Body Corporate 378945 v Harry Memelink
| Jurisdiction | New Zealand |
| Judge | Johnston |
| Judgment Date | 29 April 2022 |
| Neutral Citation | [2022] NZHC 890 |
| Docket Number | CIV-2020-485-721 |
| Court | High Court |
UNDER The Insolvency Act 2006
IN THE MATTER of the bankruptcy (or proposal, as the case may be) of Harry Memelink
[2022] NZHC 890
Johnston
CIV-2020-485-721
IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE WHANGANUI-A-TARA ROHE
Insolvency, Statutory Interpretation — application for a bankruptcy order by judgment creditor — debt to applicant for bankruptcy paid — act of bankruptcy — treating an applicant and a supporting creditor as joint applicants — Insolvency Act 2007
C T C Bell for Plaintiff down to and including 28 March 2022;
D Dewar since 28 March 2022
D Livingston for Defendant
A O'Connor for Body Corporate 68792 (a supporting creditor)
The application was dismissed.
On 25 June 2020, this Court delivered judgment in an appeal in which the judgment debtor, Mr Harry Memelink, sought to challenge a decision of the District Court declining him further time within which to bring a substantive appeal. The appeal was unsuccessful. 1 Cooke J both declined the appeal and subsequently ordered that Mr Memelink pay the judgment creditor, Body Corporate 378945 (“the Body Corporate”), costs in the sum of $8,365.
Initially, Mr Memelink did not pay those costs.
The Body Corporate commenced enforcement proceedings. Having sealed the judgment, it obtained a bankruptcy notice from this Court on 3 December 2020. It says that this bankruptcy notice was served twice. Different service agents were involved (Mr Spriggs and Mr Desmond). The Body Corporate appears to have effected service twice as a result of a misunderstanding between its own solicitors and the solicitors acting for the supporting creditor, another body corporate (“BC 68792”). Following service Mr Memelink paid the costs that Cooke J had ordered him to pay, that is to say, the $8,365 referred to earlier.
The bankruptcy notice as issued by the Court was in the orthodox statutory format. On the second page, it said that, in addition to the judgment debt, the judgment creditor was claiming costs of $828, including disbursements. Mr Memelink did not pay this these costs.
It is Mr Memelink's failure to pay this amount that has resulted in this bankruptcy proceeding which has occupied half a day of the High Court's time, during which I heard witnesses for both parties cross examined and detailed submissions from counsel.
The issue is not complicated. The Body Corporate says, and has filed affidavit evidence to the effect, that the bankruptcy notice that was served by its solicitors' service agent, Mr Barry Spriggs, during the morning of 3 August 2021 was complete. Mr Memelink says that it did not include the second page, so that he did not know that the Body Corporate was claiming costs of $828.
The parties being at odds as to whether the bankruptcy notice served by Mr Spriggs included the claim for costs, they are also divided on whether Mr Memelink was obliged to pay those costs and therefore whether Mr Memelink committed an act of bankruptcy when he failed to do so, and therefore whether the Body Corporate is entitled to the order it seeks.
Having considered the affidavit evidence before the Court, the viva voce evidence of Mr Spriggs and Mr Memelink, both of whom were cross examined, and counsel's submissions, I am satisfied that Mr Spriggs served a complete bankruptcy notice on Mr Memelink.
It is unnecessary to deal with the evidence at any length. I accept the unchallenged evidence of the Body Corporate's solicitor's secretary, Ms Lorna Fulcher, to the effect that the bankruptcy notice issued by the Registrar was complete. I accept Ms Fulcher's evidence that she forwarded a copy of the email received from the Registrar with the bankruptcy notice attached to Mr Alwyn O'Connor, the solicitor acting for the supporting creditor, BC 638792, and that she has, since this proceeding was commenced, checked and confirmed that the email forwarded to Mr O'Connor contained the bankruptcy notice, with the intention that Mr O'Connor should take responsibility for arranging service of the same on Mr Memelink. I accept Ms Fulcher's evidence that she subsequently instructed her firm's usual service agent, Mr Michael Desmond, to serve the bankruptcy notice, left a complete copy of the same in an envelope at the firm's reception for Mr Desmond to collect, and that Mr Desmond subsequently reported having served the same on Mr Memelink.
I accept Mr O'Connor's affidavit evidence that on receipt of the Body Corporate's solicitor's email attaching the email from the Registrar, he printed the complete bankruptcy notice and provided the same to his agent, Mr Spriggs, with instructions that it be served on Mr Memelink.
I accept Mr Spriggs' unchallenged evidence that on 3 August 2021 he left a copy of the bankruptcy notice on the doorstep of Mr Memelink's business premises and observed Mr Memelink pick the same up. Indeed, it is not in dispute that Mr Memelink received this. I acknowledge that Mr Spriggs expressly says that he did not check whether the document was complete. But he also says that he is confident that the document that he served was the document that he received from Mr O'Connor by email. Finally, I record that it is common ground that Mr Desmond served a complete copy of the bankruptcy notice on Mr Memelink later the same day.
As already said, Mr Memelink's evidence is that the document that Mr Spriggs served on him did not include the second page containing the claim for costs of $828.He goes on to say that he does not know whether the bankruptcy notice served on him by Mr Desmond was complete, as he did not read beyond the introductory section, believing that it was simply a copy of the earlier document. That is Mr Memelink's explanation for why, having consulted with his solicitors, Livingston & Livingston, he paid the amount of the claim, $8,365, but did not pay the costs of $828.
As already said, on the evidence, I am satisfied that Mr Spriggs served a complete copy of the document on Mr Memelink. I am not suggesting that Mr Memelink has been untruthful in giving evidence to the Court. There is no need to reach any view on that score. It seems to me to be overwhelmingly most likely that Mr Memelink simply overlooked the second page of the document and the costs claim.
It is true that Mr Bell's cross-examination of Mr Memelink pointed to some difficulties with his evidence. For a start, Mr Memelink admits to having been the subject of something like 30 bankruptcy proceedings in the past. It is difficult to imagine that Mr Memelink, an intelligent and resourceful man, would not have been alert to the fact that bankruptcy notices always include a claim in respect of costs. More pointedly still, under cross-examination Mr Memelink admitted that he had referred to the exact amount of the costs claim, $828, in correspondence at a time before, on his own evidence, he had become aware of the same. When this contradiction was put to him, he did not seem to have an answer.
However, as I say, I do not need to reach any definitive view in relation to this. In the end, the point is completely dealt with by Mr Desmond's unchallenged evidence of having served a complete copy of the bankruptcy notice later on 3 August 2021. Whether Mr Memelink read the entire document or not is not the point. Service is proved.
Accordingly, in my view, the Body Corporate has established that the bankruptcy notice, originally dated 3 December 2020 and renewed on 3 September 2021, was properly served on Mr Memelink and that his non-compliance with the same, by failing to pay the costs component of $828 within 10 working days of service, constituted an act of bankruptcy on his part entitling the Body Corporate to apply for the order it seeks in this proceeding.
That conclusion brings me to s 13 of the Insolvency Act, which is the provision that determines when the Court may or may not make an order bankrupting a debtor.
Section 13 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.
In terms of s 13(a) the Court may only make an order where the judgment creditor can establish that he, she or it is owed at least $1,000 by the judgment debtor or, if two or more creditors join in the application, they are owed at least $1,000 collectively.
The act of bankruptcy upon which...
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Body Corporate 378945 v Memelink
...THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE CIV-2020-485-721 [2022] NZHC 890 UNDER The Insolvency Act 2006 IN THE MATTER of the bankruptcy (or proposal, as the case may be) of Harry Memelink BETWEEN BODY CORPORATE 378945 Plaintiff AN......