COMMISSIONER OF INLAND REVENUE v MAKURU [2020] NZHC 2563

COMMISSIONER OF INLAND REVENUE v MAKURU [2020] NZHC 2563 [30 September 2020]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2020-409-204[2020] NZHC 2563IN THE MATTER of the Insolvency Act 2006ANDIN THE MATTER of the bankruptcy of JOHN NGATAEMAKURUBETWEEN COMMISSIONER OF INLANDREVENUEJudgment CreditorAND JOHN NGATAE MAKURUJudgment DebtorHearing: Determined on the papersCounsel: V L D A G Diefenbach for Judgment CreditorJudgment: 30 September 2020JUDGMENT OF ASSOCIATE JUDGE LESTERThis judgment was delivered by me on 30 September 2020 at 4.00pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy Registrar30 September 2020[1] The judgment creditor, the Commissioner of Inland Revenue (theCommissioner), applies for an order for substituted service as against the judgmentdebtor, Mr John Makuru.[2] I am satisfied, having regard to the evidence of Uma Kolluru, that reasonableefforts have been made to serve the bankruptcy notice on the judgment debtor and thatit cannot be promptly served. The Commissioner has been handicapped in trying toserve the bankruptcy notice, given Mr Makuru left for the Cook Islands on29 February 2020. Enquiries made by the Commissioner, as detailed in the affidavitof Ms Kolluru, have not been successful in finding a physical address for Mr Makuruin the Cook Islands.[3] I am further satisfied that the following directions which I make representa method of service likely to bring the documents to the attention of the judgmentdebtor.Orders[4] I direct the following:(1) personal service on the judgment debtor with the bankruptcy notice andall other bankruptcy documents filed (the Documents) is dispensedwith;(2) service on the judgment debtor will be deemed to be effected uponcompletion of the following steps:(a) an advertisement in the terms provided by the Commissionerand annexed to this judgment, is to be placed in the CookIslands newspaper on a Saturday edition;(b) a photocopy of the bankruptcy notice and this order is to beposted to Mr Makuru, care of 15 Torwood Road, Khandallah,Wellington 6035; and(c) a text message is to be sent to the cell phone number held bythe Commissioner for Mr Makuru advising him that an orderfor substituted service has been made and of the date that theadvertisement will be placed in the Cook Islands newspaper.[5] The Documents will be treated as served three working days afterthe completion of the above steps.[6] The application for substituted service is adjourned with leave to theCommissioner to request, by memorandum, a further order as to substituted service inthe event any adjudication application cannot be promptly served (in which event thememorandum should contain counsel's confirmation either that the judgment debtorcan still not be located, or attaching evidence as to subsequent difficulties of service).[7] The costs of the application for substituted service are fixed and are withdisbursements to be costs in the cause.[8] In addition, the Commissioner seeks leave to serve the bankruptcy noticeoutside of New Zealand. The Cook Islands are not part of New Zealand for thepurposes of the Insolvency Act 2006.1[9] McGechan on Procedure provides "[a] bankruptcy notice is a document thatmay be served outside New Zealand only pursuant to leave granted under r 6.30."2[10] Under s 17(3) of the Insolvency Act a bankruptcy notice must be servedon a debtor in New Zealand unless permission of the court is granted forservice outside New Zealand. His Honour Associate Judge Bell in WestpacNew Zealand Ltd v Boulton, when considering an application to serve a bankruptcynotice outside of New Zealand set out the approach he adopted which was to lookahead to any future bankruptcy application by the creditor relying on non-compliancewith the bankruptcy notice.3 His Honour had regard to the criteria under r 6.28(5) ofthe High Court Rules 2016 when considering whether leave would be granted to serve1 See s 29 of the Interpretation Act 1999, definition of "New Zealand".2 Andrew Beck (ed) McGechan on Procedure (online ed, Thomson Reuters) at [HR6.30.02].3 Westpac New Zealand Ltd v Boulton [2014] NZHC 693.an adjudication application out of New Zealand.4 The Judge then considered whetherit is appropriate for any bankruptcy of the debtor to be administered in New Zealand.If he was satisfied on those factors, he would generally give leave for the bankruptcynotice and the bankruptcy application at the same time. I adopt his approach in relationto this application.[11] Under r 6.28(5), the court may grant leave for an originating document to beserved out of New Zealand if the claim has a real and substantial connection toNew Zealand, there is a serious issue to be tried on the merits and New Zealand is theappropriate forum for the trial.[12] The debt, which is the foundation of the bankruptcy notice in this case, relatesto tax indebtedness incurred by the judgment debtor in New Zealand. It appears thejudgment debtor has a close connection with New Zealand, regularly travellingbetween the Cook Islands and Auckland. He is also listed as the director of a companycalled "Experience The Cook Islands Limited", incorporated on 1 April 2020 forwhich the Khandallah, Wellington address is given.[13] I am satisfied it is appropriate that leave be granted under r 6.30 for thebankruptcy notice to be served outside of New Zealand and I grant leave, if necessary,for the originating documents in this matter, that is the application for adjudication, tobe served out of New Zealand.[14] The Commissioner seeks, pursuant to s 17(4)(b) of the Insolvency Act , thecourt extend the time for Mr Makuru to comply with the bankruptcy notice fromthe standard 10 working days, to 20 working days. That is appropriate and there is anorder accordingly.__________________________________Associate Judge LesterSolicitors:Inland Revenue Legal Services, Christchurch4 At [14].ADVERTISMENT FOR SERVICE OF BANKRUPTCY NOTICETO: JOHN NGATAE MAKURU formerly of Cook Islands (previously ofChristchurch, New Zealand).TAKE NOTICE that the Commissioner of Inland Revenue (New Zealand) has issueda Bankruptcy Notice under the Insolvency Act 2006 out of the High Court ofNew Zealand at Christchurch under CI NI-2020-409-204.And further take notice that this Court has ordered that personal service be dispensedwith and that service of the Bankruptcy Notice be effected by publication of thisadvertisement.You are required to pay the Commissioner of Inland Revenue (the Creditor) the sumof $75,505.80 within ten (20) working days after date of this advertisement, either toher agent in person at any Westpac New Zealand Branch, or at the address for servicePO Box 1782 Christchurch.If you wish to defend the Creditor's claim you must file in the High Court ofChristchurch, New Zealand and serve on the Creditor an application to set aside thebankruptcy notice within 10 working days of publication of this advertisement. If youfail to do so the Creditor may proceed to take bankruptcy proceedings against you.A copy of the Bankruptcy Notice and the sealed Order may be obtained fromVirginia Diefenbach, Solicitor, Inland Revenue Department, PO Box 1782Christchurch, phone +64 3 968 1865, email virginia.diefenbach@ird.govt.nz.Any person knowing the whereabouts of JOHN NGATAE MAKURU is asked tobring this Notice to his attention.Dated this [date] of 2020