Woods v Ajani

[2017] NZHC 854

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2016-488-82 [2017] NZHC 854

UNDERE

the Insolency Act 2006,

section 309(1)(a)

BETWEEN

CHRISTINE ANNE WOODS Applicant

AND

JANETTE ANN AJANI First Respondent

KAMA NICOLE DICKSON Second Respondent

Hearing:	1 May 2017
Appearances:	P J Smith for the Applicant A Holgate for the Respondents No appearance for the Official Assignee
Judgment:	1 May 2017

ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL

Solicitors:

Marsden Woods Inskip Smith (P J Smith), Whangarei, for Applicant

The Conveyancing Shop Lawyers Ltd (Thada-Anne Chapman), Epsom, Auckland, for Respondents

Counsel:

Andrew Holgate, Barrister, Whangarei,, for Respondents

WOODS v AJANI [2017] NZHC 854 [1 May 2017]

[1]      On 3 February 2017 I made an order adjudicating Ms Woods bankrupt on the application of the respondents.   There was no appearance for Ms Woods at the hearing.  She has now applied to have her adjudication in bankruptcy annulled on the ground that the order ought not to have been made.   That is an application under s 309(1)(a) of the Insolvency Act 2006.  On such applications the court may consider whether there has been a miscarriage of justice.  It may take into account information now available to the court that was not available when the court heard the original application.

[2]      The Official Assignee has filed a report that is neutral.   It says that the

Official Assignee has charged the estate costs of $6,933.35 and disbursements of

$505.10, a total of $7,438.45.  The report indicates that Ms Woods has a property at Matapouri Road subject to a mortgage with an estimated equity of $71,000.   Her other assets are relatively inconsequential.

[3]      The application for adjudication was brought on the ground that Ms Woods had not complied with a bankruptcy notice served on her on 18 August 2016.  The sum claimed under the bankruptcy notice was $3,600, payable under an order of the District Court of 8 May 2015.  The creditors engaged a professional process-server. There is no question as to the validity or effectiveness of service of the bankruptcy notice on Ms Woods.

[4]      The respondents  began  the application  for adjudication  on  25  November

2016.   They did not use a process server.   Instead, Ms Ajani attempted to serve

Ms Woods herself.     Her affidavit of service says that she served Ms Woods on

23 December 2016.   She says that she knew Ms Woods, but says that Ms Woods refused to take the documents from her.  Ms Ajani says that at that point she threw the documents over the fence so that they landed at Ms Wood’s feet, and she then told Ms Woods that she had been served.   I relied on that affidavit to accept that Ms Woods had been effectively served.

[5]      Ms Woods sent an email to the court on 17 January 2017.   She said that Ms Ajani went to her property, allegedly in breach of a trespass notice, and that Ms Ajani threw papers at her feet and said to her friend Zoe “See, I have served her”. Ms Woods alleges that moments later Ms Ajani assaulted her while Ms Woods was holding her young daughter on her hip.  Ms Woods says that she left the site, walked inside and phoned 111.  She explained that at the time she forgot about any papers and that, to use her words, at the time they were “overrided by Ms Ajani’s aggressive behaviour”.  She says that some days later her neighbour who witnessed the incident said that she had seen Ms Ajani’s friend put the paperwork in Ms Woods’ letter-box. But when Ms Woods went to the letter-box the papers were not there and she could only assume that Ms Ajani had retrieved them.  She accordingly did not know how to respond to the documents.  She asked the courthouse to look into their records and advise whoever was handling the paperwork filed by Ms Ajani.  By oversight, that email was not referred to me. By accident, apparently, it was deleted.

[6]      Ms Woods says, in support of her application, that as she did not receive any communication from the court, she thought there was nothing that she needed to be concerned about.   She only became aware after the event that she had been adjudicated bankrupt.  She says that had she known that was going to happen, she would have taken steps to oppose the application.  She claims not to be insolvent.

[7]      In opposition, Ms Ajani confirms the steps she took to serve the proceeding. It appears  also  from  her  affidavit  that  there  has  been  other  litigation  between Ms Woods  and  Ms  Ajani  concerning  a  right-of-way.    She has  exhibited to  her affidavit an order showing that Ms Woods is indebted to her for another District Court order in the sum of $8,856.96 under a decision made in November 2015.

[8]      For this decision, I accept that there was service that complied with the High Court Rules.  It does not appear to be disputed that Ms Ajani did attempt to hand the documents directly to Ms Woods but she did not accept them, and in those circumstances it is competent for the process-server to leave the documents at the feet of the person to be served.  Notwithstanding that, the court still has a discretion to reconsider the matter if the service, even though technically correct, was not effective to bring the proceeding to the actual knowledge of the person to be served.

As a parallel, one sees that in cases of service of documents on the registered office of a company.  Sometimes, by oversight, a company moves its place of business but does not change its registered office.   While service on a registered office may comply with the requirements of the Companies Act, the court may still exercise a discretion whether to make orders if the documents never come to the actual knowledge of those in control of the company.  The situation is somewhat similar here.

[9]      In  hindsight,  it  may  have  been  unwise  for  Ms  Ajani  to  attempt  service directly herself, given the background of the dispute between herself and Ms Woods. Service is likely to be carried out more effectively if professional process-servers are used.   As it is, there seems to have been an untoward incident where Ms Woods reacted to Ms Ajani’s behaviour, without giving thought to the attempt to serve a document on her.   Her email of 17 January2017 shows that, perhaps with belated hindsight, she realised that something was on foot and that she ought to take steps to protect her position.

[10]     The deletion of the email is significant.   Had I been aware of the email I doubt that I would have made an order for adjudication when the bankruptcy application was first called.   The email showed that Ms Woods was apparently concerned about the proceeding but had insufficient knowledge of it.   In all likelihood, I would not have adjudicated her bankrupt on the first call.   My usual course in such circumstances is to adjourn the matter and direct the creditor to advise the debtor afresh about the adjournment so as to allow the debtor to take steps.

[11]     I do not consider that it would be correct to have adjudicated Ms Woods bankrupt in February 2017, now that it has become apparent she had inadequate knowledge of the proceeding but was concerned to protect her position.  That, in my view, does amount to a miscarriage of justice which makes it encumbent on the court to annul her bankruptcy under s 309(1)(a) of the Insolvency Act.

[12]     Accordingly I make an order annulling the adjudication under s 309(1)(a).

[13]     The effect of that order is to restore the position as it was immediately before Ms Woods was adjudicated bankrupt.  That leaves the creditors with an application for adjudication which they remain free to continue.  I do not consider it is necessary to order re-service of the proceeding because Ms Woods now has adequate information as to the application brought by the respondents.

[14]     I adjourn the bankruptcy application to the list on Tuesday 6 June 2017.  It will be for Ms Woods to take steps in the interim.   Through Mr Smith she has advised that she intends to take steps to pay the outstanding debt.   Now that her bankruptcy has been annulled she has the ability to do that.  It will be in her hands whether she is able to clear the debt by then.  She should, however, be aware that this may only be a temporary reprieve.  If she is unable to clear the debt by the next date, an order may be made against her.  I also encourage Ms Woods to continue to have legal representation so that her interests are properly protected.

[15]     Because the order is made under s 309(1)(a), the adjudication is annulled retrospectively.  That means that, as best I can judge, the Official Assignee does not have  any  right  to  recover  remuneration  for  any  costs  of  administering  the bankruptcy.   I make no order for costs on the present application but reserve the costs until the final hearing of the bankruptcy application.  The respondents’ position is somewhat analogous to cases where plaintiffs’ applications for summary judgment are unsuccessful.  The plaintiff may ultimately be vindicated and it may turn out that Ms Ajani is vindicated as well.   That means that Ms Ajani should not have costs

awarded against her on the present application.

Associate Judge R M Bell