Sia-Fox v Jubilee Management Limited (in liquidation)

[2012] NZHC 1444

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2012-454-184 [2012] NZHC 1444

IN THE MATTER OF     The Insolvency Act 2006

AND

IN THE MATTER OF      BOON KEE SIA-FOX Judgment Debtor

BETWEEN  JUBILEE MANAGEMENT LIMITED (IN LIQUIDATION)

Judgment Creditor

Hearing:         15 June 2012

Counsel:         D. Sheppard - Counsel for Judgment Creditor

B.K. Sia-Fox - Judgment Debtor in person

Judgment:      25 June 2012

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment of Associate Judge Gendall was delivered on 25 June 2012 at 4.00 pm under r 11.5 of the High Court Rules.

Solicitors:           Fitzherbert Rowe, Solicitors, Private Bag 11016, Palmerston North

Todd Whitehouse, Solicitors, 27 Queen Street, Levin 5510

JUBILEE MANAGEMENT LIMITED (IN LIQUIDATION)v BK SIA-FOX HC PMN CIV-2012-454-184 [25

June 2012]

[1]      Before the Court is an application by the judgment creditor seeking an order to adjudicate the judgment debtor bankrupt.

[2]      This matter came before me in the List on 14 June 2012 and I adjourned matters to a formal hearing on 15 June 2012.   This was because issues had been raised by the judgment debtor on 14 June 2012 concerning detailed written submissions which were made on that day with respect to the application by counsel for the judgment creditor.

[3]      To enable the judgment debtor to have an opportunity to properly respond to these (and given particularly that she appeared to be a self-represented litigant) matters were adjourned to the hearing on 15 June 2012.

[4]      In doing so, I issued a Minute dated 14 June 2012 in which at para [17] I

noted the following:

[17]     .... I repeat that the application before me is one simply seeking an order for adjudication in bankruptcy of the judgment debtor.  The debt in question is $19,853.58.   What is important to the Court in its consideration of this matter is whether or not Ms Sia-Fox is in fact insolvent and whether a bankruptcy order is appropriate.   There is absolutely no material before the Court at present as to Ms Sia-Fox’s financial position and in particular details of her assets, liabilities and her ability to pay this debt owing to a judgment creditor.  Given the oral claims she has made before me today as to the substantial magnitude of her assets earlier, it might well be arguable that there may  be  some  possible  way  she  can  satisfy  the  Court  that  the

$19,853.58 owing can be properly paid.

[5]      After issuing that Minute on 14 June 2012, Ms Sia-Fox on 15 June 2012 provided a Memorandum to this Court together with certain other material.   This material included a rate demand and government valuation certificate for other properties she indicated were held or owned by her together with a bank mortgage

summary she says related to mortgages on those properties.   More on this aspect later.

[6]      Returning to the present application before the Court, as I have noted it is one seeking an order adjudicating the judgment debtor bankrupt on the basis of unpaid debt owing to the judgment creditor.  This unpaid debt totalling $19,853.58 relates to three judgments obtained in this Court for costs ordered against the judgment debtor on earlier occasions.

[7]      A Bankruptcy Notice issued for these amounts was served on the judgment debtor on 21 March 2012.

[8]      Although it now seems that on 30 March 2012 the judgment debtor did file in this Court a “Memorandum to Court Bankruptcy Notice Counter-Claim” document it could not be said that it was in any way a properly supported Application to Set- Aside the Bankruptcy Notice.

[9]      Subsequently, the present bankruptcy proceedings were filed by the judgment creditor and on 19 April 2012 they were served upon the judgment debtor.

[10]     Her response was to file on 14 May 2012 a document headed “Affidavit of Boon Kee Sia-Fox Bankruptcy Notice Counter-Claim” and on 17 May 2012 to file a further document headed “Memorandum of Boon Kee Sia-Fox”.

[11]     None of these documents have constituted a formal Notice of Opposition to the present bankruptcy application.   Notwithstanding this, it is clear from the documents provided by the judgment debtor and her oral submissions made at the various calls of this matter that she does oppose the bankruptcy application.

[12]     Her opposition as I understand it is essentially based upon several factors:

(a)      She claims she has paid at least $95,000.00 to the ANZ Bank for indebtedness owed by the judgment creditor to that bank.  Thus she maintains she is entitled to subrogation rights as to a part of the

bank’s debt or alternatively she contends that she is a creditor of the judgment creditor company for at least that sum.

(b)       In addition, the judgment debtor claims she has paid at least another

$105,000.00 on behalf of the company and is also a creditor of the company for that sum.  This and the amount referred to above should be set-off against the $19,853.58 costs debt owed by her.

(c)      In any event, the judgment creditor claims that she is solvent and has substantial assets and is solvent.  In this regard, leaving on one side the debts noted at [12](a) and (b) above that she claims are owed to her by the judgment creditor, she has placed before the Court three documents.  The first is a Quotable Value Rating Valuation Certificate for a property at 158 Waerenga Road, Otaki owned by a company she says she owns (Jabez Properties Limited) which shows a rating value of $160,000.00.   The second document she has placed before the Court is a Wellington City Council Rates Assessment confirming a capital rating value for a property at 32 Stewart Drive, Newlands, Wellington at $330,000.00.    This property appears from the assessment to be in her  sole name.   The judgment debtor  finally confirms  that  bank  mortgages  over  these  two  properties  total

$291,940.01 as at 14 June 2012, and she has provided as a third document a bank confirmation of this.

[13]     Given the total rating valuation of these two properties at $490,000.00 less the  bank  mortgage  indebtedness  of  $291,940.01,  this  leaves  an  equity  in  the properties of nearly $200,000.00.  On its own this would appear to indicate that the judgment debtor has significant assets which more than cover the $19,853.58 debt owing to the judgment debtor here.  No other liabilities of the judgment debtor other than this mortgage debt and the costs awards against her have been identified at this point.

[14]     Notwithstanding this, as counsel for the judgment creditor urges upon me, there  can  be  no  doubt  here  that  the  judgment  debtor  has  committed  an  act  of

bankruptcy in accordance with s 16(1) Insolvency Act 2006.    In terms of s 17(1) Insolvency Act 2006, the judgment debtor has been served with a Bankruptcy Notice in respect of the three costs orders made earlier in this Court and she has failed to satisfy the requirements of the Notice or to make any proper application to set it aside within the time limits required.

[15]     That said, on its face, the judgment creditor is entitled to the order sought here.

[16]     It is clear, however, that s 37 Insolvency Act 2006 enables the Court at its discretion to refuse an order for adjudication if:

(b)        the debtor is able to pay his or her debts ...; or

(c)        it is just and equitable that the Court does not make an order of adjudication ....”

[17]     Here, leaving aside all other matters, in my view issues do arise first, as to whether the judgment debtor is in fact able to pay her debts and secondly, given her asset and liability position, whether it is just and equitable for the Court to make an order for adjudication in this case.

[18]     Clearly an order for adjudication changes the judgment debtor’s status in a

major way and is a serious matter.

[19]     In this case on balance I am satisfied that the judgment debtor should be given one final opportunity to clear the costs debts which are outstanding.  It would appear she is in a position where she should be able to do this, given at least her equity  in  the  properties  which  I  have  noted  above.    Certainly  as  a  possible alternative, some discussion with respect to the provision of security for the debt if in fact the debt cannot be immediately paid might provide a useful next step.

[20]     That said, and given that before me the judgment debtor simply sought an adjournment of this matter to give her time to reorganise certain affairs on the basis that first, a mortgagee sale of a substantial property she was occupying was about to take place on 5 July 2012 and might result in some possible payment to her, and

secondly,  a  major  relationship  property  settlement  conference  with  her  former partner is due to take place on 12 and 13 July 2012, it does seem to me that one final adjournment of this matter until after those dates is appropriate.

[21]     This matter is therefore adjourned to one final call in the List at 10.00 am on

9 August 2012. This is for the purpose of the debt being cleared or satisfied.  Failing this, then at the very least proper independently verified evidence needs to be before the Court as to the judgment debtor’s overall financial position and her ability to pay all her debts including the debt due to the judgment creditor as they fall due or over a reasonable period of time.

[22]     Costs at this point are reserved.

‘Associate Judge D.I. Gendall’