The Commissioner of Inland Revenue v Mani

• Jurisdiction: New Zealand
• Judge: Judge Faire
• Judgment Date: 29 September 2010
• Neutral Citation: [2010] NZHC 1753
• Docket Number: CIV 2010-404-001918
• Court: High Court
• Date: 29 September 2010

In the Matter of the Insolvency Act 2006

and

In the Matter of the bankruptcy of R Mani

Between

The Commissioner of Inland Revenue

Judgment Creditor

and

Ritesh Mani

Judgment Debtor

[2010] NZHC 1753

CIV 2010-404-001918

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

Application by a judgment debtor for an order setting aside a bankruptcy notice on the grounds that the application for bankruptcy was an abuse of process as the amount claimed by the judgment creditor was disputed and it was just that the court exercise its inherent jurisdiction to set aside the bankruptcy notice — whether the bankruptcy notice should be amended or set aside; whether the Court had an inherent jurisdiction to set aside the bankruptcy notice.

Counsel:

SL Law for judgment creditor

Appearance:

R Mani, judgment debtor in person

JUDGMENT OF ASSOCIATE Judge Faire

[on application for order setting aside a bankruptcy notice]

1 The judgment debtor applies for an order setting aside a bankruptcy notice dated 20 May 2010.

2 The application relies on the following principal grounds in support:

• a) That the judgment debtor is willing to compromise the amount owing on terms that satisfy the court or the judgment creditor;

• b) That the application for bankruptcy is an abuse of process as the amount claimed by the judgment creditor is disputed; and

• c) It is just that the court exercise its inherent jurisdiction to set aside the bankruptcy notice.

3 It is appropriate that I record that this application does not involve the most common ground which is advanced by applications to set aside bankruptcy notices. That ground relies on the Insolvency Act 2006, ss 17(1)(d)(ii) and 7. It is concerned with the alleged existence of a cross-claim.

4 The judgment creditor obtained judgment against the judgment debtor in the District Court at Auckland on 30 September 2008. A certificate for evidential purposes was issued by the district court recording the total sum for which judgment was entered and including the cost of the certificate as $229,611.39. The certificate is dated 5 November 2008.

5 The amount of the claim as recorded in that document is $229,401.39. The balance is made up of costs and disbursements.

6 On 29 March 2010 the judgment creditor filed a request to issue a bankruptcy notice in the High Court. The bankruptcy notice was issued and served. This current application follows that service. It is accepted by the Commissioner of Inland Revenue that the application was filed within the time specified in the Insolvency Act 2006, s 17 and in the notice. The result is that by the operation of hcr 24.10 the time for compliance with the bankruptcy notice is extended until this application is determined.

7 The Commissioner of Inland Revenue opposes the setting aside of the bankruptcy notice and advances four principal grounds in support of his opposition. They are:

• a) The Commissioner of Inland Revenue has issued assessments to the judgment debtor/applicant stating how much is owing for the relevant tax periods;

• b) The Commissioner of Inland Revenue has obtained judgment by default in the District Court for the amount owing. The judgment debtor has not paid the amount owing as detailed in the bankruptcy notice;

• c) The judgment debtor has not initiated the statutorily defined disputes procedure within the statutorily defined time limits and consequently the assessments are deemed to be correct; and

• d) Neither the District Court nor the High Court (other than within its judicial review jurisdiction) has the jurisdiction to determine the validity or otherwise of the assessments.

8 The judgment debtor was formerly represented by counsel. When this fixture was allocated directions were made for the filing and service of submissions. The judgment debtor did not comply. An urgent conference was called before Justice Lang to deal with that non-compliance. His Honour minuted the file as follows:

• 1. The proceeding will proceed as scheduled on 29 September 2010, whether or not the debtor has filed any submissions.

• 2. The debtor is to file and serve his written submissions no later than Wednesday, 22 September 2010.

9 The judgment debtor has not filed any written submissions.

10 The judgment debtor appeared when this matter was called. He further advised me that he had not received the most recent affidavit filed on the Commissioner's behalf. That affidavit was filed so that the court could be brought up to date with steps taken principally by the judgment debtor since the last affidavit was filed. I arranged a short adjournment so that the opportunity was available to the judgment debtor to examine the further affidavit. He advised me that he had considered it and was ready for the matter to proceed.

11 The first ground advanced in the judgment debtor's application is the allegation of his willingness to compromise the amount owing. I need not review the evidence in full. What is clear is that there has been a considerable history of material exchanged between the judgment debtor and his tax agent and the Commissioner. No compromise has been able to be effected. There is, in fact, simply no support for this as a ground for setting aside the bankruptcy notice. Having said that, I encourage the judgment debtor to place whatever new proposal he might have before the Commissioner for consideration. He should not leave matters literally at the door of the court before these steps are taken.

12 The second ground relates to an allegation that the amount claimed in the bankruptcy notice is disputed. This matter is an entirely different position from the first. It was not clearly enunciated in the papers. However, what is apparent from the evidence which was...