Page v Wanganui District Council HC Wanganui CRI 2010-483-134

[2010] NZHC 1531

IN THE HIGH COURT OF NEW ZEALAND WANGANUI REGISTRY

CRI-2010-483-134

UNDER  High Court Rules 2009, Rule 24.10

IN THE MATTER OF     an application to set aside a Bankruptcy

Notice

BETWEEN  ADRIAN NEIL PAGE AND NICOLA WILSON

Judgment Debtors

ANDWANGANUI DISTRICT COUNCIL Judgment Creditor

Hearing:         11 August 2010

Appearances: J.M. Woodcock - Counsel for Judgment Creditor

A.N. Page - First named Judgment Debtor in person

Judgment:      18 August 2010 at 3.00 pm

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment was delivered by me

on 18 August 2010

at 3.00 pm pursuant to r 11.5 of the High Court Rules.

Solicitors:           Armstong Barton, Solicitors, PO Box 441, Wanganui

AN PAGE AND N WILSON V WANGANUI DISTRICT COUNCIL HC WANG CRI-2010-483-134  18

August 2010

Introduction

[1]      Before the Court is an application by the judgment debtors, Adrian Neil Page (“Mr Page”) and Nicola Wilson (“Ms Wilson”), to set-aside a Bankruptcy Notice issued against them.

[2]      The  Bankruptcy  Notice  dated  11  May  2010  claimed  from  the  judgment debtors the sum of $12,000.00 representing a final costs judgment obtained against each of the judgment debtors in proceedings in which they were involved in the Environment Court on 11 March 2010.

Jurisdictional Issue

[3]      The Bankruptcy Notice was served on the judgment debtor Ms Wilson on 25

May 2010.

[4]      The Bankruptcy Notice was served on the judgment debtor, Mr Page, some 4 days later on 29 May 2010.   Affidavits confirming service have been filed in this Court on 14 June 2010.

[5]      Section 17(1) Insolvency Act 2006 provides that a debtor commits an act of bankruptcy where he or she fails to comply with the requirements of a Bankruptcy Notice served on him or her by a creditor within 10 working days after the date of service of that Notice (if served in New Zealand).

[6]      Accordingly, it is clear that an application to set-aside a Bankruptcy Notice must be made within 10 working days after the date of service.  This requirement is stipulated in the Bankruptcy Notice (Form B2).   It requires an application to set- aside the Bankruptcy Notice to be supported by an affidavit and the application and affidavit must be served within the 10 working day time limit.

[7]      The decision in Re Memelink Ex Parte SANCO (NZ) Limited High Court, Wellington, 10 March 2009, CIV-2008-485-2691 supports the position that even if the application to set-aside a Bankruptcy Notice is filed and served within the 10

working day period, where the supporting affidavit is late the application should be dismissed.

[8]      In the present case the time for filing and serving any application to set-aside the Bankruptcy Notices expired on:

(a)       As to the Bankruptcy Notice against Ms Wilson, 8 June 2010; and

(b)       As to the Bankruptcy Notice against Mr Page, 11 June 2010.

[9]      It  is  undisputed  that  no  formal  application  to  set-aside  the  Bankruptcy Notices or any affidavit in support was filed and served by either judgment debtor by those dates.

[10]     Instead, a document headed “Counter-Claim of Bankruptcy Notice dated 14

June 2010” was filed in this Court on 14 June 2010.  This document was signed by Mr Page and Ms Wilson.  Mr Page purports to represent both of them in this matter before me.

[11]     It is clear therefore that the judgment debtors here were out of time in filing and serving any document purporting to be an Application to Set-aside the Bankruptcy Notice or any affidavit in support.

[12]     That  failure  to  file  and  serve  their  application  and  affidavit  within  the required time frame is fatal.   No directions in the meantime could regularise this fundamental jurisdictional issue.  An act of bankruptcy has been committed by both judgment debtors and even assuming the “Counter-Claim of Bankruptcy Notice” document is a formal application to set-aside the Bankruptcy Notice, that application was filed and served out of time and must fail.

[13]     An order will follow dismissing the application.

[14]  That  effectively  disposes  of  the  application  before  the  Court. Notwithstanding this, and for the sake of  completeness,  I will  go on  to briefly consider the substantive claim for relief advanced by the judgment debtors in their

“Counter-Claim of Bankruptcy Notice” on the basis that this might constitute a proper application to set-aside the Notices (although I have found otherwise).

Judgment Debtors’ Substantive Claim for Relief

[15]     I turn now to consider that substantive claim for relief. [16]    Section 17(1) Insolvency Act 2006 provides:

(1)        A debtor commits an act of bankruptcy if –

(a)        A creditor has obtained a final judgment or a final order against the debtor for any amount; and

(b)        Execution of the judgment or order has not been halted by a Court; and

(c)         The debtor has been served with a Bankruptcy Notice; and

(d)        The debtor has not, within the time limit specified in sub-section (4) – (i)  Complied with the requirements of the Notice; or

(ii)Satisfied the Court that he or she has a cross-claim against the creditor.

[17]     Section 17(7) Insolvency Act 2006 provides further assistance in determining the meaning of a “cross-claim”.  It requires that the cross-claim must be “equal to, or greater than, the judgment debt” and it is one which “the debtor could not use as a defence  in  the  action  or  proceedings  in  which  the  judgment  or  order  ....  was obtained.”

[18]     As Brookers Insolvency Law and Practice at para IN17.10 states in part:

.... In summary s 17(1)(d) and 17(7) Insolvency Act 2006 requires the debtor to:

(i)Demonstrate that he or she has a cross-claim of true substance which he or she genuinely proposes to pursue (Sharma v ANZ Banking Group (1992) 6 PRNZ 386; [1992] 3 NZBORR 183 (CA), see further IN17.10(5) below);

(ii)       Establish that the cross-claim is equal to or is greater than the judgment debt (see further IN17.10(6) below);

(iii)      Establish that he or she could not, by law, use the cross-claim as a defence in the action or proceeding on which the judgment or order providing the basis for the bankruptcy notice was entered (Clark v UDC Finance Ltd [1985] 2 NZLR 636, 639 see further IN17.10(3) below); and

(iv)      If he or she relies on factual inability to set the cross-claim, he or she must establish some cogent circumstances because the primary emphasis is on the legal nature of

the impediment (Hardie v Booth [1992] 1 NZLR 356, 362, see further IN17.10(3)

below).

In  Re  Faloon  12/8/97,  Ellis  J,  HC  Wellington  B175/97,  it  was  emphasised  that  the counterclaim, set-off or cross demand must be against the creditor, not a third party.

[19]     Where a debtor advances a “cross-claim” in order to set-aside a Bankruptcy Notice, that debtor is required to demonstrate that he or she has a genuine triable claim against the creditor – Thomasen v Nigro CA124/76, 19 July 1978 and Clark v UDC Finance Limited (1985) 2 NZLR636.

[20]     In Sharma v ANZ Banking Group Cooke P for the Court of Appeal held that the words “genuine and triable” require a debtor to demonstrate that he or she has a claim of “true substance which he or she genuinely proposes to pursue” – at page 4.

[21]     It  appears  that  Mr  Page  in  his  affidavit  and  in  the  “counter  claim  of Bankruptcy Notice” document dated 14 June 2010 appears to raise four principle arguments in support of the present application:

(a)He claims the judgment creditor is responsible for storm water run-off from surrounding properties onto his property and is thus liable to pay an  invoice  of  $5,625.00  he  has  provided  for  installation  of  a temporary drainage system to divert this storm water.

(b)He claims the judgment debtor is responsible for incorrectly signing off a consent regarding another adjacent property due to an access way exceeding a desirable gradient.  As a result the judgment debtor claims the judgment creditor is liable to pay invoices he has just provided totalling $42,187.50 for realignment work.

(c)      He appears to claim he has appeal rights regarding the order for costs made against the judgment debtors in the Environment Court.

(d)He claims he has made complaints to the New Zealand Planning Institute and the Ombudsmen as to the conduct of the judgment creditor Council generally.

[22]     I turn now to deal with each of these arguments.  At the outset I dismiss Mr Page’s claim that his complaints to the Ombudsman and to the Planning Institute are relevant here.  I am satisfied they can be put to one side as they do not constitute a “cross-claim” for the purposes of setting aside a Bankruptcy Notice.  It is clear that no financial award is likely to be granted to the judgment debtors even in the event that their complaints might be successful.

[23]     Further, at the outset I must also dismiss the judgment debtor’s claim noted at para 21(c) above that they have appeal rights regarding the order for costs made against them in the Environment Court.  This does not constitute a “cross-claim”.  I am also satisfied on the limited material placed before the Court by the judgment debtors that, in the event that they do elect to pursue an appeal of the Environment Court decision (which as yet they have not done), it is doubtful this appeal would have any real likelihood of success.

[24]     Turning now to the claims outlined at paras [21](a) and (b) above, that the judgment creditor Council is responsible or liable for storm water run-off and for re- alignment  of  a  driveway/accessway,  in  my view,  these  claims  are  also  quickly disposed of.

[25]     The invoices relied on by the judgment debtors in relation to these alleged “cross-claims” are for $5,625.00 and $42,187.50.  They are all invoices issued by Mr Page’s company, Earth Design Contracting Limited addressed to the judgment creditor and are all dated 31 May 2010.  The invoices were issued some 2 days after Mr Page was served with the Bankruptcy Notice, service occurring on 29 May 2010. The judgment creditor contends that these claims are entirely “manufactured by the judgment debtor Mr Page following the issue of bankruptcy proceedings” and the claims are “invented and contrived simply for the purposes of endeavouring to set- aside the Bankruptcy Notices”.

[26]     What appears clear from the evidence before the Court is that there is no independent verification of any kind for the substantial amounts claimed in each of these 31 May 2010 tax invoices.

[27]     In addition, those tax invoices are all addressed to the judgment creditor Council and issued by Earth Design Contracting Limited a company which is an entirely separate legal entity from the judgment debtors.

[28]     Clearly  from  the  material  before  the  Court  this  matter  has  a  long  and protracted history and I am satisfied there is no genuine evidence before the Court to support the substance of Mr Page’s assertions that a genuine cross-claim exists here.

[29]     And, given the fact that the tax invoices in question have all been issued by Earth  Design  Contracting  Limited  and  not  the  judgment  debtors,  this  also  may present some difficulties for the judgment debtor’s contention that it is they who have a viable cross-claim against the judgment creditor.

[30]     Although given my conclusions at paras [12] and [13] above, I do not have to decide the question whether the judgment debtors have satisfied the Court that they have a proper cross-claim against the judgment creditor here, I conclude by a reasonably significant margin, that they have failed to satisfy the burden of proof on them to establish that genuine triable cross-claim.   For this reason also I would dismiss their present application.

[31]     As an aside, I note that I have not addressed the issue of whether or not Mr Page as a self-represented litigant and non-lawyer is permitted to represent the interests of the other judgment debtor, Ms Wilson here.   I have proceeded on the basis that this is not an issue before me, there having been no objection by or on behalf of the judgment creditor or Ms Wilson.

Conclusion

[32]     For all the reasons outlined above, the judgment debtors’ application to set- aside the Bankruptcy Notices issued against them is dismissed.

[33]     An order is now made that the judgment debtors are to have a further period of 5 working days from the date of this judgment to pay or satisfy the amount

claimed from them in the Bankruptcy Notices, failing which proceedings for their adjudication in bankruptcy can be brought.

[34]     As to costs, the judgment creditor has succeeded in opposing this application and I see no reason why costs should not follow the event here.  Costs are awarded to the judgment creditor on this application on a 2B basis together with disbursements as fixed by the Registrar.

‘Associate Judge D.I. Gendall’