Synnott v Wood - [2015] NZHC 217

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2014-409-000200 [2015] NZHC 217

IN THE MATTER OF the Insolvency Act 2006

AND

IN THE MATTER OF

the bankruptcy of LEON DEREK WOOD

BETWEEN

RICHARD JEFFREY SYNNOTT and TONY WILLIAM WHITE (as trustees of the R J Synnott No 2 Family Trust) Judgment Creditors

AND

LEON DEREK WOOD Judgment Debtor

Hearing: 19 February 2015

Appearances:

G M Downing for Judgment Creditors
P N Allan for Judgment Debtor

R P Lemm for Commissioner of Inland Revenue (as creditor in support)

Judgment:

19 February 2015

JUDGMENT OF ASSOCIATE JUDGE OSBORNE
on application for adjudication in bankruptcy

Introduction

[1] The judgment creditors obtained a judgment for $22,837.84 against the judgment debtor (Mr Wood) on 3 April 2014.

SYNNOTT v WOOD [2015] NZHC 217 [19 February 2015]

[2] Mr Wood committed an available act of bankruptcy on 4 August 2014 when he failed to comply with the requirements of a bankruptcy notice served on him on
26 April 2014.1

Application for an adjudication order

[3] The creditors now apply for an order adjudicating Mr Wood bankrupt.

[4] Mr Wood filed opposition to the application asserting two grounds of opposition, namely that:

(a) he is able to pay his debts; and

(b)it is just and equitable that the Court does not make an order for adjudication.

[5] Alternatively (but without formal application) he seeks an order halting the proceeding.

Adjudication in bankruptcy – the statutory regime

[6] Section 36 Insolvency Act 2006 provides that the Court may, at its discretion, adjudicate the debtor bankrupt if the creditor has established the requirements set out in s 13 of the Act.

[7] All the requirements of s 13 of the Act were established in this case in that: (a) Mr Wood owes the creditors more than $1,000;
(b)Mr Wood committed an act of bankruptcy within three months before the filing of the application;

(c) The creditors’ debt is a certain amount; and

1 Mr Wood’s application to set aside the bankruptcy notice was dismissed and the time for
payment extended to 1 August 2014 – see Synnott & White v Wood [2014] NZHC 1705.

(d) The debt is immediately payable.

[8] Relevantly, s 37 of the Act 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] The Court of Appeal has recognised that the “ability to pay debts” referred to

in the legislation:2

… means that the debtor must be able to pay his or her debts as they are incurred, either immediately or within a reasonable time.

Mr Wood’s ability to pay his debts

[10] As evidence of…

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 Synnott v Wood

Details

AGLC: Synnott v Wood [2015] NZHC 217
Case: [2015] NZHC 217
Decision Date: 19 February 2015

CaseChat Overview and Summary

The High Court of New Zealand considered an application for adjudication in bankruptcy by Richard Jeffrey Synnott and Tony William White, as trustees of the R J Synnott No 2 Family Trust, against Leon Derek Wood. The trustees obtained a judgment against Wood for $22,837.84 on 3 April 2014. Wood failed to comply with a bankruptcy notice served on him on 26 April 2014, constituting an available act of bankruptcy. The court needed to decide whether to refuse the creditors' application for an order adjudicating Wood bankrupt based on Wood's opposition on the grounds that he could pay his debts and that it was just and equitable not to make such an order.

The court found that Wood's ability to pay his debts was not substantiated as he had not provided evidence of his ability to access the anticipated funds within a reasonable time. The court also determined that it was not unjust or inequitable to make the order as Wood's claims against the trustees would not be hindered if he satisfied the Official Assignee of their tenability. Furthermore, the court did not consider Wood's complaints about the creditors' solicitors' conflict of interest to be a valid reason to refuse the adjudication.

The court concluded that there were no valid grounds to refuse the adjudication and ordered that Wood be adjudicated bankrupt. The court also dismissed Wood's application to halt the proceedings and ordered Wood to pay the creditors' and the Commissioner of Inland Revenue's costs on a 2B basis, along with disbursements and reasonable travel and accommodation costs of counsel.

Orders