Wootton v Wootton

[2021] NZHC 658

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2021-485-122

[2021] NZHC 658

IN THE MATTER

of the Insolvency Act 2006

AND

IN THE MATTER

of the bankruptcy of MARGARET ANN WOOTTON

BETWEEN

PHILLIP GARRY WOOTTON

Judgment Creditor

AND

MARGARET ANN WOOTTON

Judgment Debtor

Hearing:	(Determined on the papers)
Counsel:	E J Collins for the Judgment Creditor
Judgment:	30 March 2021

JUDGMENT OF ASSOCIATE JUDGE LESTER

(Dismissing application to review Registrar’s decision and interim decision in relation to costs)

This judgment was delivered by me on 30 March 2021 at 12.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 30 March 2021

WOOTTON v WOOTTON [2021] NZHC 658 [30 March 2021]

[1]                  On 11 December 2020, the Supreme Court ordered costs of $2,500 in favour of the judgment creditor, Mr Wootton.1

[2]                  On 10 March 2021, the judgment  creditor filed a  request  for the issue of     a bankruptcy notice. The bankruptcy notice sought the full award of costs of $2,500.

[3]                  The bankruptcy notice was served on 23 March 2021. On 25 March 2021, the judgment creditor paid the amount of the costs award.

[4]                  The bankruptcy notice records that the judgment creditor claims costs against the judgment debtor of $668, being a fee of $478 for filing the bankruptcy notice and a fee of $190 for serving the bankruptcy notice.

[5]                  Having paid the costs award, the judgment debtor has filed two documents. The first document is a notice of payment and request to the Court to fix costs – the costs sought in the bankruptcy notice being disputed by the debtor. The second document is an interlocutory application on a without notice basis to review the Registrar’s decision to accept the filing of the bankruptcy notice.

[6]                  It is necessary to provide more detail of the events between the costs award and the payment made on 25 March 2021.

[7]                  The judgment debtor says in her application, albeit without an affidavit in support, that on 22  January 2021,  New  Zealand Post  tracking  records  confirms    a package was couriered to the judgment creditor. The envelope included a bank cheque for $1,505 and apparently a note which read: “Hello Phil, the enclosed [cheque] is in part payment of [the] Supreme Court costs award from Margaret.” As will become clear, the cheque in part payment was not accepted. Hence, the request for the bankruptcy notice on 10 March 2021 asserted the full Court ordered costs of

$2,500 was outstanding.

[8]                  On 17 March 2021, the judgment creditor’s solicitor wrote to the judgment debtor referring to the cheque tendered in part payment stating:

1      Wootton v Wootton [2020] NZSC 142.

3.Mr Wootton does not accept part payment and we are now returning  the cheque for you to take  back to ANZ  and  recover  the  funds.  Mr Wootton is only prepared to receive the full amount of $2,500.00 plus the costs for the preparation and filing fee of the bankruptcy notice which you are being served with simultaneously with this letter and the returned cheque.

[9]                  As I have said, the bankruptcy notice was served on the judgment debtor a few days later on 23 March 2021.

[10]              Ms Wootton asserts that, as a result of the cheque sent in part payment of the costs award, as at the  date  of  filing  of  the  request  for  a  bankruptcy  notice  on 10 March 2021, the amount outstanding in respect of the costs award was $995. This sum is below the $1,000 debt threshold for the filing of a bankruptcy notice. For that reason, the judgment debtor asserts the Registrar should not have accepted the judgment creditor’s application for a bankruptcy notice. In her application for review, the judgment debtor asserts:

10. The Registrar should have had knowledge that on the 10th March the amount owing was $995.00 and pulled the Respondent’s Solicitors up on a faulty set of documents. Refer HCR 24.8(2)(b).

[11]              Nothing in the papers filed by the judgment debtor explains how the Registrar should have been aware of the bank cheque of $995 sent in part payment of the costs award being sent in late January 2021. The request for a bankruptcy notice filed was in order and the Registrar acted appropriately in processing that request. In short, the Registrar cannot be criticised for not taking into account something the Registrar had no way of knowing.

[12]              I note that the application to review also refers to the costs claimed being $190 for service rather than $150 for service as set out in Form B2 in sch 1 of the High Court Rules 2016, with which bankruptcy notices must comply. Such departure from the form did not invalidate the document. Rule 1.21(1) of the High Court Rules provides: “Variations may be made to any form directed or authorised by these rules to be used, as the circumstances of a particular case require”.

[13]              The costs referred to in the bankruptcy notice are a claim for costs. The usual rule in relation to disbursements, such as a service fee, is that such are payable on an

indemnity basis if reasonable. If the judgment creditor’s solicitor anticipated the service fee would be $190 and not the $150 provided in the form, then such could be claimed but, if disputed, would still need to be established by producing the invoice. Similarly, a judgment creditor with the benefit of an indemnity costs clause could claim their actual costs in the bankruptcy notice but would have to show such were reasonable if challenged.

[14]              Accordingly, the judgment debtor’s application to review the Registrar’s decision is dismissed.

[15]              At the heart of the judgment debtor’s complaint is that the bank cheque in part payment of the  debt  was  delivered  on  22  January  2021  but  only  rejected  on  17 March 2021.

[16]              In Payment Obligations in Commercial and Financial Transactions, the author states:2

Payment is a consensual act and thus requires the accord of both creditor and debtor. A tender which is not made in conformity with the contract between the parties is of no effect if rejected by the creditor but produces payment if accepted by him [sic] as a valid payment.

(footnotes omitted)

[17]              Of course, here, the obligation the judgment debtor sought to clear is not based on a contract but on a judgment of the Court. However, it is at least arguable that, by analogy with the above passage, payment in respect of a judgment debt must also be consensual. The reasons for that are confirmed by this case. There is the suggestion that the judgment debtor calculated her part payment to bring the amount of the costs award below the threshold for a bankruptcy notice, thereby removing that option from a creditor. Creating an obligation on a creditor to accept a part payment would permit a debtor to use this “tactic” as a matter of course.

2R M Goode Payment Obligations in Commercial and Financial Transactions (1st ed, Sweet & Maxwell, London, 1983) at 14.

[18]              If the bank cheque had been returned promptly, then the situation would be clearer. Because the cheque was a bank cheque, the judgment debtor had no way of knowing the cheque had not been presented.

[19]              Without an explanation as to why the bank cheque was not promptly rejected by the judgment creditor, I am not prepared to deal with the issue of costs on a without notice basis. The Registrar is to send the judgment debtor’s documents to the judgment creditor’s solicitors with a copy of this judgment.

[20]              Of course, if the judgment creditor elects not to seek costs then that will be an end to the matter as the judgment debtor is a self-represented litigant and is not entitled to costs. If the judgment creditor wishes costs to be fixed pursuant to the judgment debtor’s request then the judgment creditor is to explain the delay in returning the bank cheque and explain why retaining the cheque for an extended period should not be treated as acceptance.

[21]              The delay in rejecting the cheque is a point that will have to be answered. Someone who wishes to object to payment by a personal cheque must object to the form of tender as soon as they are aware of it. If they do not do so then they must expect to be taken to have dispensed with the need for payment through legal tender. That person would be estopped from asserting that the mode of payment did not comply with the need for legal tender.3 Here, the issue is not mode of payment but the fact of part payment, but there may well be an analogy that a creditor who does not wish to accept part payment must make that clear as soon as they become so aware.

[22]              All of these comments are made without hearing from counsel for the judgment creditor and hence I only raise these matters for counsel to consider. Until such is clarified, I say nothing further about the issue of costs.

[23]              Accordingly, I order that the application to review the Registrar’s decision to accept for filing the request for a bankruptcy notice is rejected.

3      Otago Station Estates Ltd v Parker [2005] NZSC 16, [2005] 2 NZLR 734 at [27].

[24]                As to the issue of costs, such are reserved until the judgment creditor advises whether he wishes to pursue costs. If he does, he is to address the issues I have outlined above concerning the delay in returning the bank cheque. If the judgment creditor does not wish to pursue costs then a memorandum to that effect is to be filed. In any event, the judgment creditor is to respond within 10 working days of the date of this judgment (that is by Thursday 15 April 2021), at which time the Registrar may refer the file to me.

Associate Judge Lester

Solicitors:

Collins & May Law, Lower Hutt

And to:
Ms M A Wootton, self-represented judgment debtor