Westcity Enterprises Limited v Pillai

[2014] NZHC 2651

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-000746 [2014] NZHC 2651

BETWEEN

WESTCITY ENTERPRISES LIMITED

Plaintiff

AND

NARENDRANATH RAMAKRISHNA PILLAI

Defendant

Hearing:	24 October 2014
Appearances:	N Taefi for the Judgment Creditor Judgment Debtor in Person
Judgment:	29 October 2014

JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 29 October 2014 at 10.30 a.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

Shortland Chambers, Auckland

DB Law, Auckland

Chris Patterson Barrister Limited, Auckland

WESTCITY ENTERPRISES LIMITED v NARENDRANATH RAMAKRISHNA PILLAI [2014] NZHC 2651 [29 October 2014]

[1]      I made an order for Mr Pillai’s adjudication when the judgment creditor’s application was called today.  The order was made at 11.06 am.  I also made an order for costs on a 2B basis plus disbursements as fixed by the Registrar in favour of the judgment creditor.

[2]      I now set out, as I indicated I would, the reasons for making the adjudication order.

Reasons for adjudication order

[3]      In this proceeding Westcity seeks an order adjudicating Mr Pillai bankrupt, and an order for costs.  The application was filed on 3 June 2014 and relies on the ground of Mr Pillai’s failure to comply with an earlier bankruptcy notice based on a judgment of the District Court at Waitakere for $71,182.40.

[4]      Mr Pillai filed a notice of opposition on 9 July 2014 based on the just and equitable ground in reliance upon several factors.   In essence these are his commitment to repay the debt; the fact that he has entered into repayment arrangements with his other creditors; his ability to make a lump sum payment of

$8,000 with regular payments thereafter of $500 a month; and his contention that he has no assets.  Additionally he says he will not be a risk to the business community and that his future earning prospects would be harmed by an adjudication order.

[5]      The parties subsequently engaged in discussions to explore whether or not agreement could be reached for a payment proposal, and the application was adjourned to allow them to complete their discussions.  It is common ground that the parties entered into a settlement which required him to pay the judgment sum on a staged basis, plus other sums.  However, Westcity says the terms of settlement were not performed by Mr Pillai, which he has readily conceded in Court today.  He says that was because he realised that the amount of the judgment debt contains an error which would, if rectified, reduce the amount of the judgment debt by approximately

$5,000.    He  wants  time  to  ask  the  District  Court  to  revisit  the  amount  of  the judgment sum, and says he has filed an application for that purpose.  He also says that Westcity has entered judgment against him for a further significant sum which

he was unaware of.  However, he acknowledges that this additional sum was also the subject of, and dealt with by, the terms of the settlement agreement.

[6]      Westcity’s position is that in these circumstances Mr Pillai has resiled from the settlement, and that it is entitled to proceed with its application based on the judgment debt.  Mr Pillai does not take issue with this as a general proposition.  His position is simply that he would like to enter into a new agreement based on the reduced judgment sum (assuming he succeeds in having it reduced).

[7]      As matters stand, I am satisfied that Westcity has made out the jurisdictional grounds for an order of adjudication as required by s 13 of the Insolvency Act 2006. That section provides:

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.

[8]      It is not in dispute that:

(a)      Mr Pillai owes Westcity $1,000 or more (and that this situation will not  change,  irrespective  of  the  outcome  of  the  application  that Mr Pillai says he has made to the District Court);

(b)      He committed an act of bankruptcy within three months preceding the

filing of the creditor’s application.

(c)       The debt was for an amount certain; and

(d)      The debt is due.

[9]      The only issue is whether there are any discretionary factors that make it just and equitable not to make an order.  I am satisfied that there are insufficient grounds for such, and decline to exercise my discretion under s 37. While I accept Mr Pillai’s assurance that he has gone to considerable lengths to demonstrate to his other creditors that he wishes to do everything reasonably possible to honour his commitment to them, I do not think it is appropriate to force this creditor’s hand by refusing an order for adjudication in the expectation that it will enter into a new settlement agreement for a reduced amount for this debt and for nil amount on the additional judgment debt.  Effectively this is what Mr Pillai is proposing.  He does not appreciate the significance of his failure to honour the terms of the original settlement.

[10]     As against these factors, I am very mindful of the desirability of Mr Pillai remaining in paid employment.  He says he is a self-employed taxi driver, and he is very concerned about his ability to earn a living.  That is a matter that he can raise with the Official Assignee.  Without wishing to say anything that is determinative of any decision the Official Assignee may make, I can accept that there may well be public interest in Mr Pillai’s being allowed to continue his taxi business, and I have explained  to  Mr  Pillai  that  he  should  speak  to  the  responsible  officer  at  the Official Assignee’s office as a matter of urgency.

[11]     I also take into account that there is a real public interest in regularising Mr Pillai’s position through the insolvency process.  It is clear that he is hopelessly in debt.  He can look forward to the potential benefit of being relieved of debts he cannot  pay,  and  the  opportunity to  begin  afresh  with  a  clean  slate  when  he  is discharged.

[12]     Taking all of these factors into account I have been satisfied that there should

be an order for Mr Pillai’s adjudication, and I have made such order accordingly.

Associate Judge Sargisson