Zanz Limited Partnership v Dua - [2019] NZHC 280

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-1554

[2019] NZHC 280

UNDER the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of VIKRANT DUA

BETWEEN

ZANZ LIMITED PARTNERSHIP

Judgment Creditor

AND

VIKRANT DUA

Judgment Debtor

Hearing: 27 February 2019

Appearances:

Mr Hakaria for the Judgment Creditor Mr Dua in person

Judgment:

27 February 2019

ORAL JUDGMENT OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 27 February 2019, pursuant to r 11.3 of the High Court Rules

Registrar/Deputy Registrar

Solicitors / Counsel:
Sharp Tudhope, Tauranga

Copy to:
V Dua

ZANZ LIMITED PARTNERSHIP v DUA [2019] NZHC 280 [27 February 2019]

[1] The judgment creditor (Zanz) applies for an order adjudicating the judgment debtor (Mr Dua) bankrupt.

[2] Zanz obtained a summary judgment against Mr Dua and others in the Palmerston North District Court on 18 July 2018 for the sum of $65,620.46, including costs and disbursements. Summary judgment was entered for the same sum against one of three other defendants in the proceeding, Workforce NZ Ltd (Workforce). Mr Hakaria has told me this morning that Workforce is now in liquidation.

[3] Mr Dua did not pay the judgment debt, and a bankruptcy notice was issued by Zanz on 8 August 2018. The bankruptcy notice was properly served on Mr Dua on 4 September 2018.

[4] Mr Dua did not comply with the requirements of the bankruptcy notice, and on 27 September 2018 Zanz filed an application in this Court to have him adjudicated bankrupt. The bankruptcy proceeding was served on 16 October 2018.

[5] Mr Dua filed a notice of opposition and affidavit in opposition, on 14 November 2018.

[6] The case was called before Associate Judge Andrew on 27 November 2018. His Honour allocated a half day fixture for today to hear the application on a defended basis, and gave directions for the filing of further affidavits and written submissions.

Relevant provisions of the Insolvency Act 2006 (the Act)

[7]Sections 13, 17, and 37 of the Act materially provide:

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 …; 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.

17 Failure to comply with bankruptcy notice

(1)A debtor commits an act of bankruptcy if—

(a)a creditor has obtained a final judgment or a final order against the debtor for any amount; and

(b)execution of the judgment or order has not been halted by a court; and

(c)the debtor has been served with a bankruptcy notice; and

(d)the debtor has not, within the time limit specified in subsection (4),—

(i)complied with the requirements of the notice; or

(ii)satisfied the court that he…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] NZHC 280
Decision Date: 27 February 2019

CaseChat Overview and Summary

Zanz Limited Partnership applied to the High Court of New Zealand for an order to adjudicate Mr Dua, the judgment debtor, bankrupt. Zanz had obtained a summary judgment against Mr Dua in the Palmerston North District Court for the sum of $65,620.46, including costs and disbursements. Mr Dua did not pay the judgment debt and a bankruptcy notice was issued by Zanz on 8 August 2018, which was served on Mr Dua on 4 September 2018. Mr Dua did not comply with the requirements of the bankruptcy notice, and on 27 September 2018 Zanz filed an application in this Court to have him adjudicated bankrupt.

The legal issues the court had to decide were whether all the elements of s 13 of the Insolvency Act 2006 had been established, and whether the court should exercise its discretion under s 37(c) or (d) of the Act to refuse to make an adjudication order. The court found that all the elements of s 13 of the Act had been established and Mr Dua is presently unable to pay the debt. The court also found that the public interest in holding to account those who provide commercial guarantees, including guarantees of commercial leases, was strong and the change of heart of Mr Dua did not affect the validity of the guarantee. The court rejected Mr Dua's argument that his decision to change his mind about the guarantee that he signed, should weigh in his favour in the exercise of its discretion under s 37(c) or (d) of the Act.

The court made an order adjudicating Mr Dua bankrupt, with costs on a 2B basis to Zanz and disbursements as fixed by the Registrar. The court found no grounds to refuse the adjudication order under either s 37(c) or s 37(d).

Orders