Commissioner of Inland Revenue v Musuku [2016] NZHC 2759 (17 November 2016)

Last Updated: 9 December 2016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-3155 [2016] NZHC 2759

IN THE MATTER	of the Insolvency Act 2006 AND
IN THE MATTER	OF THE Bankruptcy of Jawahar Bhaskar Musuku
BETWEEN	COMMISSIONER OF INLAND REVENUE Judgment Creditor
AND	JAWAHAR BHASKAR MUSUKU Judgment Debtor

Hearing:	17 November 2016
Appearances:	Mr Walmsley for judgment creditor Mr Thwaite for judgment debtor
Judgment:	17 November 2016

ORAL RULING OF ASSOCIATE JUDGE J P DOOGUE [On availability of affidavit evidence]

COMMISSIONER OF INLAND REVENUE v MUSUKU [2016] NZHC 2759 [17 November 2016]

[1] A preliminary issue arises as to the admissibility of two affidavits which were filed on behalf of the judgment debtor in this proceeding. The judgment creditor has made an application for an order that the affidavits not be read. I will describe the details of that shortly.

[2] The judgment creditor seeks an order adjudicating the judgment debtor in bankruptcy based upon a debt entered against the judgment debtor in the District Court in August 2015 for approximately $42,000.

[3] The notice of intention to oppose is not particularly informative of the grounds upon which the judgment debtor opposes adjudication. However based upon the submissions which Mr Thwaite has filed in support of the defence it would appear that the case raises a number of issues which may be summarised as follows.

[4] The judgment debtor says that it is matter of public interest that the judgment debtor be allowed to pursue other litigation against the Commissioner arising from tax assessments, determinations and decisions with respect to other taxation periods than that with which the present application is concerned. The judgment debtor asserts he is acting in good faith. He says that a bankruptcy would compromise his rights to a lawyer – presumably to assist him with regard to the litigation I have just made mention of. The further ground is that a bankruptcy would conflict with the objectives of insolvency law which are said to include providing a fresh start to the debtor, providing a pool of assets for distribution among creditors and assuring commercial morality in New Zealand. It is said as well, that the judgment creditor is the only creditor who seeks adjudication, that the judgment creditor has rights which she could exercise, but has not, against assets presumably belonging to the judgment debtor; that the judgment debtor has no assets and has valid reasons for not paying and the process has taken a long time.

[5] The parties are probably unanimous in their views concerning the last point made in the preceding paragraph.

[6] A curious feature of the present proceeding is that the judgment debtor did not provide any evidence himself instead there were filed on his behalf two affidavits by his brother respectively sworn on 31 August 2016 and 19 September 2016.

[7] The judgment creditor served a notice pursuant HCR 9.74 requiring the brother, Ravi Musuku, to attend at the Court for cross-examination. It is accepted that he is not been made available for cross-examination. The judgment creditor as a result seeks a direction that the affidavits of Mr Ravi Musuku are not to be used as evidence. Mr Walmsley referred me to HCR 9.74(3) which provides:

(3) The affidavit of a person who is not produced must not be used as evidence unless the evidence is routine, or there are exceptional circumstances and either case the court grants leave.

[8] Mr Thwaite told me that the evidence of the deponent in both affidavits was “routine”. He submitted that a number of the matters deposed to in the affidavits were already within the knowledge of the Commissioner of Inland Revenue.

[9] Mr Walmsley, on the other hand, said that there are a number of matters referred to in the affidavits which the Commissioner has no information about including what the current debts of the judgment debtor are. He gave an instance of a credit card debt which at one stage was shown as $25,000 but which is apparently, currently, not shown as a debt. He referred to the fact that there is evidence in the affidavits about the alleged inability of a person in the position of the judgment debtor to continue working as a pharmacist if adjudicated bankrupt. The position of the Commissioner I understand is that it does not know whether or not that is correct.

[10] Neither party was able apparently to refer to any authority on how the Court has on previous occasions interpreted Sub-rule 3 above and in particular what meaning has been attached to the expression “routine”.

[11] Courts generally attach significance when deciding disputed issues of fact to having the person who is giving the evidence before the Court so that the Judge can observe that person giving their evidence, and assess their reliability in a setting where the witness may be subjected to searching cross-examination which confronts the witness with reasons, which if unexplained, would tend to cast doubt on the

version of events that the witness gives. It is regarded as being so important to have a witness before the Court for cross-examination on disputed matters that the Court will generally decline to come to conclusions on disputed fact unless the process I have described has taken place.

[12] Consistent with that approach, it would seem to be the correct approach to adopt an interpretation of “routine” as being used in the sense of being used in contrast to the case where the evidence in question involves facts which are controversial. If it is controversial, the evidence is not “routine”.

[13] This would bring about the result that where there was evidence on contested facts, the opposing party should be accorded the right to cross-examine the witness and to that end serve a notice requiring the deponent to attend for cross-examination. The considerations which I have discussed above also explain why the Court is empowered to decline to accept the evidence if this process has not taken place.

[14] I do not accept that the evidence is in any way routine which the deponent has put forward. It contains for example important statements about the present financial worth of the judgment debtor. It gives information about a trust which might be prepared to assist the judgment debtor to come to a compromise. It gives evidence about the specific values of properties which are referred to. One of the affidavits states that apart from his solicitor and the bank, the judgment debtor has no other creditors. It opines that if he is adjudicated bankrupt then his ability to work in a pharmacy “outside New Zealand may be affected, depending upon jurisdiction”. It says that the judgment debtor has started work but does not give any details about what he is earning which is no doubt a matter that the judgment creditor would wish to cross-examine on if able to. It states that he owns a piece of land in India but does not give an estimate of the value of that land. Reference to these aspects of the evidence is sufficient to demonstrate that the evidence which is contained in the two affidavits by Mr Ravi Musuku is far from being routine. It plainly includes matters which are controversial and on which the Court could not come to a conclusion without seeing and hearing the witness in the witness box.

[15] For those reasons I conclude that the evidence of Ravi Musuku contained in the affidavits which he has sworn do not come within the exception contained in

_{HCR 9.74(3). They are therefore not to be used as evidence in this proceeding.}

J.P. Doogue

Associate Judge