Resene Parts Limited v Ariyani HC Auckland CIV 2010-404-1644

[2010] NZHC 1240

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2010-404-001644

IN THE MATTER OF     the Insolvency Act 2006

AND

IN THE MATTER OF     the bankruptcy of ARIO ARIYANI BETWEEN  RESENE PAINTS LIMITED

Judgment Creditor

AND  ARIO ARIYANI Judgment Debtor

Hearing:         23 July 2010

Counsel:         T Tran for judgment debtor

no appearance for judment creditor or Official Assignee

Judgment:      23 July 2010

ORAL JUDGMENT OF ASSOCIATE JUDGE ABBOTT

Solicitors:

Gibson Sheat, PO Box 2966, Wellington 6011 for judgment creditor

McVeagh Fleming, PO Box 300844, North Shore City 0752 for judgment debtor

RESENE PAINTS LIMITED V ARIO ARIYANI HC AK CIV 2010-404-001644  23 July 2010

[1]      On 6 July 2010 I made an order, in default of appearance by the judgment debtor (debtor), adjudicating him bankrupt.  He has applied for recall and rescission of that order.

[2]      Before dealing with the application itself, it will help an understanding of the decision to give some background.

[3]      The  judgment  creditor’s  (creditor)  application  for  adjudication  was  first called before me in the bankruptcy list on 8 June 2010.   At that time the debtor appeared in person and sought time to put an offer to the creditor to settle his debt. After having stood the matter down to allow him to discuss that offer with counsel for the creditor, and having been informed that the creditor was unwilling to accept the particular proposal, I adjourned the application to the bankruptcy list on 6 July

2010 to allow the debtor time to consider whether he was eligible for entry into the no assets procedure or for a summary instalment order.

[4]      When the matter was called again on 6 July 2010 the debtor was not present. Counsel for the creditor was unaware of any steps that the debtor may have taken to establish his eligibility for the no assets procedure or a summary instalment order. Accordingly he sought and was given leave to proceed and the order for adjudication was made.

[5]      Before the order for adjudication was sealed counsel for the debtor filed a memorandum asking for a stay of sealing of the order to allow the debtor time to pay the  judgment  debt,  and  upon  confirmation  of  that  payment  for  the  order  to  be recalled and rescinded.  The creditor supported that request.

[6]      It transpires that after the hearing on 6 June 2010 the debtor took steps to apply for a summary instalment order, and approached an insolvency practitioner who agreed to be the supervisor for that order, but subsequently made arrangements with a third party funder to enable him to clear the debt in full.  Unfortunately, he understood that the application had been adjourned for a month, rather than to 6 July

2010, and was anticipating a further appearance in this court on 8 July 2010.

[7]      I granted an interim stay to allow the debtor opportunity to pay the money into his solicitor’s trust account, and to obtain the consent of the Official Assignee. The application was eventually adjourned to this date to allow him time to reach agreement with Official Assignee on his costs and to make arrangements to clear them.

[8]      As a preliminary matter, I will comment on the form of the application.  It has been made by memorandum rather than a formal application.  That was both for reasons of speed and to avoid incurring additional costs.   I am prepared, in the circumstances of the case, to allow the application to proceed on that basis.

[9]      It is open to the court to recall an order for adjudication, and rescind it in appropriate   circumstances:   Re   White   ex   parte   John   White   Associates   Ltd (in liquidation) HC Hamilton CIV 2003-419-000079 15 May 2003, Master Faire.

[10]     In most circumstances of recall, the application is made almost immediately, before  the  order  is  sealed  and  before  the  bankruptcy  advances.     In  other circumstances  (where  the  application  is  made  later),  it  would  normally  be appropriate to apply for annulment.  Although a relatively lengthy period has now passed since the order for adjudication was made, I am prepared to proceed with recall, rather than require the debtor to apply for an annulment, having regard to the facts that the debtor acted promptly and the order for adjudication has not been sealed.

[11]     I accept that the debtor’s failure to appear at the hearing on 6 July  2010 was inadvertent.  I also accept that he took the steps that were discussed at the hearing on

8 June 2010 to try to clear the debt, initially by establishing his entitlement to enter into either the no assets procedure or a summary instalment order.  It is to his credit that in that time he also managed to procure other finance from a third party which would have enabled him to clear the debt before an order for adjudication was made. Had he appeared, and advised the court of these matters, at the hearing on 6 July

2010, I would not have made the order for adjudication and would have allowed him time to complete the payment to the creditor.

[12]     Counsel had advised me today that the debtor has reached agreement with the Official Assignee over the costs to be paid to the Official Assignee, and an amount to cover those costs has been lodged with his solicitors, to be paid out on the discharge of the order for adjudication.  In light of that the Official Assignee, who is aware of this hearing, does not oppose the order being sought.   As I have said already, the creditor has given its consent on the basis that it will be paid in full if the order is made.

[13]     I am not aware of any other creditors.  Certainly no other creditor appeared at either hearing of the application for adjudication.

[14]     In all these circumstances I consider it just to allow recall, on condition that the creditor’s debt and the Official Assignee’s costs are paid.

I make an order that the order for adjudication made on 6 July 2010 is recalled and rescinded on the following conditions:

a)       The debtor’s solicitors are to pay the creditor, by 5:00pm today, out of the money held in their trust account, the sum of $9,166.58 to clear the judgment debt and the costs awarded on 6 July 2010;

b)        The  debtor’s  solicitors  are  to  pay  the  Official  Assignee,  also  by

5:00pm today, out of the balance of the money held in their trust account, the sum of $3,077.50 as the agreed costs incurred by the Official Assignee.

[15]     There is no other order as to costs in respect of this application.

Associate Judge Abbott