Smiths Hardware Limited t/a Smiths Mitre 10 v McConnell

[2022] NZHC 72

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2021-409-000544

[2022] NZHC 72

UNDER

the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of CRAIG MCCONNELL

BETWEEN

SMITHS HARDWARE LIMITED trading as SMITHS MITRE 10

Judgment Creditor

AND

CRAIG MCCONNELL

Judgment Debtor

Hearing:	On the Papers
Counsel:	A J Davis for Judgment Creditor
Judgment:	2 February 2022

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 2 February 2022 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

SMITHS HARDWARE LTD trading as SMITHS MITRE 10 v MCCONNELL [2022] NZHC 72 [2 February 2022]

[1]The judgment creditor obtained judgment against the judgment debtor for

$60,153.06 in the Christchurch District Court on 22 October 2021. It has successfully applied for the issue of a bankruptcy notice against the judgment debtor in respect of the judgment but has been unable to effect personal service of the bankruptcy notice upon him.

[2]                 The judgment creditor applies for an order dispensing with personal service and authorising substituted service of the bankruptcy notice on the judgment debtor by:

(a)sending an image of the bankruptcy notice to the judgment debtor’s mobile telephone number; and

(b)advertising the bankruptcy notice in the Otago Daily Times (being a newspaper that circulates in the area where the judgment debtor now resides).

[3]                 The application is made in reliance upon r 6.8 High Court Rules 2016. It has been made on a without notice basis. That is clearly appropriate as to require personal service of the application upon the judgment debtor would defeat the purpose of the application itself.

[4]Rule 6.8 provides:

6.8      Substituted service

(1)If reasonable efforts have been made to serve a document by a method permitted or required under these rules, and either the document has come to the knowledge of the person to be served or it cannot be promptly served, the court may---

(a)      direct---

(i)that instead of service, specified steps be taken that are likely to bring the document to the notice of the person to be served; and

(ii)that the document be treated as served on the happening of a specified event, or on the expiry of a specified time:

(b)      when steps have been taken for the purpose of bringing, or which have a tendency to bring, the document to the notice of the person

on whom it is required to be served, direct that the document be treated as served on that person on a specified date:

(c)      subject to any conditions that the court thinks just to impose, dispense with service of a document on a person and give to the party by whom the document is required to be served leave to proceed as if the document had been served.

(2)If a direction is given under subclause (1)(a) in respect of a document, the document must be treated as having been served at the place---

(a)      at which the document is likely to have come to the notice of the person to be served; or

(b)      where that person was or is likely to have been on the happening of the event or the expiry of the time specified under subclause (1)(a)(ii).

[5]                 The evidence before me is contained in an affidavit of Shona Dawn Campbell. It satisfies me of the following matters:

(a)Ms Campbell is a process server in the Queenstown Lakes area;

(b)she received instructions to serve the bankruptcy notice upon the judgment debtor on or around 7 December 2021;

(c)she has spoken to the judgment debtor on his mobile telephone and also exchanged text messages with him;

(d)the judgment debtor is aware that Ms Campbell wishes to serve him with a court document relating to the debt owing to the judgment creditor;

(e)the judgment debtor has indicated that he does not feel able to accept or make arrangements for service of documents;

(f)Ms Campbell has attempted to effect personal service of the bankruptcy notice upon the judgment debtor at his residential address but has been unsuccessful in that attempt; and

(g)if substituted service is effected in the manner I adopt below, the bankruptcy notice is likely to come to the attention of the judgment debtor.

[6]                 It is not reasonable to expect the judgment creditor to continue to make attempts at personal service when the judgment debtor has indicated that he will not co-operate in accepting service or making arrangements to do so. In these circumstances, I am satisfied the requirements of r 6.8 are met and it is appropriate that I dispense with personal service of the bankruptcy notice and order substituted service of it upon the judgment debtor.

[7]                 I will not order that the bankruptcy notice be advertised in the Otago Daily Times. That appears, in the circumstances of this case, to be an unnecessary expense. The judgment creditor has both a mobile telephone number and a residential address for the judgment debtor and substituted service can be adequately effected without public advertisement. I note, also, the judgment debtor has indicated he is suffering from stress associated with debts owed to several creditors. Advertising the bankruptcy notice publicly might unnecessarily add to his stress but also potentially hamper negotiations he may be having with his creditors to the detriment of all involved.

Result

[8]The orders I make are as follows:

(a)Personal service upon the judgment debtor of the bankruptcy notice issued in this proceeding is dispensed with.

(b)Service of the bankruptcy notice and the sealed order made on this application is to be deemed to have been effected two working days following completion of the following:

(i)by leaving the bankruptcy notice and sealed order with an occupant at the judgment debtor’s residence, being the address identified at paragraph 2 of the affidavit of Shona Dawn

Campbell dated 22 December 2021, or if there is no occupant at that address, by affixing the documents to the front door of the residence, and

(ii)following completion of (b)(i) above, by the judgment creditor’s solicitors sending a full image of the bankruptcy notice, along with a text message to the mobile telephone number of the judgment debtor identified at paragraph 1(b) of the notice of application. The text message shall read as follows:

Smiths Hardware Ltd trading as Smiths Mitre 10, obtained a judgment against you in the District Court at Christchurch on

22 November 2021 for $60,153.06. The High Court at Christchurch has on the application of Smiths Hardware Ltd issued a bankruptcy notice against you in respect of the judgment. On 2 February 2022 the High Court made an order authorising substituted service of the bankruptcy notice upon you. In accordance with the Court’s order an image of the bankruptcy notice is attached. The bankruptcy notice has been delivered to your residential address on [date to be entered]. Service of the bankruptcy notice is deemed to have occurred two working days following transmission of this text message to you; that is on [date].

Smiths Hardware Ltd is represented by A J Davis of the firm of solicitors Clark Boyce, 328 Durham Street North, Christchurch, telephone [phone] and email
 [email protected]. A hard copy of the bankruptcy notice can be obtained from the offices of Clark Boyce or the High Court at Christchurch.

(c)I reserve leave to the judgment creditor to apply for substituted service of any subsequent application and/or related documents required to be personally served on the judgment debtor in this proceeding by way of memorandum provided such memorandum includes the following information:

(i)details of any recent contact with the judgment debtor;

(ii)details of attempts to serve the further documents on the judgment debtor;

(iii)confirmation the judgment debtor still uses the same mobile telephone number and continues to reside at the same address (or a current address if he does not); and

(iv)any further contact details for the judgment debtor such as telephone numbers or social media information.

[9]The costs of this application are reserved.

[10]              I reserve leave for either party to apply for further directions as may be required.

O G Paulsen Associate Judge

Solicitors:
Clark Boyce, Christchurch