Makele v Tugaga

[2025] NZHC 842

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-000254

[2025] NZHC 842

BETWEEN

ROB MAKELE

Judgment Creditor

AND

FIONA TUGAGA

Judgment Defendant

Hearing:	4 April 2025
Appearances:	A M Swan for the Judgment Creditor P C Murray for the Judgment Debtor
Judgment:	9 April 2025

JUDGMENT OF ASSOCIATE JUDGE COGSWELL

This judgment was delivered by me on 9 April 2025 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Smith & Partners, Waitakere Webster Law, Auckland

P Murray, Auckland A M Swan, Auckland

MAKELE v TUGAGA [2025] NZHC 842 [9 April 2025]

Introduction

[1]    This is an opposed bankruptcy application. The sole issue for determination is whether the judgment debtor was served with a bankruptcy notice and bankruptcy proceedings.

[2]    If the judgment debtor was not served with the bankruptcy notice, then there was no act of bankruptcy on which the judgment creditor is entitled to proceed.

Background

[3]    This bankruptcy proceeding arises from an order of the Tenancy Tribunal in which the judgment creditor as tenant was awarded the sum of $21,214.36 against the judgment debtor as landlord.

[4]    On 8 February 2024, a bankruptcy notice was issued against the judgment debtor.

[5]It is the judgment creditor’s position that:

(a)the  bankruptcy  notice  was  served  on  the  judgment  debtor  on     6 August 2024. An affidavit of service was filed in relation to that service;

(b)the judgment creditor’s collection agent, Law Debt Collection, wrote to the judgment debtor on 12 September 2024 recording that the bankruptcy notice had been served and demanding payment. No response was made to that letter by the judgment debtor;

(c)the bankruptcy proceedings were served on the judgment debtor on 20 November 2024. An affidavit of service was filed in relation to that service;

(d)the judgment creditor’s agent emailed the judgment debtor and her lawyer on 6 December 2024 confirming that bankruptcy proceedings

had been served. No response was made to that correspondence until 22 January 2025.

[6]    The affidavits of service both record that the judgment debtor identified herself to the process server and accepted the documents from him on request.

[7]    The judgment creditor says that the judgment debtor took no steps in response to service of either the bankruptcy notice or the bankruptcy proceedings and that the first step she took was the filing and service of a notice of opposition to the bankruptcy proceedings on the grounds of a failure to effect service.

[8]    The judgment debtor has filed an affidavit denying that she was served with either the bankruptcy notice or the bankruptcy proceedings and that on each occasion when service was purportedly effected, she was not at the address of service.

[9]    There is a direct conflict in the evidence between the process server’s affidavits of service and the affidavit of the judgment debtor.

Relevant principles

[10]   Section 13(b) of the Insolvency Act 2006 (Act) provides that a creditor may apply for a debtor to be adjudicated bankrupt if the debtor has committed an act of bankruptcy within the period of three months before the filing of the application for adjudication.

[11]   Under s 17(1)(c) and (d) of the Act, a debtor commits an act of bankruptcy if the debtor has been served with a bankruptcy notice and the debtor has not complied with the requirements of the notice or satisfied the Court that they have a cross-claim against the creditor.

[12]   The High Court Rules prescribe that a bankruptcy notice is a document “required by these rules to be served” in terms of r 6.1. Rule 6.1 stipulates the methods that may be used for serving a document required by these rules to be served, which, in this case, is personal service.

[13]   Rule 6.11 provides that a document may be personally served by leaving the document with the person to be served, or, if that person does not accept, by putting it down and bringing it to the notice of that person.

[14]   I pause here to interpolate that the evidence of the process server is that the documents were personally handed by him to the judgment debtor, who positively identified herself to him on request and accepted the documents from him. If this evidence is accepted then personal service in terms of r 6.11 has been effected and an act of bankruptcy committed.

[15]   The judgment debtor notes that the Court should take special care in relation to service of bankruptcy proceedings, due to the serious effect that an order of bankruptcy adjudication has on the judgment debtor’s status. The Court is mindful to ensure that service is effected in strict compliance with the rules on an application for adjudication in bankruptcy.

[16]   It follows from the combined effect of r 6.11 and s 17(1)(c) and (d) of the Act that, if service has not been effected in terms of the rules, there is no act of bankruptcy and the judgment creditor’s application must be dismissed.

The hearing and the evidence

[17]The Court heard from both the process server and the judgment debtor.

[18]   For the process server, he confirmed that the evidence he had provided in his two affidavits of service was true. He gave some relevant background about his experience. He had been the Deputy Registrar of the Family Court for 15 years prior to becoming a process server and private investigator. He was well acquainted with the service rules in the District and High Courts.

[19]   He was resolute in his evidence that the judgment debtor identified herself to him on request and accepted the documents from him. He identified the judgment debtor in Court.

Service of bankruptcy notice

[20]   On cross-examination the process server said that he attended the property (which is gated). He called out from outside of the property and somebody walked down the long driveway and approached him. He says that he asked if she was Fiona Tugaga and that she confirmed that she was and took the bankruptcy notice from him.

[21]   Counsel for the judgment debtor challenged the process server by saying that it is the judgment debtor’s position that the person who was handed the bankruptcy notice was in fact the judgment debtor’s gardener. Under cross-examination the judgment debtor stated that there was no one else at home on 6 August 2024. So, service can only have been on her or the gardener.

[22]   That was not accepted by the process server who made it clear that he asked the judgment debtor if she was Fiona Tugaga and, on receiving her confirmation that she was, handed the bankruptcy notice to her. He rejected the suggestion that he handed the documents to a gardener.

[23]   The judgment debtor had, from the date of filing her affidavit, located EFTPOS receipts which were contained in a late-filed memorandum. The judgment debtor says that the two EFTPOS receipts confirm that she was not at home on the dates and times when the process server says that he served her.

[24]   She says that she was not at home on 6 August 2024 at 11.57am, but was at her sister-in-law’s place tidying her wardrobe, following which she went out to lunch to a café in West Harbour called Arum. She says that she was there for about an hour.  The sister-in-law’s home is located in Titirangi, following which she went to lunch at Arum Café in West Harbour and then visited her daughter and grandchildren.

[25]   The judgment creditor’s counsel pointed out to the judgment debtor that her affidavit does not address any of this information. Paragraph 9 of the judgment debtor’s affidavit simply says:

On 6 August 2024 I believe I was [at] my sister in law Shirley Anne Sharp’s house during the day.

[26]   She now says that she was at her sister-in-law’s house, but left to have lunch at Arum Café following which she visited her daughter and grandchildren. Neither her sister-in-law or daughter swore an affidavit supporting this position.

Response to judgment creditor’s agent’s letter of 12 September 2024

[27]   The judgment debtor was asked about her lack of response to receipt of Law Debt Collection’s letter of 12 September 2024. That letter confirmed the date of service of the bankruptcy notice and made demand for the sum outstanding.

[28]   The judgment creditor’s counsel asked her wouldn’t it have been sensible to write back to Law Debt Collection and record that she hadn’t been served? The judgment debtor said that she just left it, because she didn’t know what to do with it.

[29]   In answer to my question about why she did not do something in response to a clear threat to bankrupt her, she then changed her earlier answer and said that she rang her sister-in-law to ask her what she should be doing with the letter, having received it. Clearly, the letter was of sufficient concern to her consider responding to it.

[30]   Then, she said that she forwarded it to counsel for advice. Yet, it was not until 22 January 2025 that counsel first contacted Law Debt Collection in relation to the bankruptcy proceedings.

[31]   There is no explanation as to why counsel would not have made enquiry of Law Debt Collection in September 2024 if he had been provided with the letter then.

Service of bankruptcy proceedings

[32]   The process server’s  evidence  is  that  personal  service  was  effected  on  20 November 2024 at 6.10 pm. He says that he was able to drive up the drive of the property and knock on the front door, which he recalled was white. Again, he says that the judgment debtor identified herself on request and accepted the bankruptcy proceedings from him.

[33]   He was clear that the judgment debtor identified herself and accepted the documents, and that there was no mistaken identity issue. On my questioning, he confirmed that there was nobody else at the property on that second occasion of service.

[34]   The judgment debtor says that she was at Kumeu Fisheries at 5.48 pm, and so therefore cannot have been at the home at 6.10 pm that day. She referred to an EFTPOS receipt timed at 5.48 pm for a purchase at Kumeu Fisheries. I discuss the probative value of the EFTPOS evidence later. Again, the judgment debtor did not provide a sworn affidavit from her daughter to support her position.

Response to judgment debtor’s lawyer’s email of 6 December 2024

[35]   The judgment debtor also made no response to her own lawyer forwarding an email received by him from Law Debt Collection to her in December 2024. No response appears to have been forthcoming from the judgment debtor despite clear advice to her at that time that she was subject to bankruptcy proceedings.

[36]   Her evidence was that she did not know what to do. That is surprising given the clear advice that bankruptcy proceedings were before the Court.

[37]   The first  response  from  the judgment debtor  was her counsel’s email of   22 January 2025.

Discussion

[38]   At the end of the day, it is a question of credibility that I must determine. Has the judgment creditor proven, on the balance of probabilities, that service was carried out as the sworn evidence of the process server says or was personal service not carried out at all as the judgment debtor says?

[39]   I consider that the following factors support the judgment creditor’s position that the bankruptcy notice and bankruptcy proceedings were served on the judgment debtor:

(a)If the bankruptcy notice was handed to the judgment debtor’s gardener, why would the gardener not have given it immediately to her employer? To accept the judgment debtor’s evidence is to accept that the gardener must have been served with a document by the process server but kept it or disposed of it without drawing it to the judgment debtor’s attention. That lacks credibility. The gardener was not called to give evidence on the judgment debtor’s behalf.

(b)The process server says that he handed the bankruptcy proceedings to the judgment debtor at her home. The judgment debtor confirmed that only her and her husband live at the property. So, to accept the judgment debtor’s evidence is again to accept that a female person at the property, who was not the judgment debtor, received the bankruptcy proceedings and did not draw them to the attention of the judgment debtor, again a position I find lacking in credibility.

(c)The process server was clear that it was the same person that he served on both occasions, so, either he served the judgment debtor twice or he served the gardener twice. I consider it lacking in credibility to find that he served the gardener twice, the second time when the gardener answered the door of the judgment debtor’s home.

(d)The judgment debtor’s affidavit does not mention the visit to the Arum Café and her daughter’s home on 6 August 2024, it only mentions that she was at her sister-in-law’s house that day. The further detail can be seen as an attempt to prove that she was not at her home on 6 August 2024 by reference to the EFTPOS receipt on that day.

(e)I have concerns about the EFTPOS receipts. Whilst the judgment debtor says that they evidence that she was not served at the times alleged, on further examination it transpired that two different accounts were used for the payments, and she was unable to demonstrate that her card had been used on 6 August 2024 to pay for lunch at Arum Café. The card numbers recorded on the wo EFTPOS receipts did not match

the card numbers for the cards held by the judgment debtor. This inconsistency was pointed out to the judgment debtor. She then said that she had lost a card, which had had to be replaced, which explained why the card numbers did not match the payments. This evidence was not provided until she was questioned on that point. I have concerns about the probative value of the untested EFTPOS receipts, which were only raised at the last minute ahead of the hearing.

(f)The judgment debtor was clearly concerned enough about the Law Debt Collection letter of September 2024 to speak to her family about it. She says that she referred it to counsel, but yet counsel did not contact the agent until January 2025. I do not accept that she did that. This was not a case where that letter came out of the blue, rather, it clearly set out that the bankruptcy notice had been served on the judgment debtor. It was incumbent on her at that point to take steps rather than ignore it. There is no credible explanation for the judgment debtor’s lack of action in response to the Law Debt Collection letter other than that she chose to ignore it.

(g)I also take note of the fact that the judgment debtor did not call anyone to support her opposition. She did not file affidavits from her sister-in- law, her daughter or her gardener. Any of those persons could have sworn affidavits supporting the judgment debtor’s case, but did not do that.

(h)Finally, to accept the judgment debtor’s position is to accept that the process server, an experienced process server with 15 years’ experience in the Court system, failed not once, but twice, to serve the judgment debtor but instead served someone else and then gave two false affidavits. Or, that he did not serve either the bankruptcy notice or the bankruptcy proceedings on anyone, but swore two false affidavits saying that he did.

[40]   Having heard the evidence, I do not accept the judgment debtor’s evidence and am of the view that the judgment debtor chose to ignore the bankruptcy notice, the bankruptcy proceedings and correspondence related to that.

Result

[41]   I find that she was served with the bankruptcy notice and the bankruptcy proceedings in accordance with the affidavits of service filed in this proceeding.

[42]   This bankruptcy application is listed in the Bankruptcy List on 15 May 2025 at 10:00am.

[43]   In the absence of payment of the amount due, the judgment creditor will be entitled to proceed.

[44]   As the judgment debtor has been unsuccessful in opposing the bankruptcy proceedings, the judgment creditor is entitled to costs at scale 2B, plus disbursements as fixed by the Registrar.

Associate Judge Cogswell