Stevens v Commissioner of Inland Revenue HC Wellington CIV 2010-485-81

[2010] NZHC 1180

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2010-485-000081

IN THE MATTER OF     the Insolvency Act 2006

AND

IN THE MATTER OF     the bankruptcy of MD Stevens

BETWEEN  MARK DAVID STEVENS Debtor

ANDTHE COMMISSIONER OF INLAND REVENUE

Creditor

Hearing:         5 July 2010

Counsel:         Y Meng for creditor

JT Parry for Globe Business Services Ltd (in liquidation) a creditor in support

Judgment:      5 July 2010 at 11:58

(ORAL) JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for adjudication order]

Solicitors:           Inland Revenue Department, PO Box 1462, Wellington for creditor

Ford Sumner Lawyers, PO Box 25 299 Wellington for creditor in support

And To:             MD Stevens, 11 Sovereign Point, Khandallah, Wellington, debtor

STEVENS V COMMISSIONER OF INLAND REVENUE HC WN CIV 2010-485-000081  5 July 2010

[1]      The judgment creditor applies for an order adjudicating Mark David Stevens a bankrupt.  The proceeding has been subject to two previous adjournments.

[2]      The  Commissioner  obtained  judgment  against  Mr Stevens  in  the  District Court at Wellington on 9 February 2009.  The Commissioner requested a bankruptcy notice be issued.  A bankruptcy notice was issued and was served on Mr Stevens.

[3]      He did not comply with the bankruptcy notice.   That resulted in an act of bankruptcy occurring.   The Commissioner filed an application for an adjudication order.  It was first called on 10 May 2010.  Associate Judge Gendall’s file minute on that day records:

a.        debtor suffering ill-health b.        proposal to be put to CIR

c.        adjourned to 14 June 2010.

[4]      On 14 June 2010 the proceeding was called before Associate Judge Abbott. Counsel for the creditor appeared.  The debtor appeared.  The minute records that he had the assistance of an accountant.

[5]      The Judge’s minute recorded:

Proposal not acceptable to IRD.   Adjourn application to allow debtor to attempt to repay – need to take advice in light of another substantial debt. Adjourned to 10am on 5 July 2010.   Further adjournment unlikely unless debtor can demonstrate that he is able to meet all his debts.

[6]      Today Mr Stevens  advised  me  that  he was  hopeful  of  receiving a  large payment  from  a  trust.    However,  no  clear  statement  from  the  payee  has  been provided as to whether payment will be made and when.   Mr Stevens sought an adjournment. The Commissioner opposes a further adjournment.

[7]     The jurisdictional requirements which must be met before an order of adjudication  is  made  are  contained  in  the  Insolvency  Act  2006,  ss 13  and  36. Section 13 provides:

13       When creditor may apply for debtor's adjudication

A creditor may apply for a debtor to be adjudicated bankrupt if—

(a)the debtor owes the creditor $1,000 or more or, if 2 or more creditors join in the application, the debtor owes a total of $1,000 or more to those creditors between them; and

(b)the debtor has committed an act of bankruptcy within the period of 3 months before the filing of the application; and

(c)       the debt is a certain amount; and

(d)       the debt is payable either immediately or at a date in the future that is certain

Section 36 provides:

36.      Court may adjudicate debtor bankrupt

The  Court  may,  at  its  discretion,  adjudicate  the  debtor  bankrupt  if  the creditor has established the requirements set out in section 13.

[8]      The jurisdictional requirements are met in this case.  I must now consider the

Insolvency Act 2006, s 37.  Section 37 provides:

37.      Court may refuse adjudication

The Court may, at its discretion, refuse to adjudicate the debtor bankrupt if—

(a)       the applicant creditor has not established the requirements set out in section 13; or

(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; or

(d)      for any other reason an order of adjudication should not be made.

[9]      No formal notice of opposition has been filed in this case.  The only matter that has been raised for consideration is directed at the matters that are set out in the Insolvency Act 2006, s 37(c) and, possibly, (d).   In Eide v Colonial Mutual Life Assurance Society Limited[1]  the general principles involved in the exercise of the discretion under the then Insolvency Act 1967, s 26 (which is now the Insolvency

Act 2006, s 37) were analysed.  The important matters were noted there.  They need not be repeated for the purposes of this judgment.

[1] Eide v Colonial Mutual Life Assurance Society Limited [1998] 3 NZLR 632 at 635

[10]     This is one of those cases where the debtor hopes he may be able to pay but cannot present clear evidence of that position.   He is apparently looking for other work and, again no doubt, will be incurring creditor in the meantime.   No proper basis has been established which would justify my not exercising the discretion to order an adjudication in this case.  If the debtor’s position changes then, of course, he may make application to the court for an order of discharge.

[11]     In all the circumstances, I am satisfied that an order of adjudication should be made.  Accordingly, I order that Mark David Stevens be adjudicated a bankrupt.

[12]     Costs based on Category 2 Band B are ordered in favour of the creditor and the supporting creditor, together with disbursements as fixed by the Registrar.

The order is made at 11:58.

JA Faire

Associate Judge