Smith v Keenan - [2022] NZHC 618

IN THE HIGH COURT OF NEW ZEALAND GREYMOUTH REGISTRY

I TE KŌTI MATUA O AOTEAROA MĀWHERA ROHE

CIV-2021-418-000024

[2022] NZHC 618

UNDER the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of Anthea Rose Keenan

BETWEEN

RAYMOND BRUCE SMITH

Judgment Creditor

AND

ANTHEA ROSE KEENAN

Judgment Debtor

Hearing: 28 March 2022

Appearances:

M D W King for Judgment Creditor Judgment Debtor in person

Judgment:

30 March 2022

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 30 March 2022 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

SMITH v KEENAN [2022] NZHC 618 [30 March 2022]

[1] The judgment creditor (Mr Smith) makes a creditor’s application to adjudicate the judgment debtor (Ms Keenan) bankrupt under s 13 of the Insolvency Act 2006 (the Act). Ms Keenan opposes the application.

Background

[2] Mr Smith is the Mayor of the Westland District Council. This application has its origin in a defamation proceeding brought by Mr Smith against Ms Keenan and Geoffrey King and heard in the Christchurch High Court. Ms Keenan and Mr King did not take any formal steps to defend the claim. It was determined by way of formal proof before Gendall J. In a judgment of 31 May 2021, Gendall J entered judgment against Ms Keenan and Mr King for liability for reasonable solicitor/client costs pursuant to s 24(2) Defamation Act 1992.1 The amount of those costs was subsequently fixed in a judgment of 29 June 2021. Gendall J ordered that Ms Keenan and Mr King were jointly and severally liable to pay Mr Smith costs and disbursements totalling $32,667.74.2 The judgment was sealed on 30 June 2021.

[3] Ms Keenan filed an appeal from the judgments to the Court of Appeal under CA479/2021. She did not obtain a stay of enforcement of the judgment from this Court or the Court of Appeal.

[4] Mr Smith took steps to obtain payment of his judgment. He applied for the issue of a bankruptcy notice against Ms Keenan. It was dated 6 September 2021 and was served upon Ms Keenan on 23 September 2021. Mr King paid a one-half share of the judgment sum, and the bankruptcy notice was issued only in respect of the balance of $16,333.87, which was, and remains, unpaid.

[5] Ms Keenan asserts an application to set aside the bankruptcy notice was filed on 27 September 2021. She did not in fact make such an application, but she did send an email to the Court on that date asserting that she and her husband did not owe anybody any money, were not insolvent, and should not be subject to a bankruptcy

1 Smith v King [2021] NZHC 1252 at [49].
2 Smith v King [2021] NZHC 1557 at [11].

notice. The email was not, and was not treated as, a formal application to set aside the bankruptcy notice.

[6] Mr Smith’s creditor’s application was filed on 5 November 2021, but personal service could not be effected…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Smith v Keenan

Details

AGLC: Smith v Keenan [2022] NZHC 618
Case: [2022] NZHC 618
Decision Date: 30 March 2022

CaseChat Overview and Summary

The case of Smith v Keenan [2022] NZHC 618 involved a creditor's application by Raymond Bruce Smith, the Mayor of the Westland District Council, to have Anthea Rose Keenan, the judgment debtor, adjudicated bankrupt under the Insolvency Act 2006. Keenan opposed the application. The dispute arose from a defamation proceeding between Smith and Keenan, which resulted in a judgment against Keenan for costs and disbursements totalling $32,667.74, which she failed to pay.

The legal issues that the court had to decide were whether the grounds for the adjudication of Keenan's bankruptcy had been established under s 13 of the Insolvency Act 2006, and whether there were any reasons why the court should not exercise its discretion to make an order of adjudication. The court considered Keenan's objections to the application, including her claim of solvency, her objections to the judgments obtained against her, the bankruptcy notice being issued while her appeal was pending, and her objection to Smith's counsel continuing to act for him.

The court found that Smith had established the grounds for the making of an order of adjudication under s 13 of the Act, as Keenan owed him more than $1000, she had committed an act of bankruptcy by failing to comply with the bankruptcy notice, the debt was a certain amount and immediately payable. The court also found that Keenan had not provided sufficient evidence to establish that she was solvent, and that her objections to the judgments, the bankruptcy notice, and Smith's counsel were without merit. The court therefore granted Smith's application and made an order adjudicating Keenan bankrupt. Smith was also entitled to his costs on a 2B basis plus reasonable disbursements as fixed by the Registrar.

In conclusion, the court found that Smith had established the jurisdictional facts necessary for an order of adjudication, and that Keenan had not raised any matter which would justify the court exercising its discretion to decline to make the order. The court noted that Keenan had made it plain that she would not pay her debt, and that the making of an adjudication order involved a change in her legal status that would have adverse consequences for her.

Orders