Nisbet v Wilson & Co HC WN CIV 2008-485-202

[2008] NZHC 2409

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2008-485-202

IN THE MATTER OF     the Insolvency Act 2006

BETWEEN  CRAIG GRANT SCOTT NISBET (A BANKRUPT)

Applicant

ANDWILSON & CO (SUING AS A FIRM) Respondent

Hearing:         14 July 2008

Appearances: E Gartrell - Applicant

R Gordon - Respondent

C Pardo - Official Assignee (in attendance) Judgment:  14 July 2008

ORAL JUDGMENT OF ASSOCIATE JUDGE GENDALL

Solicitors:           Reeves Lawyers Incorporate EW Gartrell, Solicitors, PO Box 5151, Wellington

Buddle Findlay, Solicitors, PO Box 2694, Wellington

CGS NISBET (A BANKRUPT)  V WILSON & CO (SUING AS A FIRM) HC WN CIV 2008-485-202 14 July

2008

[1]      Before the Court is an application by Mr Nisbet which is described as “An Application for Annulment under Section 309 of the Insolvency Act 2006 and Application for an Order that the Assignee must not advertise pending Appeal or Application for Annulment under Section 66”.

[2]      The application which was filed as I understand it on 11 July 2008 is opposed by Wilson & Co as the substituted applicant creditor.  A Notice of Opposition was filed today, 14 July 2008.

[3]      The Annulment Application before the Court is supported by an affidavit of

Mr Nisbet dated 11 July 2008.

[4]      Before me today counsel for Mr Nisbet has handed up to this Court further affidavits of Mr Nisbet.   The first of these is dated 14 July 2008 and the second which relates to Auckland proceedings CIV 2004-404-4819 is dated 18 February

2008.  In addition a further affidavit of Mr Nisbet also dated 14 July 2008 has been handed up to the Court today.

[5]      In response to the 11 July affidavit, Wilson & Co have filed an affidavit of Mr Michael George Bale sworn 13 July 2008 in support of their opposition to the present application.

[6]      Mr Nisbet was adjudicated bankrupt by order of this Court dated 11 July

2008.  This followed a defended hearing of the Bankruptcy Application brought by

Wilson & Co as the substituted applicant creditor which was heard on 7 July 2008.

[7]      The unpaid debt claimed by Wilson & Co, which formed the basis of their bankruptcy application totalled an amount of $6,471.80.

[8]      The Annulment Application before the Court is brought pursuant to s. 309

Insolvency Act 2006.  This section states in part:

“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

(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 sub-part 1 of Part

5.”

[9]      The present Annulment Application, as I understand it, is made effectively under s. 309 1(b) Insolvency Act 2006.

[10]     Before me, Mr Gartrell for Mr Nisbet submitted at one point that s. 309 (1)(a) Insolvency Act 2006 might apply here.  I reject this contention however.  Brookers Insolvency Law & Practice Volume 1 at para. IN309.02 states in part relating to the fore-runner of s. 309 (1)(a):

“Despite the discretion it gives to the Court, sub-section 1(a) should be interpreted narrowly.  Generally it will not provide grounds for interfering with  a  discretion  exercised  on  a  properly  brought  adjudication  petition unless there was some defect in procedure, abuse of process, or where some material fact was not brought before the Court making the adjudication order

…”.

[11]     Here there has been no suggestion that the adjudication application or petition was in any way improperly brought or that there was any defect in procedure or

abuse of process.   As I see the position, it has also not been seriously suggested that “a significant material fact was not brought before the Court” making the adjudication order which would have had a significant impact upon whether the order was made or not.

[12]     That said, I reject any contention on the part of Mr Nisbet that s. 309 (1)(a) might apply here and that he should not have been adjudicated bankrupt when the order was made on 11 July 2008.

[13]     That leaves s. 309 (1)(b) to consider.  Under this sub-section it is clear that, for an order for annulment to be made, the Court must first be satisfied that the bankrupt's debts have been fully paid or satisfied and the Official Assignee’s fees and costs incurred in the bankruptcy have been paid.

[14]     Before me today, Mr Gartrell for Mr Nisbet submitted to the Court that the debt which was the subject of Wilson & Co’s Bankruptcy Application before the Court is now in the course of being settled.   Mr Gartrell confirmed that a cheque drawn upon ZFL Trust for $8,471.80 has been paid to the Office of the Official Assignee.   This was confirmed to the Court today by Mr Pardo who assisted the Court  by  appearing  for  the  Official  Assignee’s  office.    I  am  grateful  for  his assistance.

[15]     It is clear, however, that this cheque for $8,471.80 is not cleared funds.  Mr Gartrell said, however, that the cheque could be uplifted immediately and a payment made to the Official Assignee in cleared funds.  I accept this confirmation from Mr Gartrell as an officer of this Court.

[16]     Notwithstanding that, this Court must be satisfied in terms of s. 309 (1)(b) that all the bankrupt’s debts are fully paid or satisfied before an annulment of the adjudication order may be made under that sub-section.

[17]     On this the material before the Court is somewhat scanty.  Mr Nisbet himself in his recent affidavits has repeated his earlier claim that he is “solvent”.  In his last affidavit dated 14 July 2008 he deposes:

“1.There  are  no  other  creditors  pertaining  to  the  bankruptcy  matter aside from those involved in the debt to which I have now settled.”

[18]     I repeat this is a statement to which Mr Nisbet has deposed today, 14 July

2008.

[19]     In addition in his further affidavit provided today, 14 July 2008, Mr Nisbet states:

“1.I have read the affidavit filed by Mr Michael George Bale.  Mr Bale asserts that there are additional debts owed to his firm.  The (sic) are none and if there had been, they would no doubt been brought to the Court’s notice on the application before substitution took place.  In relation to the Lombard debt the Court will be aware that this is a part-heard matter …”.

[20]     Notwithstanding these contentions advanced to the Court by Mr Nisbet, again as I see the position, he has not provided to the Court any clear list of what he maintains are his outstanding creditors, nor does he again set out in detail a clear list of his assets and his income and other commitments.   (Those other matters are technically superfluous to my consideration today.  For the Annulment Application to succeed, I repeat that I need to be satisfied that Mr Nisbet has fully paid or satisfied all his debts).

[21]     I turn now to matters which have been put before the Court today by Mr Pardo the Official Assignee.  Helpfully, he provided to the Court a print-out obtained from Bay Corp (Veda Advantage (NZ) Ltd) of defaulting debts held under the name, “Craig Grant Nisbet of 17 Totara Street, Lower Hutt, Wellington”.

[22]     From that report, Mr Pardo notes that Mr Nisbet appears to be in default under two BNZ credit card arrangements which he holds.  The first of these showed an  outstanding  debt  owing  to  BNZ  Recoveries  for  credit  card  debt  totalling

$19,142.00.   This was loaded by way of “default date” and noted the date at 23

April 2008.  The second credit card debt also noted BNZ Recoveries as creditor and a total debt of $24,124.00.  Again the default date loaded was 23 April 2008.

[23]     The Bay Corp report goes on to list a further debt claimed by Lombard Finance & Investments Limited showing a default date of 17 September 2007 and a debt amount of $1,456,508.00.  As I understand the position this debt is the subject of dispute by Mr Nisbet and I leave it on one side at this point.

[24]     So far as the BNZ credit card debts are concerned, these were not mentioned by Mr Nisbet in the various affidavits he has placed before the Court.  I must assume therefore that these two debts which total approximately $43,000.00 remain outstanding and as such the BNZ is a creditor of Mr Nisbet which needs to be cleared.

[25]     In addition, in the affidavit sworn by Mr Bale in support of the opposition to the present application, he makes reference to certain debts which he says are outstanding to his firm, Wilson & Co in addition to the debt which was the subject of the  bankruptcy application.    These  debts  appear  to  be  disputed  in  Mr  Nisbet’s affidavit and for the purposes of my consideration of the present application I also leave these on one side.

[26]     Mr Bale, however, went on in his 13 July 2008 affidavit to mention a debt which he says is owed to Cardno TCB a firm of surveyors and engineers who he deposes “did work for Mr Nisbet”.   Mr Bale states in this affidavit that TCB are owed some $19,000.00 by Mr Nisbet.

[27]     Perhaps  somewhat  surprisingly,  Mr  Nisbet  did  not  mention  this  debt  to Cardno TCB in either of his 14 July 2008 affidavits, the first of which particularly addressed Mr Bale’s 13 July 2008 affidavit.

[28]     Instead at the eleventh hour this morning Mr Gartrell passed up to the Court a number of GST invoices which appear to emanate from TCB and which were addressed to “Falmouth Properties Ltd” for work undertaken.  Mr Gordon properly, in my view, raised an objection to these invoices being placed before the Court very

much at the eleventh hour.  Notwithstanding that I ruled that I would consider the invoices.  They appear to relate to work involved on a Tuamotu Property between it seems 10 February 2006 and 20 April 2006.   There is obviously no background explanation as to whether these invoices do in fact relate to the $19,000.00 debt which Mr Bale identifies in his affidavit.

[29]     It need hardly be said that all this is highly unsatisfactory.

[30]     For the purposes of my consideration of the present application, with some reluctance I will, however, put on one side the claim made that Mr Nisbet owes

$19,000.00 to TCB.  That obviously must be a matter for further consideration at a later time.

[31]     Notwithstanding that, the position which the Court faces, as I see it is simply this.   Mr Nisbet seeks an annulment of his bankruptcy under s. 309 (1)(b) on the basis that his debts “have been fully paid or satisfied and that the Assignee’s fees and costs incurred in the bankruptcy have been paid”.

[32]     At best, as I see it, Mr Nisbet has indicated that $8,471.80 has been paid to the Official Assignee which clears the bulk of the Wilson & Co debt claimed in the bankruptcy application.   Mr Nisbet also states that he is in a position to pay the balance costs awarded on that application to Wilson & Co and can meet what, at this stage, would no doubt be reasonably nominal costs and disbursements incurred by the Official Assignee.

[33]     Notwithstanding that, however, at the least this leaves the question of the credit card debts to BNZ which have been identified this morning.  Those credit card debts total some $43,000.00 and as I have already noted from the Bay Corp report it has indicated that there has been a default on the part of Mr Nisbet in complying with those credit card arrangements.

[34]    Before me today Mr Gartrell for Mr Nisbet was unable to provide any confirmation regarding payment of those credit card debts.

[35]     I conclude therefore that the Court is quite unable to reach any other position but that Mr Nisbet has been unable to show he can meet and satisfy the BNZ credit card debts at least.  This by itself seems to me to prevent any order for annulment being made in terms of s. 309 (1)(b) Insolvency Act 2006.

[36]     In summary, the Court cannot be satisfied that these BNZ credit card debts let alone any other outstanding debts which may ultimately be shown to be owing by Mr Nisbet can be fully paid and therefore the application for annulment under s. 309 must fail.

[37]     The Annulment Application from Mr Nisbet therefore fails.

[38]     Given that finding, it seems to me unnecessary to proceed to consider the further application under S. 66 Insolvency Act 2006 for an order that advertising of the adjudication be restrained at this point.  The adjudication order was made on 11

July 2008 and the Official Assignee is required to carry out normal advertising no doubt at least in part to identify what outstanding creditors Mr Nisbet may have.

[39]     The application under S. 66 Insolvency Act 2006 therefore fails.

[40]     Further,  the  additional  application  which  I  note  seeks  a  “stay”  of  the bankruptcy similarly fails and the final application which would appear to be for a “suppression order” under r 66 of the High Court Rules for similar reasons fails.

[41]     That effectively disposes of all the applications before the Court.  If there is any issue with respect to costs then these are reserved and can be the subject of appropriate memoranda from counsel.

‘Associate Judge D.I. Gendall’