Dudfield v Krogh HC Wellington CIV-2010-485-2173 [2011] NZHC 383 (21 March 2011)

Last Updated: 15 June 2011

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

_{CIV-2010-485-2173}

BETWEEN CHRISTOPHER JOHN DUDFIELD Judgment Creditor

AND KAREN KROGH Judgment Debtor

Hearing: 21 March 2011

(Heard at Wellington)

Counsel: C. Chapman - Counsel for Judgment Creditor

J. Grace - Counsel for Judgment Debtor

Judgment: 21 March 2011

_{ORAL JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL}

Solicitors: Peterson Law Ltd, Solicitors, PO Box 342, Wellington

Jefferies Raizis, Solicitors, PO Box 10641, Wellington

CJ DUDFIELD V K KROGH HC WN CIV-2010-485-2173 21 March 2011

[1] Before me today is an application by the judgment creditor seeking an order for adjudication in bankruptcy of the judgment debtor.

[2] The judgment debt in question, which originally amounted to the sum of

$4,276.75, relates to a decision of the Disputes Tribunal made against the judgment debtor on 1 February 2010 for which a certificate of judgment of the District Court at Wellington was issued on 1 April 2010.

[3] A Bankruptcy Notice with respect to this debt was served on the debtor on 5

November 2010. By reason of her failure to comply with the Bankruptcy Notice, the judgment debtor committed an act of bankruptcy some 10 working days later on 19

November 2010.

[4] The present application for adjudication was filed on 7 February 2011 and served on the judgment debtor on 23 February 2011.

[5] A Notice of Opposition to that application together with supporting affidavit were filed on 9 March 2011.

[6] Before me today, Mr Chapman, counsel for the judgment creditor indicated that the debt outstanding (originally amounting to $4,276.75) had grown with accumulating interest and costs claimed on the Bankruptcy Notice and Adjudication Application to a figure of $6,348.48.

[7] In addition, today the judgment creditor claims an additional amount by way of category 2B costs since an earlier call of this matter on 7 March 2011. This amounts to some $1,692.00 and a further $752.00. This brings the total amount which Mr Chapman for the judgment creditor claims is outstanding by the judgment debtor to the sum of $8,792.48.

[8] From the Notice of Opposition filed by the judgment debtor, the grounds advanced to oppose any order for adjudication appear to be as follows:

(a) The judgment debtor claims she can pay her debts;

(b) The judgment debtor claims that it is just and equitable that the Court does not make an order for adjudication.

(c) And the judgment debtor relies on the evidence contained in her affidavit sworn 9 March 2011.

[9] What is clear from the application before me is that the judgment debtor has committed an act of bankruptcy in that she has failed to respond in any way to the Bankruptcy Notice served upon her.

[10] In terms of s 37 Insolvency Act 2006, the judgment debtor appears to oppose the present application on the basis that she claims to be able to pay her debts and is solvent on the one hand, and that on the other hand, given the entire circumstances surrounding this matter it is just and equitable that an order for adjudication should be refused.

[11] On the issue of solvency, the only evidence before the Court is contained in the 9 March 2011 affidavit from the judgment debtor. At para [1] of that affidavit she deposes:

(a) I am not insolvent. Annexed and marked “A” is a statement of financial position. It can be seen that I own a house in Karori and I have shares in two companies. I intend to deposit the sum mentioned in the creditor’s application into my solicitor’s trust account pending the hearing on 21

March 2011.

[12] The annexed statement of financial position suggests that the judgment debtor has net assets of $326,000.00. This represents the house property at 40

Messines Road, Karori at a value of $860,000.00 (less a mortgage debt of

$745,000.00) shares in Olive Cafe Limited at $75,000.00, shares in Krogh Holdings Limited at $100,000.00, a Citroen motor car at $6,000.00, bank accounts totalling approximately $10,000.00 and personal effects totalling $20,000.00.

[13] Before me, however, Mr Chapman for the judgment creditor raised issues concerning the ownership of the Messines Road property. A copy of the title to this

property was provided to the Court and it appears to show that the legal owners of the property are the judgment debtor and one Mr Murray George Harden.

[14] Mr Grace for the judgment debtor, as I understand it suggested that this property may be owned by a Trust and that the judgment debtor may have misunderstood notions of ownership and beneficial interest when completing her affidavit. Notwithstanding this, Mr Grace suggested that her interest in this property as a beneficiary and the company shares noted above in particular show that her assets clearly exceed any liabilities to a substantial extent.

[15] At this point it needs to be said that the evidence before the Court as to the judgment debtor’s financial position is rather unsatisfactory. There is no verification of the list of assets provided in the affidavit of the judgment debtor. The Court is simply left with the assertion in her affidavit that these represent her assets and liabilities. There is also no explanation regarding what the company shares listed relate to. Finally, no independent verification of any values is provided.

[16] Mr Grace for the judgment debtor, however, did go on to suggest that the size of the original debt being something under $5,000.00 was relevant here. Given this aspect, although Mr Grace conceded the financial statement lacked much by way of detail, it was he said put together simply to show that the judgment debtor had substantial assets well in excess of the debt claimed.

[17] Mr Chapman for the judgment creditor, however, complained that it was quie improper for the judgment debtor here to suggest that the modest size of the debt in question was the reason why inadequate information had been placed before the Court. On this, he went on to indicate that the costs consequences of the Judgment Debtor’s continued opposition to the judgment creditor’s attempts to be paid the amount ordered by the Disputes Tribunal, must rest entirely with her.

[18] Also today, it was indicated to the Court that the sum of $5,000.00 had been paid by the judgment debtor into her solicitor’s trust account. This was confirmed by an affidavit of Mr Simon Raizis filed 17 March 2011. This affidavit confirms that a

2011. Specifically, he deposes:

I have also been given written instructions from Karen Krogh for Jefferies Raizis to hold this money in the firm’s trust account until after the hearing on 21 March 2011. Annexed and marked “B” is a copy of those instructions.

[19] Those instructions appear to provide an irrevocable instruction to Jefferies Raizis to hold the $5,000.00 in their trust account “and not to release it until after the High Court hearing on Monday, 21 March 2011”.

[20] Mr Chapman for the judgment creditor suggested that this payment of

$5,000.00 was of no moment, particularly as it was held for the benefit of the judgment debtor and not the judgment creditor, and in any event it was to be released immediately after the High Court hearing today.

[21] In response, as I understand the position, Mr Grace acknowledged that this

$5,000.00 was available as some form of security towards payment of the judgment debt but he went on to note that the judgment debtor still disputed her liability under the Disputes Tribunal order and was contemplating making an application to seek a stay of enforcement of this order. No such application has been made at this point, however.

[22] This entire matter, in my view, is unsatisfactory to say the very least. The order of the Disputes Tribunal, as I have noted above, was made on 1 February 2010, well over 1 year ago. The order was in favour of the judgment creditor and related to an account for work which he maintains was carried out in April 2007 nearly 3 years earlier.

[23] No steps were taken to either appeal or to set-aside or stay the Disputes

Tribunal order.

[24] Instead, as I see the position, this matter has involved a relatively long history of argument and counter-claim between the parties relating to the plans completed, work undertaken (or not undertaken) and the like.

from the judgment debtor to the judgment creditor she offered:

In order to resolve the situation I hereby make the offer to pay an amount of $400.00 per month to the judgment creditor ... Please advise me if my proposal is acceptable to the judgment creditor.

[26] Only since that time, as I understand it, has the judgment debtor endeavoured to raise further and new arguments disputing payment of the original debt due.

[27] Finally, what is also clear is that the original Disputes Tribunal Order and judgment debt of $4,276.75 has by now grown significantly with the addition of interest and costs. And it is of some relevance here that the debt relates to work carried out by the judgment creditor in April 2007, nearly some 4 years ago now.

[28] As Mr Chapman suggests, there is a reasonable argument that the considerable costs and interest which have increased the original debt significantly have in large measure resulted from the actions and delays taken by the judgment debtor here.

[29] Under all the circumstances prevailing in this case, which I now weigh up, in my view, the appropriate course is for the present application before me to be adjourned for a period of two weeks until a call on 4 April 2011.

[30] This is to give an opportunity within that period for the judgment debtor to clear the total debt, costs and interest which are appropriately due to the judgment creditor. From her statement of financial position, there seems to be little doubt that the judgment debtor would be able from her own resources to find sufficient funds for this purpose.

[31] If the debt in question is not satisfactorily cleared by 4 April 2011 when this matter is re-called before me, then at that point my final judgment with regard to the application before the Court will be given.

[32] On that basis, this matter now stands adjourned to a call at 10.00 am on 4

April 2011.

‘Associate Judge D.I. Gendall’