Upper Hutt City Council v Kent

[2018] NZHC 2041

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2018-458-256

[2018] NZHC 2041

BETWEEN

UPPER HUTT CITY COUNCIL

Judgment creditor

AND

HARRY DALE KENT

Judgment debtor

Hearing:	10 August 2018
Appearances:	Ms N Levy for judgment creditor Judgment debtor in person
Judgment:	10 August 2018

ORAL JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1]This is a proceeding under the Insolvency Act 2006.

[2]                 On 18 August 2014 and 10 May 2017 this Court entered costs judgments for the plaintiff, the Upper Hutt City Council, against the defendant, Mr Harry Kent, following the final determination of two appeals brought by Mr Kent. The total amount of these two judgments was $17,878.80.

[3]                 At the Council’s request a bankruptcy notice in  that amount was issued on  20 April 2018.

[4]The bankruptcy notice was subsequently served on Mr Kent.

[5]                 Mr Kent filed a document dated 21 May 2018 and entitled “Notice of Opposition”.

UPPER HUTT CITY COUNCIL v KENT [2018] NZHC 2041 [10 August 2018]

[6]                 The file was referred to me on 19 June 2018. I directed that Mr Kent’s Notice of Opposition be treated as an application to set aside the bankruptcy notice, and made further directions in relation to the disposal of that application.

[7]Subsequently, the Registrar arranged for the matter to be set down for hearing.

[8]                 Mr Kent has filed detailed submissions attached to which is a large body of supporting material. Ms Levy has filed a short submission. Mr Kent has replied to that. During the course of the hearing today he sought to hand in a further document in which he revisited some of the matters addressed in his earlier documents.

[9]                 I have of course reviewed Mr Kent’s submissions and the various attachments. The exclusive focus of this material and his oral submissions are the substantive issues dealt with in the original litigation. None of that material has any relevance to the proceeding before me today.

[10]              Insolvency proceedings are governed by the Insolvency Act 2006 and pt 24 of the High Court Rules 2016.

[11]              Section 17 of the Act provides in effect that an application to set aside a bankruptcy notice and any affidavit evidence in support thereof must be filed and served within 10 working days of service of the notice itself.

[12]              In the event of such an application being made, the judgment debtor must ultimately be able to demonstrate that he or she has a cross claim (see s 17(1)(d)(ii)) which means:

“… a counterclaim, set off, or cross demand that:

(a)is equal to, or greater than, the judgment debt or the amount that the debtor is being ordered to pay;

(b)the debtor could not use as a defence in the action or proceeding in which the judgment or the order, as the case may be, was obtained. (See s 17(7).)

[13]              Ms Levy submits first that even if Mr Kent’s Notice of Opposition is treated as an application to set aside the statutory demand, such an application cannot succeed

in this case because Mr Kent has not filed an affidavit in support. I do not think that can be correct. There may be cases in which a cross claim might be constructed on purely legal grounds meaning that no affidavit evidence would be necessary. So there can be no absolute obligation that a judgment debtor seeking to set up a cross claim must file an affidavit.

[14]              Ms Levy’s second submission, which I think is unanswerable, is that this is not such a case and that there is nothing in Mr Kent’s application or submissions which could possibly amount to a cross claim against the Council.

[15]              In short all of that material is directed at seeking to relitigate the issues which were dealt with in the original litigation, and is completely irrelevant today. Mr Kent has failed altogether to set up a cross claim against the Council. Accordingly there is no basis which I could even begin to consider whether the Council’s bankruptcy notice should be set aside. It is a pity that Mr Kent did not get some advice in relation to this matter. But there we are.

[16]              On that basis, I dismiss Mr Kent’s application to set aside the bankruptcy notice.

[17]              On the Council’s behalf Ms Levy seeks costs. Mr Kent does not oppose this. The Council is entitled to its costs on a 2B basis unless of course its actual costs are less than scale.

Associate Judge Johnston