Tizzie's Limited v Wilson
[2017] NZHC 1657
•18 July 2017
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
CIV-2016-441-122 [2017] NZHC 1657
UNDER the Insolvency Act 2006 IN THE MATTER
of the bankruptcy of Gay Louise Wilson
BETWEEN
TIZZIEʼS LIMITED
Judgment creditorAND
GAY LOUISE WILSON Judgment debtor
Hearing: 14 July 2017 Appearances:
T Manktelow for the judgment creditor
Ms G L Wilson in personJudgment:
18 July 2017
JUDGMENT OF ASSOCIATE JUDGE SMITH
[1] The judgment creditor (Tizzies) applies for an order adjudicating the judgment debtor (Mrs Wilson) bankrupt.
Background
[2] On 26 July 2016 Tizzies obtained judgment by default against Mrs Wilson for
$24,673.16. The nature of the claim by Tizzies against Mrs Wilson is not relevant to the present decision, as she acknowledges the debt and says she will pay it. With interest at 5% per annum under the District Court Act 2016 calculated up to
31 May 2017, and costs in this court, the total debt is now said to be in excess of
$35,400.
[3] Tizzies issued a bankruptcy notice against Mrs Wilson on 17 October 2016 in this court at Napier. The bankruptcy notice was served on Mrs Wilson on
TIZZIEʼS LIMITED v WILSON [2017] NZHC 1657 [18 July 2017]
26 October 2016, and any application Mrs Wilson might have wished to make had to be filed within 10 working days (by 9 November 2016).
[4] Under the High Court Rules,1 any application by Mrs Wilson to set aside the bankruptcy notice was required to be made by formal interlocutory application with a supporting affidavit, and those documents were required to be served on the judgment creditor within the 10 working day period. No such application was filed by Mrs Wilson.
[5] The court has no jurisdiction to extend the 10 working day period within which a judgment debtor may apply to set aside a bankruptcy notice.2 Mrs Wilson therefore committed an act of bankruptcy on 10 November 2016 when the 10 working days period expired.
[6] Tizzies filed an application for an order adjudicating Mrs Wilson bankrupt on
29 November 2016. A date of hearing for the application was set for
2 February 2017 in the Napier registry. Mrs Wilson was served with the creditor’s
application and summons to debtor on 10 January 2017.
[7] Prior to the hearing scheduled for 2 February 2017, Mrs Wilson made a written application for an order transferring the proceeding to the Palmerston North registry of the court.
[8] When the matter was called on 2 February 2017, Mrs Wilson’s application to transfer the proceeding to the Palmerston North registry was not opposed. I made an order for transfer accordingly, and directed Mrs Wilson to file and serve a formal notice of opposition and affidavit in opposition, by 16 February 2017.
[9] Mrs Wilson duly filed a notice of opposition and affidavit by that date. The notice of opposition described the District Court judgment entered against Mrs Wilson as “totally flawed” and “out of order”. Mrs Wilson denied that she was
a “debtor”, and stated:
1 Rule 24.8 and Form B2 in the first schedule.
2 ANZ Bank New Zealand Ltd v Edwards [2013] NZHC 2756.
Apparently a person cannot be declared “bankrupt” if that person can pay.
[10] The documents filed by Mrs Wilson showed that she had entered into conditional agreements for sale of two sections in a subdivision of certain land owned by her in Bulls. She enclosed copies of the agreements for sale and purchase, each of which showed a purchase price of $65,000 and a purchasers’ finance condition to be satisfied by 10 February 2017. Mrs Wilson’s position was that, due to the section sales, she would have $130,000, less just several thousand dollars in costs, with which to meet her liabilities. Mrs Wilson expressed certain concerns over the conduct of the case in the District Court, and indicated that she intended to lodge a complaint with the Human Rights Commissioner and/or with the Judicial Conduct Commissioner.
[11] The case was called before Associate Judge Christiansen in the Palmerston North court on 23 February 2017. The Associate Judge allocated a half day fixture for 1 June 2017, and made directions for the filing of submissions. The Associate Judge also requested that Mr Peter Twigg, Mrs Wilson’s solicitor handling her property sales, report to the court and to counsel for Tizzies in relation to the property sales.
[12] Mr Twigg reported to the court in accordance with Associate Judge Christiansen’s request, on 1 May 2017. He confirmed that Mrs Wilson was currently in the process of subdividing her land in Bulls, and that there were two conditional sale contracts, each for the sum of $65,000. Mr Twigg confirmed that a resource consent for the subdivision had recently been received, and that he had sought confirmation from both purchasers in relation to the balance of conditions contained within the contracts. Mr Twigg attached a copy of the conditions of consent for the subdivision, and a copy of the subdivision plan.
[13] On 15 May 2017 Mrs Wilson filed an application for adjournment of the
1 June fixture. In her adjournment application, she stated that her subdivision “is only now getting under way”, with the actual work being done following a longer than expected administrative period. Mrs Wilson expressed the hope that a further hearing would not even be necessary if the court would grant her time to get her
subdivision completed. Tizzies would be paid from the proceeds. Mrs Wilson maintained her position that she did not owe anything to Tizzies, but said she would nevertheless pay Tizzies from the proceeds of the two pre-sold sections, leaving her dissatisfaction with the judgment of the District Court (and further concerns over the hearing in this court on 23 February 2017) to be dealt with by the Judicial Conduct Commissioner and the Human Rights Commission.
[14] Mrs Wilson’s application for an adjournment was opposed by Tizzies. An affidavit in opposition was filed by Ms Tyler, a legal executive employed by counsel for Tizzies.
[15] Ms Tyler referred to the resource consent which had been issued for the subdivision, noting that the consent was subject to twenty one conditions, three of which had to be satisfied before work could commence on the site.
[16] Ms Tyler gave evidence of enquiries she had made of the Rangitikei District Council (the Council), which elicited the information that none of the conditions in the resource consent had then been satisfied. She attached an email from the Council dated 19 May 2017, in which the Council officer advised that the Council had not had contact from Mrs Wilson since the resource consent had been issued. The Council officer advised that she was waiting on comments from other officers of the Council before she could respond on the likely cost of work the Council’s contractors would be required to attend to under the consent conditions J, K, and L. (Mrs Wilson was required to meet all associated costs incurred by the Council in relation to water connections (condition J), sewer connections (condition K) and storm water connections (condition L)). The Council’s officer had also sought further advice from within the Council as to the likely timeframe for the Council to undertake the work.
[17] Ms Tyler noted that Mrs Wilson had provided no evidence as to when the applications relating to conditions J, K, and L would be submitted to the Council. Nor had Mrs Wilson provided any advice of the approximate costs she would incur with the Council, or how she would meet those costs.
[18] I convened a telephone conference on 29 May 2017 to deal with Mrs Wilson’s adjournment request. In my minute of the conference, I recorded that Mrs Wilson had submitted that she was making progress with the sale of the two sections, and that she had expressed the view that she would be able to get the subdivision through by the end of the June 2017 or very shortly thereafter. I noted that, on the face of it, it appeared that if that were to occur there would be sufficient money available to clear the debt owing to Tizzies.
[19] In the course of the telephone conference, Mrs Wilson confirmed that she intended to pursue the issues she has with the conduct of the hearing in the District Court, and the hearing in this court on 23 February 2017, with the Judicial Conduct Commissioner and/or the Human Rights Commission, but that these issues would not be matters for consideration at the hearing of the bankruptcy application. She confirmed that her intention was to pay Tizzies from the proceeds of sale of the two sections. She stated that if an adjournment was granted in accordance with her request, and payment was not made to Tizzies by the adjourned hearing date, the only issue would be whether a bankruptcy adjudication order should then be made, or whether there existed some basis for a further adjournment.
[20] After hearing from Mrs Wilson and counsel for Tizzies I granted the adjournment. I noted that I had taken into account Mrs Wilson’s advice that she was not entirely dependent on getting the subdivision through to raise the funds required to pay Tizzies —she also had the possibility of obtaining bridging finance, or selling a cottage she owns in Napier, where the market was said to be strong.
[21] I adjourned the matter for hearing on 14 July 2017. In granting the adjournment request, I advised Mrs Wilson that the adjournment was likely to be a final adjournment, and that if Tizzies had not been paid by 14 July 2017 she was at high risk that an adjudication order would be made against her that day.
Mrs Wilson’s memorandum to the court dated 5 July 2017 and Mr Twigg’s further
report dated 4 July 2017
[22] Mrs Wilson filed an updating memorandum on 5 July 2017. While at the time of the 29 May telephone conference she believed that everything was totally on
track to complete the subdivision before the 14 July hearing, she discovered, only several days later, that she and her two buyers had been let down by the real estate agent who had been acting in the sale. She contended that she had trusted the agent to move forward with the subdivision work, but had just learned that the main contractors (who the agent had undertaken to arrange) had not even been contacted, let alone booked in for the necessary work. Furthermore the estimated cost of the subdivision work (earlier estimated at $40,000–$45,000) would now be nearer to
$70,000. Mrs Wilson said that she regarded a subdivision cost of $70,000 as unacceptable, having regard to the relatively low sale prices she had achieved on the sales of the two sections. She said that she had also understood that the sale prices of $65,000 per section would be a net price to her, after the subdivision costs had been taken out. She had since become aware that the two buyers were not expecting to pay for the services. Mrs Wilson then reluctantly decided that she had to cancel the two contracts, which she did in early June 2017.
[23] Mrs Wilson referred to the option of selling her Napier cottage (an alternative source of funds to pay to Tizzies) as her “worst nightmare”.
[24] Mrs Wilson went on to advise in her 5 July 2017 memorandum that, notwithstanding her cancellation of the two sale contracts, the two purchasers did not want to walk away from the transactions, and that over the preceding few weeks she had been working hard with them to work out an arrangement under which the subdivision services could be financed and completed. The discussions were successful, and Mrs Wilson advised that the contractors had been booked and, subject to the result of the hearing in this court, would be starting work on Monday
17 July 2017. She and her two purchasers had been able to secure a lower total price for the services (back down to $40,000–$45,000).
[25] Mrs Wilson referred to a proposal made by one of the purchasers to lend her the money to pay Tizzies, but that proposal is said to have evaporated when the purchaser consulted her solicitor and accountant about it.
[26] Mrs Wilson made a plea to the court to be allowed to continue with the subdivision work, so that the work carried out by the two purchasers and herself
would not be in vain. She referred to the court having left open a “window of hope” in its minute of 29 May 2017, referring to the passage in the minute which recorded that one of the issues to be dealt with on 14 July 2017 would be “whether there exists any basis for a further adjournment”. She also referred to the question, raised by myself in the course of the 29 May telephone conference, of whether bankruptcy was the correct way to go in circumstances where Mrs Wilson has assets which can be sold.
[27] Mrs Wilson went on to refer in her memorandum to her various concerns over the conduct of the proceeding in the District Court, and the hearing in this court on 23 February 2017. It is not necessary for me to address the detail of those concerns, however, as Mrs Wilson accepts that they will be pursued in other quarters; her intention remains to pay the amount of the judgment, including all interest to the date of payment, to Tizzies.
[28] The proposed complaints to the Human Rights Commission and the Judicial Conduct Commissioner have not yet been lodged. Mrs Wilson stated that her intention is to file them only upon completion of the court proceeding (she explained her intention to lodge the complaints only after completion of the court hearing on the basis that she did not want to have to “add bits on” after those documents had been lodged). Mrs Wilson then submitted that to bankrupt someone before a referral to the Human Rights Commission and the Judicial Conduct Commissioner had been dealt with, “would surely be an extremely both dangerous and silly path to go down”.
[29] Mr Twigg provided a further report to the court on 4 July 2017. He confirmed that both of the sale contracts entered into by Mrs Wilson had been terminated, but both purchasers remained committed to purchasing the sections.
[30] Mr Twigg said that, due to delays in obtaining satisfactory quotes and contractors to complete the works required to satisfy conditions of consent, the subdivisional process was, despite Mrs Wilson’s best efforts, “not able to have been progressed as quickly as she would have hoped”. He estimated that if Mrs Wilson were allowed further time to complete the subdivision, the physical work would
probably be completed by mid-August 2017, with titles to issue in late August/early
September.
[31] Mr Twigg noted that Mrs Wilson has been under considerable pressure as a lay person seeking to complete and coordinate a minor subdivision, where delays were “somewhat inevitable”. He supported Mrs Wilson’s application for an adjournment.
[32] Mr Twigg provided copies of emails dated 1 July 2017 and 3 July 2017 from the solicitors for the two purchasers. The first of the emails proposed that each of the purchasers would purchase their sections as before, and that each would pay half of the estimated subdivision costs of $45,000 as those costs became due for payment. The amounts paid by the purchasers for subdivision costs would be deducted from the amounts payable by them on settlement, with the balance paid to Mrs Wilson. Mrs Wilson would then be in a position to meet her other liabilities (including the liability to Tizzies).
[33] In the second email, dated 3 July 2017, the same solicitor confirmed that neither of the prospective purchasers was in a position to lend the money to Mrs Wilson. However both prospective purchasers wished to assist, and the proposal set out in the 1 July 2017 email remained open. The solicitor estimated that acceptance of that proposal would enable titles to be issued some time in August, and if settlement then took place approximately $85,000 would be available to Mrs Wilson to pay the Tizzies debt. The solicitor for the other prospective purchaser sent an email shortly thereafter, confirming that his client agreed to the terms put forward by the first of the prospective purchasers.
[34] By the time of the hearing on 14 July 2017 Mrs Wilson had not signed any new agreement with the two purchasers, but she advised the court that she was prepared to do so, and saw no reason why agreements along the lines put forward by the purchasers’ solicitors could not be completed within a few days.
The issue for determination
[35] By the time of the hearing of 14 July 2017, the only remaining issue was whether the application should be further adjourned.
The parties’ submissions
Tizzies
[36] Mr Manktelow submits that Tizzies has satisfied all of the requirements of s 13 of the Insolvency Act 2006 (the Act) for the making of an adjudication order. The amount claimed exceeds $1,000, it is for a certain amount, it is payable immediately, and the creditor’s application was filed within three months of the act of bankruptcy. Jurisdiction therefore exists to make an adjudication order.
[37] Mr Manktelow submits that there is no basis for any further adjournment. He refers to the terms of the Court’s minute of 29 May 2017, including the statement that Mrs Wilson had a high risk of an adjudication order being made if Tizzies had not been paid by 14 July.
[38] In respect of the sale contracts for the two sections, Mr Manktelow notes that there are presently no agreements binding on the purchasers. He refers to previous adjournments having been granted to allow Mrs Wilson to complete the subdivision, and to a number of promises having been made in the past (including an estimate made by Mrs Wilson in her February 2017 affidavit that the two sale agreements could likely be settled around mid-to-late March). He submits that, given that history, Tizzies is entitled to take a jaundiced view of Mrs Wilson’s application for a further adjournment.
[39] Mr Manktelow also refers to the lengthy list of conditions attached to the Council’s resource consent, submitting that if an adjournment were granted there would be a substantial risk that payment would still not have been made by the adjourned date. He refers to Mr Twigg’s comment in his 4 July report that delays are “somewhat inevitable” in a subdivision of the kind presently being undertaken by
Mrs Wilson. He submits that it is likely that the subdivision work will be beyond
Mrs Wilson.
[40] Mr Manktelow also refers to Mrs Wilson’s failure to provide information on her finances. While her overall financial position is not known, it is clear from the correspondence from the purchasers’ solicitors (in particular, from their expressed willingness to cover the estimated services cost of $45,000) that Mrs Wilson is unable to cover these costs herself.
[41] More generally, Mr Manktelow submits that creditors are entitled to be paid within a reasonable time. He refers to the Court of Appeal decision in Holdgate v Blocassa Ltd,3 a case in which a debtor who had been adjudicated bankrupt applied to have the bankruptcy annulled. The debtor was subdividing properties at the date of his adjudication, and it appears that he had continued with the subdivision work following his adjudication (it was unclear how he had been able to do that). The
Court of Appeal recorded its understanding that the subdivisions would need to be completed before any sales could occur and cash become available, but it was not clear how the further work would be funded if an annulment order were made. The Court expressed concern that the debtor might incur yet further debts to complete the subdivision. Nor was it clear how long it would take for the subdivisions to be completed.
[42] Mr Manktelow submits that, although this is not an annulment case, the position is similar. There is no basis on which the court could be satisfied that Mrs Wilson, who has already had a reasonable time to pay the debt, would be able to do so if any reasonable further amount of time were allowed to her.
[43] As for the question of bankruptcy adjudication where a debtor has assets and appears to be “balance sheet solvent”, Mr Manktelow refers to the Court of Appeal decision in Holdgate v Blocassa, and to the judgment of Master Thomson in Re McDougall,4 submitting that the relevance of Mrs Wilson’s assets is to show that
adjudication would not be pointless.
3 Holdgate v Blocassa Ltd [2007] NZCA 132.
4 Re McDougall (1994) 16 NZTC 11,058 (HC).
[44] Mr Manktelow submits that there is nothing which would make it unjust or inequitable to make an order for adjudication. Mrs Wilson purchased certain items but was unable to honour the cheques used to pay for them. He suggests that an order for adjudication may well protect the public from further similar purchasing decisions by Mrs Wilson.
[45] In summary, Mr Manktelow submits that the only real issue is whether Mrs Wilson’s inability to realise her assets within a reasonable time since the adjudication application was filed has been established. With reference to Mrs Wilson’s stated “preference” for completing the subdivision, rather than selling her Napier cottage, he submits that we are well past the point where Mrs Wilson is entitled to express any preference between the various options she might have for settling the debt. He also points to the absence of any explanation why bridging finance cannot be obtained.
Mrs Wilson
[46] Mrs Wilson refers to her considerable past experience in dealing with property, in support of the submission that she is well capable of completing the subdivision if she is given time to do so.
[47] She says that she has looked at the possibility of bridging finance, but when she did so the estimated subdivision costs had risen to around $70,000. She considered that the servicing costs on borrowing that amount would be “astronomical”.
[48] As far as the subdivision works are concerned, she told me that she had a meeting with a Council officer on site on 2 May 2017, and that everything is ready to progress. The sewer lines are already there, a power contract has been arranged, and any work relating to easements will be very minor. The firm of Truebridge Associates Ltd will be doing the survey work and overseeing the subdivision works, and engineering plans for the subdivision were completed some three weeks ago. Mrs Wilson foresees no difficulties in the work proceeding smoothly from here on.
[49] Mrs Wilson explained the difficulties she had encountered with her land agent as follows. In late February or early March 2017, the land agent received an offer to purchase all of the land, but failed to communicate that offer to her. Mrs Wilson told me that the amount the prospective purchaser was prepared to pay at that stage was $300.000, but no offer was made as the agent told the prospective purchaser that there were already two conditional agreements in place on the land, and Mrs Wilson would not be able to sell the whole block (the prospective purchaser was only interested in buying the entire block). The discussions ended at that point. Mrs Wilson says that if she had known about this prospective buyer she could have cancelled the conditional agreements for sale of the two sections, and that she would have been prepared to accept an offer of approximately $300,000 for the whole block. She contends that that option was effectively foreclosed by the agent’s failure to tell her about the possible offer for the whole block.
[50] Mrs Wilson confirmed in her oral submissions that she and the two purchasers have been working very hard over the last few weeks to organise the subdivisional works. She says that her relationship with the purchasers is very good, and asks the court to give her, and them, the opportunity to get the subdivision work done.
[51] Mrs Wilson confirmed at the hearing that her intention is to pay the debt, together with interest at 5% per annum down to the date of payment. She also confirmed that the court is not required to consider the correctness or otherwise of the District Court judgment entered on 26 July 2016.
[52] As for her personal circumstances, Mrs Wilson told me that she is nearly 70 years old, and is now retired. She is not running any business.
[53] Generally, Mrs Wilson submits that she has done her best with the subdivision, and if an adjournment is granted she will work hard to get it completed, so that Tizzies can be paid.
[54] On the question of other options for paying the debt, including the sale of the cottage she owns in Napier, Mrs Wilson feels that she should be entitled to express a
preference to proceed with the subdivision. Her justification for that stance goes back to what she sees as injustice in the conduct of the District Court proceeding, and the entry of judgment against her in that proceeding.
Discussion and conclusions
[55] Section 13 of the Act provides:
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.
[56] I am satisfied that the requirements of s 13 have been made out in this case. Therefore, there is jurisdiction to make an adjudication order.
[57] However the court has a discretion to refuse to make an adjudication order, even where the s 13 grounds are established. Section 37 of the Act provides:
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.
[58]
The
court’s starting point in considering a creditor’s application for
adjudication is that the applicant, having satisfied the s 13 requirements, is
prima facie entitled to an order for adjudication. The order is not to be refused on
the grounds of expedience or convenience, but each case is to be considered on its own terms.5 If the circumstances suggest that the bankruptcy process is being used oppressively, that might justify refusal of an order. On the other hand, proof that a debtor has assets will not necessarily preclude an order given the range of interests that may be involved. The court is required to balance the various considerations relevant to the case and determine whether the debtor has made out a case that an order for adjudication should not be made.6
[59] The Court of Appeal considered the position of a debtor who has sufficient assets to pay the debt, in Holdgate v Blocassa Ltd.7 Arnold J, giving the judgment of the court, said:8
Section 26 of the Insolvency Act [a reference to the predecessor of the Act, the Insolvency Act 1967] provides that a court may dismiss a bankruptcy petition if it is satisfied that the debtor is able to pay his or her debts. This means that the debtor must be able to pay his or her debts as they are incurred, either immediately or within a reasonable time. If unable to do this, the debtor may be declared bankrupt even though he or she has more assets by value than liabilities. Put another way, a debtor will not necessarily avoid bankruptcy by showing a positive balance sheet. It is the capacity to pay either immediately or within a reasonable time that is critical. These propositions emerge from the authorities discussed in Brooker’s Insolvency Law (Looseleaf edition) at [IA26.08].
[60] However ability to pay within a reasonable time, while an important consideration, is not the only factor the Court may consider in deciding whether or not to make an adjudication order. In Re Epirosa Master Williams QC (as he then was) listed the following factors which are frequently considered relevant to the exercise of the court’s discretion to make an adjudication order:9
(a) what are the wishes of all affected parties, including the applying creditor, other creditors, and the debtors?
5 Baker v Westpac Banking Corporation CA212/92, 13 July 1993 at 4, and Strachan v Moodie
[2014] NZHC 3167 at 35.
6 Baker v Westpac Banking Corporation, above n 5 at 4.
7 Above n 3.
8 At [19].
9 Re Epirosa, ex parte Diners Club NZ Ltd HC Wellington B498/91 and B532/91, 6 March 1992.
(b)does the debtor have the ability to meet his or her debts over time and, if so, does that meet the requirements of achieving finality within a reasonable period?
(c) what were the circumstances in which the debt was incurred, and do those circumstances suggest that the creditor is acting unreasonably in pursuing adjudication?
(d) will adjudication be pointless?
(e) will the debtor, if adjudicated, be rendered unable to support himself or herself?
(f) does the debtor have such a standing in the community that significant issues of stigma or embarrassment will result?
[61] I agree with Mr Manktelow that Mrs Wilson has had a reasonable time to pay the debt. The judgment in the District Court was entered in July 2016, and that judgment required immediate payment by Mrs Wilson. The judgment has not been stayed, and Mrs Wilson has not filed an appeal or sought a rehearing in the District Court. It was for Mrs Wilson to make an election whether to appeal the District Court judgment (or apply to set it aside), or to make arrangements to pay the judgment. She cannot have her cake and eat it by not appealing the judgment, while at the same time using her dissatisfaction with the judgment to stave off bankruptcy proceedings brought by the creditor. To her credit, it appears that she now accepts that reality.
[62] I also accept Mr Manktelow’s submission that the situation has gone past the point where Mrs Wilson is entitled to assert a “preference” as to how she satisfies the judgment debt (her preference being to complete the subdivision and pay Tizzies from the proceeds of sale of the two sections). I do not accept Mrs Wilson’s submission that her dissatisfaction with the District Court judgment somehow entitled her to pay Tizzies by the method she chose, notwithstanding that that method has involved months of delay and will now involve further delay.
[63] There are also concerns over estimates given in the past by Mrs Wilson as to when the subdivision will be completed. In her affidavit sworn on 15 February 2017
Mrs Wilson said that it was “estimated” that the settlement date (for the two “pre- sales”) would be around mid-to-late March, 2017, allowing for a few bad weather delays. And in the course of the conference on 29 May 2017 Mrs Wilson expressed the view that she would be able to get the subdivision through by the end of June
2017 or very shortly thereafter. Partly on the strength of that advice, I agreed to adjourn the proceeding for a defended hearing on 14 July 2017.
[64] I accept that Mrs Wilson may subsequently have realised that her real estate agent had not passed on to her an expression of interest from a prospective purchaser of the entire block of land in Bulls, but that is a matter between Mrs Wilson and her agent — it cannot affect Tizzies’ rights. The same can be said about Mrs Wilson’s apparent failure to appreciate that she would be responsible for the subdivision costs of approximately $45,000, and that the proceeds of the two pre-sales ($130,000) would not be “net funds” in her hands.
[65] I note also that Mr Twigg, in his report to the court dated 4 July 2017, referred to “coordinating contractors to complete physical work, completing survey and legal requirements can take some time”. Mr Twigg also properly acknowledged that delays are “somewhat inevitable” where a lay person such as Mrs Wilson is seeking to compete and coordinate a minor subdivision.
[66] The next list date in Palmerston North is 24 August 2017, and it seems highly improbable that the subdivision could be completed, and Tizzies paid, by then.
[67] I accept that Mrs Wilson is “cash flow insolvent”. That is demonstrated by her apparent inability to cover the costs of the subdivision services herself. And I accept that if an order for adjudication were made the Official Assignee would probably be able to realise sufficient assets to cover all of Mrs Wilson’s debts.
[68] As Mrs Wilson has now accepted responsibility for the debt I do not think it can be said that Tizzies has acted unreasonably in pursuing adjudication. And there
is no evidence to suggest that factors (e) or (f) in Master Williams’ list10 would point against an adjudication order being made.
[69] Those are the considerations which might be said to point in favour of immediate adjudication. But there are some factors which weigh in favour of an adjournment being granted. First, it appears that Mrs Wilson has not sufficiently appreciated the seriousness, and urgency, of her position until relatively recently. That of course is not something with which Tizzies should have to concern itself, but it seems likely that Tizzies will not be significantly prejudiced if one final adjournment is granted (particularly as Mrs Wilson accepts that she is liable to pay interest on the judgment debt at the statutory rate of 5 per cent per annum).
[70] Secondly, it is clear that the two purchasers remain committed, and indeed appear to be prepared to cover the costs of the subdivision works to ensure it is completed. That much is apparent from Mr Twigg’s report of 4 July 2017 and the emails attached to it.
[71] Indeed, the two purchasers appear to have put in considerable effort to get arrangements in hand for the subdivision completed, and they have clearly incurred legal costs. It is understandable that they have not been prepared to lend the money to Mrs Wilson given the bankruptcy application pending against her, but I think their commitment and effort to date is entitled to some consideration in the weighing exercise the Court is required to perform. It is likely that they would be losers if an adjudication order were made now.
[72] I do not see this as a case where there is a need for an immediate order for adjudication so that Mrs Wilson’s affairs can be subject to immediate investigation by the Official Assignee. There is some concern over the nature of the claim (apparently made on the basis of dishonoured cheques), but as I understand it Mrs Wilson says that the cheques were only provided on a conditional basis. No other creditors have filed notices in support of the adjudication application, and
Mrs Wilson is now retired and is not carrying on any business. There would seem to
10 Set out in para [60] of this judgment.
be no significant risk to the commercial community if the application for adjudication is adjourned for a few more weeks.
[73] The choice between immediate adjudication and granting a final adjournment to allow Mrs Wilson to pay the debt (including interest and costs in accordance with scale 2B in the High Court Rules) is finely balanced. In the end I have come to the view that she should have one final opportunity to pay. I adjourn the adjudication application to 9.00am on Friday 15 September 2017, that hearing to be in Palmerston North and conducted by audiovisual link.
[74] That adjournment contemplates that Mrs Wilson will have found a source of money and paid Tizzies (including interest and costs) by that date. Whether that source is the proceeds of a sale of the Bulls land as a single block, completing the subdivision and paying from the proceeds of the two pre-sales, sale of the Napier cottage, obtaining bridging finance, or otherwise, is for Mrs Wilson to decide. But what she should understand now is that it is highly unlikely that there will be any further adjournment (even for a short period of time) if the full amount has not been paid to Tizzies by 15 September 2017. Mrs Wilson may consider it appropriate to immediately put in place a “back-up” plan for payment, in case she cannot get the subdivision through, and release sufficient funds to settle with Tizzies, before
15 September 2017.
[75] Before leaving the matter, I refer to Mrs Wilson’s submission that it would be inappropriate for the court to make an adjudication order before she has had the chance to pursue her complaints to the Human Rights Commission and the Judicial Conduct Commissioner. I do not accept that submission. If there were merit in it, Mrs Wilson would be able to delay a decision on the adjudication application indefinitely, by the simple expedient of further delaying the filing of her proposed complaints.
Result
[76] The adjudication application is adjourned to 9.00am on 15 September 2017 at Palmerston North. I expect to make an adjudication order that day if Tizzies has not been paid.
Associate Judge Smith
Solicitors:
Brittens Lawyers, Palmerston North for the judgment creditor
0
3
0