KONTINUUM FINANCE LIMITED V CHRISTIAN HC WN CIV-2009-485-001530 [2009] NZHC 1031 (14 August 2009)

IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY
                                                                  CIV-2009-485-001530


                 IN THE MATTER OF The Insolvency Act 2006
                 AND IN THE MATTER OF The Bankruptcy of Paul John Christian

                 BETWEEN                     KONTINUUM FINANCE LIMITED
                                             Judgment Creditor

                 AND                         PAUL JOHN CHRISTIAN
                                             Judgment Debtor


Judgment:        14 August 2009


               JUDGMENT OF ASSOCIATE JUDGE D I GENDALL


      This judgment was delivered by Associate
Judge Gendall on 14 August 2009 at
                  2.30 pm pursuant to r 11.5 of the High Court Rules.


[1]       On 17 July 2009,
an interlocutory application without notice seeking
directions as to service and substituted service orders was filed in this bankruptcy
proceeding by the judgment creditor.


[2]       This application has just been referred to me for consideration. I apologise to
counsel and the parties for the delay which has occurred in making this application
available for a decision.


[3]       I now give
that decision with respect to the service questions at issue.


[4]       The application before me is brought without notice, and
that is appropriate
here. It seeks orders in reliance on r 6.1(2), 6.6 and 6.8 High Court Rules that the
judgment debtor be served
in this proceeding (presumably with both the bankruptcy
notice and subsequently the application for adjudication and supporting documents)
not personally but by way of substituted service by forwarding these documents first,


KONTINUUM FINANCE LIMITED V CHRISTIAN HC
WN CIV-2009-485-001530 14 August 2009

to his e-mail address at [e-mail] and secondly, by posting these
documents
to his home address at 10 Grange Hill, London, United Kingdom.


[5]    The stated grounds advanced in the application in support
of the order sought
are broadly that the judgment debtor has resided continuously at the address of 10
Grange Hill, London for some
time, and has also received and sent e-mails to his e-
mail address at [e-mail], and thus service in that way would
be the
least costly, quickest and most efficient option.


[6]    It appears however that no attempts have been made as yet to serve
the
judgment debtor personally with the present bankruptcy notice or any other
documents in this current proceeding. From the affidavit
of Mr Bernard Darwen,
sworn 29 July 2009, filed in support of this application, it seems that the judgment
creditor has already filed
two previous sets of bankruptcy proceedings against the
judgment debtor and, in these, bankruptcy petitions were served personally
on the
judgment debtor at his London address. Mr Darwen confirms in his affidavit that,
although the judgment debtor was cooperative
about service on these occasions,
personal service on him in London was at considerable cost (he says these costs have
now exceeded
$1,200). And Mr Darwen goes on to state that the judgment debtor
has been in regular contact with the judgment creditor over this
time. Apparently,
the last of these bankruptcy petitions served upon the judgment debtor was
withdrawn on 30 March 2009 because he
had made a number of promises as to
payment, which were accepted by the judgment creditor in good faith.


[7]    The present application
before the Court is effectively one for substituted
service made in terms of r 6.8 High Court Rules. This rule states:

       6.8
    Substituted service

       If reasonable efforts have been made to serve a document by a method
       permitted or required
under these rules, and either the document has come to
       the knowledge of the person to be served or it cannot be promptly served,
the
       court may--

       (a)     direct--

               (i)     that instead of service, specified steps be taken that are
likely
                       to bring the document to the notice of the person to be
                       served; and

               (ii)
   that the document be treated as served on the happening of a
                       specified event, or on the expiry of a specified
time:

       (b)     when steps have been taken for the purpose of bringing, or which
               have a tendency to bring, the
document to the notice of the person on
               whom it is required to be served, direct that the document be treated
   
           as served on that person on a specified date:

       (c)     subject to any conditions that the court thinks just to
impose,
               dispense with service of a document on a person and give to the
               party by whom the document
is required to be served leave to
               proceed as if the document had been served.

[8]    From this rule it is clear that
the conditions precedent for the Court to
exercise its jurisdiction to order substituted service in the context of bankruptcy
proceedings
such as the present are:


       a)      Proof that reasonable efforts have been made to effect service
               personally
on the debtor; and


       b)      Proof that:


               i)      The document has come to the knowledge of the debtor; or


               ii)     Prompt personal service cannot be effected.


[9]    The general principles governing an order for substituted
service are set out
in McGechan on Procedure at para HR6.8.02 and para HR6.8.03, the latter of which
sets out a guide to the steps
which are required to be taken before a substituted
service application is to be successful.


[10]   McGechan at para HR6.8.05 goes
on to deal with the position regarding
substituted service outside New Zealand and concludes that:

       The same requirements
for substituted service within jurisdiction are
       applicable where substituted service outside New Zealand is ordered.

[11]
  In Re Rewiri ex parte Commissioner of Inland Revenue  (2002) 16 PRNZ 415
Heath J, in noting the significance of orders for adjudication on debtors and their
effect on dealings with third parties, highlighted
the need for bankruptcy proceedings

to be brought to the attention of a debtor and, therefore, for substituted service orders
to
be made sparingly.


[12]   That said, and bearing in mind the preconditions for the Court to exercise its
jurisdiction to order
substituted service noted at paragraph [8] above, it would seem
in the present case that at this point it is not appropriate for
an order for substituted
service to be made. Those preconditions have not been satisfied here. There is no
proof before the Court
that reasonable efforts have been made to effect personal
service on the debtor, nor that such prompt personal service is unable
to be effected.
Indeed, in this case, Mr Darwen for the judgment creditor confirms in his affidavit to
the contrary, and goes on
to note that the earlier bankruptcy petitions were served
personally on the debtor and that on those occasions he was "cooperative
about
service".


[13]   Effectively, the principal reason advanced by the judgment creditor here for
an order for substituted service
(being the cost of completing personal service) is not
sufficient, in my view, to justify the substituted service orders sought.


[14]   To avoid this cost which the judgment creditor says is significant, it may be
that alternative service avenues should be
explored. These might include a request to
the judgment debtor that, to keep costs to a minimum, he provide an address for
service
for these proceedings through an agent in New Zealand, or otherwise. But
the jurisdictional requirements for the making of a substituted
service order have not
been met here.


[15]   For these reasons, at this point the application by the judgment creditor for
directions
as to substituted service in this proceeding must fail.


[16]   The judgment debtor is to be served personally with the bankruptcy
notice
and adjudication proceedings in the usual way, unless either some other agreement
on service arrangements is reached, or an
alternative substituted service application
is made, once the preconditions for the exercise by the Court of its jurisdiction to
order substituted service are satisfied.

                                                        `Associate Judge D I Gendall'


Solicitors:
Mike Garnham, Wellington for the Judgment Creditor