Wanganui District Council v Wilson HC Wanganui CIV-2010-483-133

[2011] NZHC 377

IN THE HIGH COURT OF NEW ZEALAND WANGANUI REGISTRY

CIV-2010-483-133

IN THE MATTER OF     THE INSOLVENCY ACT 2006

AND IN THE MATTER OF THE BANKRUPTCY OF NICOLA JANET WILSON

BETWEEN  WANGANUI DISTRICT COUNCIL Judgment Creditor

ANDNICOLA JANET WILSON Judgment Debtor

Hearing:         23 February 2011 (Heard at Wanganui)

Counsel:         S.A. McDonald - Counsel for Judgment Creditor

A. Page - Advocate for the Judgment Debtor

Judgment:      24 February 2011 at 2:05 PM

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment was delivered by Associate Judge Gendall on 24 February 2011 at

2.05 pm under r 11.5 of the High Court Rules.

Solicitors:           Armstrong Barton, Solicitors, PO Box 441, Wanganui

WANGANUI DISTRICT COUNCIL V NJ WILSON HC WANG CIV-2010-483-133 24 February 2011

Introduction

[1]      Before the Court is an application by the judgment creditor seeking an order to adjudicate the judgment debtor bankrupt in terms of s. 13 Insolvency Act 2006.

[2]      The judgment creditor contends that the judgment debtor committed an act of bankruptcy by failing to comply with a Bankruptcy Notice served upon her claiming the sum of $12,000.00.  This was based upon an order for costs of this sum made against the judgment debtor in the Environment Court on 11 March 2010.

[3]      The Bankruptcy Notice was served on the judgment debtor on 25 May 2010.

[4]      Around  14  June  2010  the  judgment  debtor  filed  an  application  which purported to be an application to set-aside the Bankruptcy Notice.

[5]      On 18 August 2010 following a hearing on 11 August 2010 I dismissed the application to set-aside the Bankruptcy Notice.

[6]      The application was dismissed on the basis that it did not take the proper form, it was not filed within the statutory time period and also it was not served within that time period.

[7]      A matter  has  been  raised  now  as  the  first  ground  of  opposition  by  the judgment debtor to the present application.  It transpires that due to the fact that the Queens Birthday holiday intervened in the period in question, it is suggested the application itself may have been filed in time.  This is not correct here, however.  It was filed out of time.  And, there is no question that the application was not served within the statutory time period which is a mandatory requirement.  In addition, the form in which the application was made did not follow the rules.

[8]      My judgment with respect to the application to set-aside the Bankruptcy

Notice must therefore stand.  It was not challenged on review or repeal.

[9]      In the meantime, the substantive bankruptcy proceeding was served on the judgment debtor on 21 September 2010.  On 6 December 2010 the judgment debtor filed a formal Notice of Opposition to the present adjudication application.

[10]     This matter was then called before me on 8 December 2010 when I set this matter down for formal hearing yesterday, 23 February 2011.

Parties’ Arguments and My Decision

[11]     The present application is brought pursuant to Section 13 Insolvency Act

2006 which provides as follows:

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.

[12]     In the present case the $12,000.00 costs judgment which has not been the subject of an appeal or review by the judgment debtor clearly exceeds the $1,000.00 threshold provided in s 13(a) Insolvency Act 2006.

[13]     In addition, the judgment debtor has committed an act of bankruptcy within the period of 3 months before the filing of the present adjudication application on 8

September 2010 in that she has failed to comply with the Bankruptcy Notice served on her on 25 May 2010 either within the time allowed within the notice or within the additional 5 working day period allowed in my judgment of 18 August 2010.

[14]     Further, the $12,000.00 costs debt has been outstanding for nearly one year, it is payable immediately and it is clearly a certain amount.

[15]     I am satisfied therefore that the requirements of s 13 Insolvency Act 2006 have been satisfied here.

[16]     The judgment debtor’s opposition to the present application effectively relies upon s 37 Insolvency Act 2006.  This section sets out the basis upon which the Court at its discretion may refuse to adjudicate a judgment debtor bankrupt as follows:

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.

[17] Turning to consider these grounds, as I have noted at [14] above, s 37(a) does not apply here. Turning to s 37(b) there is no evidence of any kind before the Court from the judgment debtor or otherwise to show that she is able to pay her debts. She is a student and has said she cannot pay the $12,000.00 debt.  The ground set out in s

37(b) also is not met here.

[18]     That   leaves   the   remaining   two   grounds   under   s   37(c)   and   (d)   for consideration.  These provide that, where a judgment debtor is able to establish that it is just and equitable that the Court does not make an order of adjudication or for some other sufficient cause an order for adjudication ought not to be made, the Court may refuse to make an order for adjudication.

[19]     Despite  the  various  grounds  advanced  by  and  upon  which  the  judgment debtor purported to have the judgment creditor’s Bankruptcy Notice set aside in August  2010,  the  grounds  advanced  before  me  here  to  oppose  the  present adjudication application differed somewhat.

[20] I have already dealt with the first ground affecting the timing of the application to set-aside the Bankruptcy Notice in dismissing it at [8] above.

[21]     The next ground which raised entirely new matters appeared to be a claim from the judgment debtor that she had been overcharged by the judgment creditor in relation to rates levied in respect of certain properties she has a share in and she suggested that this overcharging would “easily pay the $12,000.00 being demanded”.

[22]     This matter however, in my view, is quickly disposed of.   It is specifically addressed in the effectively uncontradicted affidavit evidence of Mr Paul Drake a legal officer of the Judgment Creditor.  In Mr Drake’s detailed affidavit filed herein dated  23  December  2010,  the  judgment  creditor  accepts  that  following  a  rates review, it was discovered that the city water supply rate for the properties under consideration was incorrectly assessed to a minor degree since 1 July 2009.  As a result of the error, it was calculated that the judgment debtor was entitled to a rates credit of $32.05 for the period  she jointly owned 86 Ikitara Road.  Otherwise, Mr Drake deposes that no rates overcharges have been made.

[23]     The judgment  debtor  has  put  nothing  before  the Court  to  challenge  this evidence of Mr Drake.  In addition, it would seem there are substantial rates arrears for the 86 Ikitara Road property owned by the judgment debtor.  The rates credit of

$118.15 Mr Drake has confirmed is to be credited to the outstanding rates arrears for the judgment debtors’ property.   This still apparently leaves a significant debt for unpaid rates. This amount, of course, is not part of the present proceeding.

[24]     Since the judgment debtor and her ex-partner involved in these matters, Mr Adrian  Neil  Page  (Mr  Page),  have  owned  the  three  properties  in  question,  Mr Drake’s uncontradicted evidence is that the total rates paid is $7,465.27.   The argument by the judgment debtor that the rates over payment would effectively cancel out the judgment debt which totals $12,000.00 has no credible basis therefore and is dismissed.

[25]    The next ground of opposition which I understand the judgment debtor endeavoured to advance here appears to relate to certain criminal proceedings Mr Page is presently facing.   Although the relevance of this is difficult to assess, it would seem that Mr Page is facing criminal proceedings for breaching abatement notices and interim and substantive enforcement orders in relation to the property at

86 Ikitara Road.  He has elected trial.  A trial date has yet to be set.  The Court has apparently appointed amicus curiae in relation to these criminal proceedings.   An application under s344A of the Crimes Act 1961 challenging the validity of a search warrant has been filed and served in relation to those criminal proceedings.

[26]     As I understand it, the judgment debtor and Mr Page rely on the admissibility of  evidence  application  in  respect  of  these  criminal  proceedings  as  a  basis  to challenge the present application for adjudication.

[27]     The judgment debtor and Mr Page however were represented by counsel in the earlier Environment Court proceedings. An evidential challenge was not made in relation to the evidence relied on in those Environment Court proceedings.

[28]     The judgment debtor, as I understand it, has not appealed the making of the Environment Court Enforcement Order, or the associated order for costs. As I see it, the judgment debtor has not established that the criminal proceedings have any relevance to the Environment Court proceedings.   I fail to see how the criminal proceedings have any bearing on the enforcement of the order for costs in relation to those Environment Court proceedings.

[29]     In my view, the judgment creditor’s application for adjudication is not a venue for the judgment debtor to relitigate the merits of the judgment creditor’s case in respect of the Environment Court or Criminal Court proceedings.  The judgment debtor has review and appeal rights in relation to these matters which she has elected not to pursue.

[30]     Next, in her affidavit in support of the notice of opposition dated 6 December

2010 at paragraph 6, the judgment debtor seems to assert that she is pursuing a claim of $15,000 against the judgment creditors.  A claim for negligence was apparently filed by Mr Page against the Wanganui District Council last year.  On 3 December

2010, however, this claim was dismissed, in full, by Referee JS Dryden.

[31]    The judgment debtor has not put before the Court details of any other outstanding Dispute Tribunal claims or any other civil claims by her against the judgment creditor.  I dismiss this ground of opposition as well.

[32]     Finally, the judgment debtor appears here to make a number of allegations against Wanganui District Council staff, in particular a Mr Shane McGhie.  On this, she or Mr Page has apparently filed complaints with the Ombudsman and New Zealand Planning Institute (NZPI).

[33]   As I understand the position, the judgment creditor has conducted two investigations into the allegations by the judgment debtor against Mr McGhie.  No evidence was found to substantiate his claims.

[34]     In any event, and as I noted at [22] of my earlier judgment in this matter dated  18 August  2010,  there  is  no  ability for  the  Ombudsman  or  the  NZPI to financially compensate the judgment debtor in relation to her complaint.   For that reason the judgment debtor’s outstanding complaints do not form a sufficient basis to refuse the present application for adjudication.

[35]     As I understand the position, the judgment debtor has not filed any appeals or reviews in relation to the order for costs issued by the Environment Court which forms the basis for the present application.   There are no relevant or outstanding cross-applications or cross-claims by the judgment debtor against the judgment creditor.

[36]     Finally, the judgment debtor claims that it is unfair here that she has been “dragged into” the bankruptcy proceedings for something that she never instigated or took part in.  She seems to blame the co-owner of the property in question, Mr Page for the predicament in which she finds herself.  She claims that she is unable to pay the $12,000.00 debt but “If I had been able to pay I would have, in order to get it out of the way and get on with my life.”

[37]     At the time that the Environment Court matters were considered, however, the judgment debtor was a registered owner of the subject property at 86 Ikitara

Road.  She defended and filed proceedings, and as I understand it she appeared in the hearings in relation to the Environment Court proceedings.   I am told she pleaded guilty to, and was convicted of a breach of an abatement notice issued in respect of

86 Ikitara Road.  She has also herself signed and filed joint documentation in relation to these bankruptcy proceedings and therefore can be deemed to have fully taken part in relation to the matters regarding 86 Ikitara Road, the costs order and the pending application for bankruptcy.

[38]     In this case, I conclude that the arguments by the judgment debtor are without merit and fall well short of satisfying the onus upon her to establish that it is just and equitable, or that there is some other sufficient cause, that the application for an adjudication order should not be made.

Conclusion

[39]     For  the  reasons  I have  outlined  above,  I am  satisfied  that  the  judgment

creditor’s application for an adjudication must succeed.

[40]     Orders are now made therefore as follows:

(a)       An  order  is  made  adjudicating  the  judgment  debtor,  Nicola  Janet

Wilson, bankrupt;

(b)Costs are awarded to the judgment creditor on this application on a Category 2B basis together with disbursements as fixed by the Registrar; and

(c)       These orders are timed at 2.05 pm today, 24 February 2011.

‘Associate Judge D.I. Gendall’