Pratt & Whitney Holdings SAS v Gapuzan

[2014] NZHC 1195

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-409-001590 [2014] NZHC 1195

IN THE MATTER OF	the Insolvency Act 2006
AND
IN THE MATTER OF	the bankruptcy of ROSAURO GAPUZAN
BETWEEN	PRATT & WHITNEY HOLDINGS SAS Judgment Creditor
AND	ROSAURO GAPUZAN Judgment Debtor

Hearing:	29 May 2014
Appearances:	S E Goodwin for Judgment Creditor No appearance for Judgment Debtor
Judgment:	30 May 2014

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

as to adjudication in bankruptcy

[1]      Pratt & Whitney Holdings SAS (“Pratt & Whitney”) obtained a judgment against Mr Gapuzan on 15 October 2013 in the District Court at Christchurch.  The judgment was for a sum of $3,887.50 representing the costs and disbursements incurred by Pratt & Whitney in a proceeding brought by Mr Gapuzan against Pratt & Whitney.    The  District  Court  proceeding  was  struck  out  with  Mr  Gapuzan,  as plaintiff, not appearing at the hearing.

[2]      Pratt & Whitney issued  a bankruptcy notice for the judgment debt.   Mr

Gapuzan did not pay the judgment debt.

[3]      Pratt  &  Whitney  then  applied  for  an  order  adjudicating  Mr  Gapuzan bankrupt.

PRATT & WHITNEY HOLDINGS SAS v GAPUZAN [2014] NZHC 1195 [30 May 2014]

Mr Gapuzan’s opposition

[4]      Mr Gapuzan filed a notice of intention to oppose the application, supported by an affidavit.

The hearing

[5]      When the proceeding was called for hearing today, Ms Goodwin appeared for the creditor.  Mr Gapuzan did not appear.

[6]      Ms Goodwin relied upon the following matters in support of the application:

(a)      Mr Gapuzan is indebted to Pratt & Whitney by reason of a District Court judgment, a sealed copy of which has been produced to this Court;

(b)Mr Gapuzan was on 18 December 2013 served with a bankruptcy notice in relation to the judgment debt;

(c)      Mr Gapuzan failed to pay the judgment debt by 23 January 2014 with the consequence that he committed an act of bankruptcy.1    The judgment debt remains unpaid, as certified by Ms Goodwin in a certificate provided to the Court at the hearing.

Discussion of Mr Gapuzan’s grounds of opposition

[7]      Although Mr Gapuzan did not appear at the hearing, he had identified for the Court in his notice of opposition grounds on which he relied.  In addition, there was his  affidavit  filed in  support  of the opposition.   Finally,  he had  filed a written submission shortly before the hearing.

[8]      I  have  in  the  circumstances  considered  the  content  of  each  of  those documents. The matters they raise can be considered under five headings:

Mr Gapuzan’s application for judicial review

[9]      Mr Gapuzan applied to the High Court for judicial review of the District

Court judgment by which he was ordered to pay costs and disbursements.

[10]     Mr Gapuzan asserted that the District Court should have stayed its judgment pending the outcome of the judicial review proceeding.

[11]     At  the  time  Mr  Gapuzan  filed  his  notice  of  intention  to  oppose  the adjudication application, his judicial review application had not been heard.  It was subsequently heard and the application was dismissed on 30 April 2014.2

[12]     It is no longer relevant to consider a stay.

Ability to pay debts

[13]     Mr Gapuzan asserted that he is gainfully employed and is able to pay his debt.

[14]     His affidavit evidence, however, contained no information as to such ability to pay debts.  Furthermore, in the written submission he filed, he recorded –

The debtor proposes to pay his debts by instalment in terms agreeable to both parties.

In itself, this appears to implicitly recognise an inability to meet his debts as they fall due.  As it is, no evidence was provided to support an ability to clear his debts either immediately or by instalment.

Justice and equity

[15]     Mr Gapuzan asserted that it is just and equitable that the Court does not make an order of adjudication.  In his notice of opposition he explained that it would be oppressive and an abuse of the Court’s process that Pratt & Whitney be allowed to pre-empt and defeat the claim which he (Mr Gapuzan) was pursuing in the High Court.

[16]     In the event, Mr Gapuzan’s judicial review proceeding has been dealt with and the application declined.

“Perjury” of the creditor

[17]     In his notice of opposition, Mr Gapuzan refers to that part of the application for an adjudication order in which Pratt & Whitney identifies the residence of the debtor.  Pratt & Whitney referred to the debtor as having, for the greater part of the past six months, resided at an address in Bishopdale, Christchurch, within the district of this Court.

[18]     Mr Gapuzan referred to  documents in other proceedings which indicated Pratt  &  Whitney’s  awareness  that  Mr  Gapuzan  had  been  resident  out  of  New Zealand.

[19]     It is clear from the documents that Mr Gapuzan has not at all times been resident in Christchurch.  However, at the times relevant to the documentation filed in this proceeding, Ms Goodwin notes both that Mr Gapuzan has been using a New Zealand email address (@xtra.co.nz) and that he has used his Bishopdale address as his address for service in the proceeding.

[20]     There is no basis upon which to conclude that the creditor in some way

intended to mislead the Court as to Mr Gapuzan’s residence.

Lack of service of the application

[21]     Mr Gapuzan asserted that service of the documents in the proceeding (which had occurred on the basis of orders as to substituted service) had not been properly effected.

[22]     Regardless of any issues as to the effectiveness of the service, Mr Gapuzan elected  (having  received  at  least  copies  of  all  documents)  to  enter  a  formal appearance in the proceeding in order to oppose the application, without registering any protest as to jurisdiction or similar.

[23]     Furthermore, following the filing of his notice of opposition Mr Gapuzan was personally served with a full set of the summons, application for adjudication and affidavit in support on 28 April 2014.

[24]     Thereafter, he chose to file his written submission in opposition dated 26

May 2014, a document in which, understandably, he no longer made any allegation of incomplete service.

[25]     This ground of opposition also falls away.

Conclusion

[26]     Pratt & Whitney has established the jurisdiction to adjudicate Mr Gapuzan bankrupt.   There is  no  reason  why the Court  should  in  its  discretion  refuse to adjudicate him bankrupt.

[27]     In addition to the judgment debt which Pratt & Whitney obtained in the District Court, Pratt & Whitney is now entitled also to the costs and disbursements awarded on the judicial review application by this Court (costs being on a 2B basis).3

With Mr Gapuzan now bankrupt, Pratt & Whitney will be able to prove in his bankrupt estate for the High Court costs and disbursements in addition to those awarded by the District Court.

Orders

[28]      I order:

(a)       Rosauro Gapuzan is adjudicated bankrupt;

(b)Rosauro Gapuzan is to pay to Pratt & Whitney Holdings SAS the costs of this proceeding on a 2B basis together with disbursements to

be fixed by the Registrar;

3      Gapuzan v The District Court at Christchurch [2014] NZHC 870 at [52].

(c)       This order is made at 2.30 pm today.

Solicitors:

Lane Neave, Christchurch.

Associate Judge Osborne