West Coast Holdings Limited v Murray

[2019] NZHC 2913

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1559

[2019] NZHC 2913

IN THE MATTER

of the Insolvency Act 2006 and in the matter of the Bankruptcy of Trevor James Murray

BETWEEN

WEST COAST HOLDINGS LIMITED

Judgment Creditor

AND

TREVOR JAMES MURRAY

Judgment Debtor

Hearing:	7 November 2019
Appearances:	S McKenna for the Judgment Creditor Mr Murray Judgment Debtor in person
Judgment:	7 November 2019

ORAL JUDGMENT OF ASSOCIATE JUDGE SMITH

Solicitors:

Grantham Law, Hamilton

And to:
Judgment Debtor

WEST COAST HOLDINGS LTD v MURRAY [2019] NZHC 2913 [7 November 2019]

[1]                  The judgment creditor served a bankruptcy notice on Mr Murray on 30 August 2019, claiming a sum of $257,785.25 owing under a judgment given in this Court in Auckland on 14 February 2017.

[2]                  Mr Murray wished to dispute the bankruptcy notice, not because of any challenge to the validity of the judgment (which appears not to have been subject to any appeal), or because he has paid the amount of the judgment, but because he believes the bankruptcy notice was invalid.

[3]                  Because of the procedural difficulties which I am about to describe, it is not necessary to go into the detail of Mr Murray’s argument that the bankruptcy notice was invalid – it is enough to say that he believes that the judgment creditor’s failure to pursue a bankruptcy notice issued over a year earlier (in response to which he had made a without prejudice settlement offer that was never accepted) precluded the judgment creditor from issuing the bankruptcy notice issued on 30 August 2019.

[4]                  The procedural difficulties arise over Mr Murray’s failure to effect service of his application to set aside the bankruptcy notice, with a supporting affidavit, within the prescribed period of ten working days. There was initially an issue as to whether Mr Murray had filed a setting aside application and supporting affidavit within the ten working day period, as the documents were apparently lost somewhere in the registry. However the Court’s “register of documents filed” does show that on 13 September 2019 Mr Murray filed an interlocutory application to set aside bankruptcy notice and an affidavit in support. In those circumstances, Mr McKenna was content to accept that, on the balance of probabilities, the application and supporting affidavit were filed within the ten working days.

[5]                  The issue arises over the service of the application and supporting affidavit. Mr McKenna told me that, by 13 September 2019 (the last day of the ten working day period), the only document the judgment creditor had received from Mr Murray was a document dated 3 September 2019 described as “interlocutory application to have bankruptcy notices dismissed”. The document was unsworn. Mr McKenna said that it was not until 14 October 2019 that the judgment creditor received an affidavit from

Mr Murray in support of his setting aside application, and even then the document was unsworn.

[6]                  The Court has no ability to extend the ten working day period within which an applicant to set aside a bankruptcy notice must not only serve the application, but also serve a supporting affidavit. That is clear from the judgment of Associate Judge Gendall in Memelink v Sanco (NZ) Limited,1 in which the Associate Judge said:

[13] In my view, from the wording of the Insolvency Act 2006 and the provisions in the required form B2 for a bankruptcy notice, it is clear that a judgment debtor has only ten working days from the date of service upon him of the bankruptcy notice to apply to this Court to set it aside and this application must be supported by affidavit. In addition, within this same ten day working period the judgment debtor is required also to serve a copy of the application and supporting affidavit on the judgment creditor.

On the facts of the case in Memelink, the supporting affidavit was not served on the judgment creditor (or apparently filed) until about one month after the ten working day period had expired. In those circumstances, the Associate Judge considered that there was no basis for him to deal with the application to set aside the bankruptcy notice.

[7]                  To similar effect, the learned authors of McGechan on Procedure say that any application to set aside a bankruptcy notice must be filed and served within the ten working day time limited.2 They note that this requirement is also stipulated in notes on the bankruptcy notice in form B2, which states that an application to set aside the bankruptcy notice must be supported by affidavit, which must be served along with the application on the judgment creditor within the ten working day time limit. Late service will not cure the act of bankruptcy that will have already occurred.3 The authors of McGechan refer to Memelink for the proposition that, even if the application is filed and served in time, if the affidavit is late, the application will be dismissed.

[8]                  In this case, Mr Murray acknowledges that no sworn affidavit was served on the judgment creditor within the ten working day period allowed. However, he

1      Memelink v Sanco (NZ) Limited HC Wellington, CIV-2008-485-2691, 10 March 2009 at [13].

2      McGechan on Procedure, HR 24.10.01, referring to ANZ Bank (New Zealand) Ltd v Edwards

[2013] NZHC 2756.

3      Prescott v Auckland Council [2017] NZHC 2698 at [19].

submitted that the substance of the affidavit later sworn by him was made available to the judgment creditor within the ten working day time limit, albeit not in sworn form. I cannot accept that submission. The requirement is clearly for an affidavit, and the document provided by Mr Murray to the judgment creditor before 13 September 2019 was not an affidavit.

[9]                  The result of that finding is that the application to set aside the bankruptcy notice must be dismissed. There will be an order accordingly.

[10]              The judgment creditor having been successful in having the application to set aside the bankruptcy notice dismissed, it is entitled to costs. Mr McKenna asked for an order for costs at the lowest possible level under the High Court Rules, being category 1, band A. I make an order for costs in favour of the judgment creditor on a 1A basis, with disbursements to be fixed by the registrar.

Associate Judge Smith