that have been already advanced in relation to the application by Mr Tomar to annul his adjudication order.
Result
[38] I am of the view that Mr Tomar’s application for the annulment of his adjudication order under s 309(1) of the Insolvency Act 2006 should be dismissed. I am also of the view that the application for leave to appeal the Judgment should be dismissed.
19 M v H [2023] NZCA 243 [19 June 2024].
[39] The reasons advanced by Mr Tomar to support annulment of the adjudication order made against him and leave to appeal the Judgment are essentially the same grounds. I am of the view that these applications should fail because:
(a)It is apparent from the analysis of the issues raised in support of his application for annulment, the issues of Mr Tomar complaints have been dealt with by multiple judgments of this Court. This results in the conclusion that none of these grounds are valid grounds to assert that Mr Tomar should not have been made bankrupt on 30 November 2023;
(b)his principal complaint is that he has not been given the opportunity to challenge the Costs Judgment because of the stay order and the order under s 166 of the Senior Courts Act 2016 made by Downs J on 18 November 2021. Mr Tomar asserts that this is a breach of procedure and natural justice, including a breach of his rights under the Bill of Rights Act 1990. My view is that Downs J was clearly satisfied Mr Tomar’s conduct justified the orders made, and Mr Tomar could have pursued his rights under his judicial review applications and appeals if he had paid the outstanding costs to Ms Khatri as ordered by Downs J. In any event, he consented to the stay order made by Downs J.
(c)there are no identified errors of law or fact in the Judgment justifying granting leave to appeal;
(d)there are no matters of public interest, and the alleged inconsistencies and anomalies Mr Tomar complains of in respect of the High Court’s decisions relating to his proceeding are all related to his own circumstances, and not of wider public importance and in any event have all been dealt with in previous judgments of this Court.
Orders
[40]I make the following orders:
(a)Mr Tomar’s application to annul the adjudication order made against him on 30 November 2023, pursuant to s 309(1) of the Insolvency Act 2006, is dismissed;
(b)Mr Tomar’s application for leave to appeal the Judgment is dismissed;
(c)Ms Khatri is entitled to costs in respect of all steps she has taken under schedule 3 of the High Court Rules after 1 September 2024 calculated at a rate of $500 per day.
…………………………….. Associate Judge Taylor
0
1