Tararua District Council v Reid HC Palmerston North CIV-2009-454-622

[2010] NZHC 2378

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2009-454-622

IN THE MATTER OF     the Insolvency Act 2006

AND

IN THE MATTER OF     the bankruptcy of JAMES ROBERT REID Judgment Debtor

TARARUA DISTRICT COUNCIL Judgment Creditor

Hearing:         3 December 2010

Appearances: P. Broczek - Counsel for Judgment Creditor

J. R. Reid - Judgment Debtor in person

Judgment:      8 December 2010 at 3.00 pm

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment is delivered by Associate Judge Gendall on 8 December 2010 at 3.00 pm under r 11.5 of the High Court Rules.

Solicitors:           Brookfields, Lawyers, PO Box 240, Auckland

TARARUA DISTRICT COUNCIL V JR REID HC PMN CIV-2009-454-622  8 December 2010

[1]      The  judgment  creditor’s  application  to  have  the  judgment  debtor  James Robert Reid (“Mr Reid”) adjudicated bankrupt was the subject of a defended hearing before me on 6 October 2010.   My decision on the application at the time was reserved.  My judgment dealing with the application was issued on 15 October 2010.

[2]      In that judgment I concluded that first, the judgment debtor Mr Reid had committed an act of bankruptcy here by failing to comply in the required time with a Bankruptcy Notice served upon him by the judgment creditor, secondly, that the requirements of s 13 Insolvency Act 2006 had been satisfied, thirdly that in considering the exercise of its discretion, the Court was unable to find here that the judgment debtor was able to pay his debts when due and finally, that the judgment debtor had not been able to satisfy the Court that for any other reason an order for adjudication should not be made nor that it was just and equitable for the Court here to decline the judgment creditor’s application.

[3]      Instead, in my judgment of 15 October 2010 it was noted that given the judgment debtor had paid into this Court on 4 March 2010 $9,105.36 and on 13

October 2010 a further $37,980.37, it was appropriate for him to be allowed a short additional time to satisfy his outstanding debts.  Accordingly, an order staying the bankruptcy proceeding was made but only until 15 November 2010 upon stated terms that:

... this stay is specifically to enable the judgment debtor to satisfy all debts owing by him to the judgment creditor.

[4]      The 15 October 2010 judgment went on to provide that this matter was then to be the subject of a call in the bankruptcy list at 10.00 am on 2 December 2010 and:

The purpose of this call is to consider whether all outstanding debts owing to the judgment creditor are settled, and if not, whether the order staying this proceeding should be lifted.

[5]      Although  the  $9,105.36  originally claimed  by the  judgment  creditor  was subsequently paid from funds held in Court as I had ordered on 15 October 2010, when this matter was again called on 2 December 2010 the judgment debtor confirmed that he still continued to dispute the various costs awards made against

him which were the debts claimed here by the judgment creditor and the various creditors in support and he gave no authority for any further payments to be made from the funds held in this Court to settle those further debts.

[6]      At the hearing on 2 December 2010 I adjourned this matter for a further 1 day to 3 December 2010 and indicated that the stay order made on 15 October 2010 was extended to 10.00 am on 3 December 2010.

[7]      A Minute I issued then on 2 December 2010 in Mr Reid’s presence in open

Court stated:

The stay order I made in this proceeding on 15 October 2010 is extended to 10.00 am on 3 December 2010 to give Mr Reid time to accept the position that these debts must be settled and a direction made by him that they are to be paid from the Court funds held.

[8]      The  debts  in  question  were  confirmed  by Mr  Broczek  for  the  judgment creditor and creditors in support to total $34,011.20 and specifically to comprise Court costs ordered against the judgment debtor payable to:

(a)      Woodville District Visions Incorporated Society      $  1,593.00 (b)      Evan Matthew Nattrass  $  4,790.00 (c)      Troy Donald Gerbich  $  9,842.90 (d)      Troy Donald Gerbich  $     678.00

(e)      Tararua District Council  $17,107.30

$34,011.20

[9]      On 3 December 2010 this matter was again called at 9.30 am.  Mr Broczek appeared as counsel for the judgment creditor and supporting creditors and Mr Reid again appeared in person.

[10]     Mr Reid confirmed specifically in response to a question from the Court that:

I have the ability to pay my debts.

and went on to say further that he opposed any adjudication order being made.

[11]     Mr Reid again claimed that the payment into Court of $37,980.37 on 13

October 2010 showed that he was solvent and could meet his debts.  Nevertheless, he again made no response to the Court’s continuing request that he provide a detailed statement of his financial position and confirmation that he was able to meet all his debts as they fell due.  In this regard, mention is made of the evidence before this Court of Lisa Gay Hughes in her affidavit sworn 1 October 2010 referred to at para [57] of my judgment of 15 October 2010 such affidavit being provided on behalf of the judgment creditor.   In this affidavit, Ms Hughes indicated that the judgment debtor at present had unpaid Court ordered costs in favour of the judgment creditor and a range of other different parties which at that point totalled $76,382.56.

[12]     Notwithstanding this, on 3 December 2010 before me Mr Reid again stated that “as a matter of principle” he was not prepared voluntarily to meet any of the further outstanding costs due to the judgment creditor or any of the other creditors, although he did acknowledge that he had exhausted his appeal rights concerning those costs orders as in each case his appeals against the orders to the Court of Appeal had been struck out.

[13]     In essence Mr Reid’s defence here appears to be that he is not a debtor who is unable to pay his debts but rather he is a debtor who is unwilling to do so.

[14]     In my view, however, this does not answer the issues which are before the Court.   Mr  Reid  at  no time  has  placed  before the  Court  any verified  financial information as to his assets, liabilities, income or commitments and his ability to meet his debts as they fall due.   At no time has he provided a list of his debts. Before me on 3 December 2010 he simply stated that he had a print out from his bank showing a credit in his cheque account of some $70,000.00.  This print out was

not provided to the Court, nor was any affidavit evidence as to its existence made available.

[15]     This  matter  has  a  reasonably  long  history.    The  Bankruptcy  Notice  in question was served upon the judgment debtor in November 2009.  No application to set-aside the Bankruptcy Notice was made.  The present bankruptcy application was filed on 16 December 2009 nearly 12 months ago.   Significant indulgences have been granted to the judgment debtor on a number of occasions to put his affairs in order and to allow him time to appeal to the Court of Appeal against each of the costs orders in question.   These appeals were all unsuccessful.   Mr Reid has repeatedly failed to provide proper financial information to this Court.  It is difficult to escape the conclusion that his intention in doing this under all the circumstances here is simply to “toy” with the Court and his creditors and to use what means he can to thwart the proper processes.   In the interests of all parties here and broader administration of justice concerns, this cannot be allowed to continue.

[16]     Notwithstanding these concerns, however, as I have noted above it is clear that Mr Reid has paid a substantial sum being $37,980.37 into this Court which is still retained.   This more than covers the further debts outstanding here to the judgment creditor and to the creditors in support of the present application.

[17]     Before me, counsel for the judgment creditor and the creditors in support effectively made an oral application that, in the event that an order for adjudication was not made, the Court order payment from this $37,980.37 retained in Court of the total $34,011.20 debts outstanding to the judgment creditor and supporting creditors as outlined at para [8] of this judgment.

[18]     On 3 December 2010, Mr Reid made no response to this oral application for payment of the debts other than to say again that he did not consent to the payments being made and that he continued to dispute the Court ordered costs debts, despite the fact that he had exhausted all his legal appeal remedies.

[19]     Under these circumstances, in my view, the appropriate way to proceed here is for the judgment creditor’s adjudication application to be dismissed upon the basis

that an order is made now for payment of these debts totalling $34,011.20 from the monies presently held in this Court.   This will bring matters to a conclusion and clearly it is in the overall interests of justice that this occurs.  It will clear all debts associated with the current proceedings and will mean therefore that no reason exists for an adjudication order to be made against Mr Reid.

[20]     In addition, if Mr Reid wishes to pursue some other action with respect to these Court ordered costs against him (despite his appeals to the Court of Appeal being unsuccessful) he is of course free to do so and, as the major cost debts paid are to the Local Authority and related parties, recovery of these amounts ultimately, if Mr Reid is successful, would presumably occasion no difficulty.

[21]     That said, despite Mr Reid having committed an act of bankruptcy here, for the reasons outlined above, I now exercise my discretion to refuse an order for his adjudication.   In doing so, I confirm, if necessary in the exercise of the inherent jurisdiction of this Court, that the oral application made on behalf of the judgment creditor  and  supporting  creditors  for  payment  of  their  debts  from  the  amounts retained in this Court succeeds.  Appropriate orders are to follow.

Orders

[22]     The following orders are now made:

(a)The present application for an order adjudicating Mr Reid bankrupt is dismissed.

(i)	To Tararua District Council in settlement of their various costs awards	$17,107.30
(ii)	To Woodville District Visions Inc Society in settlement of their costs award	$1,593.00
(iii)	To Evan Matthew Nattrass in settlement of his costs award	$4,790.00

 

(b)       From the sum of $37,980.37 held by this Court in this proceeding, the following payments are to be made:

(iv)	To Troy Donald Gerbich in settlement of his costs awards	$9,842.90
And the sum of	$   678.00
(v)	The balance of $3,969.17 together with any interest earned thereon is to be paid to the judgment debtor Mr Reid.

[23]     As to costs on the present adjudication application, no submissions were made to me regarding this issue.  The application although dismissed has achieved payment of the outstanding costs debts to the judgment creditor and supporting creditors and to that extent it has notionally succeeded.

[24]     If costs are in issue between the parties and are unable to be agreed, then the following directions are to apply:

(a)The judgment creditor and the supporting creditors are to file and serve memoranda on the costs issue within 20 working days of today.

(b)The judgment debtor Mr Reid is then to have a further 20 working days to file and serve his memorandum in response on the costs issue.

(c)      Those memoranda are then to be referred to me and in the absence of either party indicating they wish to be heard on the issue I will decide the question of costs based upon the material before the Court.

‘Associate Judge D.I. Gendall’