Clark v Official Assignee

[2015] NZHC 2975

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2008-416-000071 [2015] NZHC 2975

BETWEEN

KANE REX CLARK

Plaintiff

AND

THE OFFICIAL ASSIGNEE Defendant

Hearing:	26 November 2015
Appearances:	K R Clark (bankrupt) in person G E Slevin for Official Assignee
Judgment:	26 November 2015

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

The application

[1]      Mr Clark applies for his discharge from bankruptcy under s 294 Insolvency

Act 2006.

Mr Clark’s bankruptcy

[2]      The circumstances are unusual.

[3]      Mr Clark was adjudicated bankrupt on 30 September 2008 by reason of his failure to meet a trade debt of $11,548.99.   He had been working in the building industry in the Gisborne region.

[4]      It transpires that other creditors also had claims.  A finance company claims

$13,237.84.  The Inland Revenue Department has a claim of approximately $88,000. The  Ministry  of  Social  Development  has  a  claim  of  $6,623.51.  The Accident

Compensation Corporation has a claim of $1,439.56.

CLARK v THE OFFICIAL ASSIGNEE [2015] NZHC 2975 [26 November 2015]

[5]      Mr Clark did not appear at his adjudication hearing and did not at the time complete a statement of affairs.

[6]      It is established that Mr Clark did not at the time receive the Notice to Bankrupt  which  informs  the  bankrupt  of  obligations  such  as  the  filing  of  the statement of affairs.  Mr Clark had changed addresses and the correspondence was returned to the Assignee undelivered.

[7]      It is clear that Mr Clark became aware of his bankruptcy and indeed had some contact with the Assignee beginning two years later in relation to matters such as possible travel but nothing of significance occurred.

[8]      Eventually, in 2013, through further contact with the Assignee Mr Clark was informed of the need to complete a Statement of Affairs.   Eventually, in August

2013, he did complete a Statement of Affairs.

[9]      By  his  Statement  of  Affairs,  Mr  Clark  identified  as  the  causes  of  his bankruptcy:

(a)       Ill health;

(b)      Lack of working capital;

(c)       Inability to collect debts due to disputes over work; (d)           Unemployment and loss of income;

(e)       Domestic discord and the breakdown of his relationship.

[10]     A time-line of events from 2008 which Mr Clark has provided identifies in some detail the events which have affected him.   In addition to those listed in his Statement of Affairs, it is apparent that some brushes with the law also took him out of play before he moved away from Gisborne in 2009, eventually settling in Christchurch.

[11]     Mr  Clark  has  a  modest  income  ($380  wages  per  week)  which  is  fully committed to his living expenses.  He has no assets of any value, his 1999 Toyota van having been seized by the bailiff earlier this year.

The Assignee’s report

[12]     The Assignee has filed the report required under s 296 of the Act.   It is a comprehensive report which identifies the matters which I have summarised.

[13]     The   Assignee   does   not   object   to   Mr   Clark’s   discharge.      That   is understandable as there is nothing to suggest that prolonging Mr Clark’s bankruptcy would benefit his creditors or the broader community.

Mr Clark’s creditors

[14]     Although  the  application  has  been  served  on  Mr  Clark’s  creditors  and advertised in the Gazette, no-one has taken a step in the proceeding, either in opposition or support.

Discharge – the jurisdiction

[15]     The need for Mr Clark to apply for discharge arises because he will not be automatically discharged from bankruptcy until August 2018, when three years will have elapsed from the filing of his Statement of Affairs.1

[16]     Mr Clark therefore applies for his discharge under s 294(1) of the Act which provides simply:

The bankrupt may at any time apply to the Court for an order of discharge from bankruptcy.

[17]     By s 298 of the Act, the Court, on such an application, has a broad discretion which includes conditional and unconditional discharge.

1      Insolvency Act 2006, s 290(1).

[18]     The judgment of the Court of Appeal in ASB Bank v Hogg2  contains an authoritative statement of the approach to the exercise of the Court’s discretion, which I adopt.  Richardson J, delivering the judgment of the Court stated:3

In conferring a discretion expressed in the broadest terms the legislation recognises that each case will be different, that the relevant factors may vary from case to case and that the exercise of the discretion must be governed by the circumstances of the particular case having regard to the guidance provided by a consideration of the scheme and purpose of the legislation. In providing for automatic discharge after three years the legislation recognises that it is not in the public interest that the bankruptcy should endure indefinitely. In providing for earlier discharge, s 108 recognises that continuing the bankruptcy to the end of the three years may not be in the public interest. Whether or not it is will be a matter for decision on the particular facts. In that regard guidance is provided by s 109(2) which lists matters on which the Assignee is to report to the High Court in such a case. The  Court  is  to  consider  die Assignee's  report  as  to  the  affairs  of  the bankrupt, the causes of the bankruptcy, the manner in which the bankrupt has performed the duties imposed on him or her under the Act and his or her conduct both before and after the bankruptcy, and also as to any other fact, matter or circumstance that would assist the Court in making its decision. Clearly the Court apprised of the matter will consider the legitimate interests of the bankrupt, the creditors and wider public concerns, but it is neither required nor entitled to impose threshold requirements in the exercise of the discretion so as to derogate from the breadth of the powers conferred under s 110. The applicant has the onus in the sense of adducing evidence to show good cause for ordering an early discharge, but his obligation goes no further than that.

Discussion

[19]     Applications for discharge frequently involve applications for early discharge or applications where the required three years for automatic discharge has elapsed but there has been objection to discharge.   The present case is the more unusual situation where there has been a deferred commencement of the three-year period of bankruptcy because of a failure to file a Statement of Affairs.

[20]     Mr Clark’s failure to file a Statement of Affairs in the period shortly after his adjudication is satisfactorily explained.   A point was reached in 2013 where Mr Clark became aware of the need to file a Statement of Affairs but did not do so.  By that point, however, he had been bankrupt for almost five years.  It is also clear from

the evidence that in the period 2013-2014, he suffered a number of misfortunes

2      ASB Bank v Hogg [1993] 3 NZLR 156.

3      At 157 – 158.

including the loss of his domestic relationship in unhappy circumstances, illness and a work accident.   The delay in eventually completing a Statement of Affairs after

2013 is not something appropriately to be held against Mr Clark.

[21]     Most significantly, Mr Clark has now filed a Statement of Affairs and has satisfied the Assignee that there would be no point to further administration of his bankrupt estate.  I share that view of the facts. There will be nothing of benefit to Mr Clark’s creditors through a continued administration.  There is nothing in the broader public interest which requires a continuation.

[22]     In these circumstances, I am satisfied that the appropriate order is one of absolute discharge.

[23]     By her report, the Assignee notified the Court that she does not seek recovery of the costs and disbursements incurred in the administration of the bankruptcy, which appear to have been slight.

Order

[24]     I order:

(a)       Kane Rex Clark is discharged from bankruptcy with immediate effect; (b)     This order is timed at 10.51 am.

Addendum

[25]     The Statement of Affairs and accompanying information which Mr Clark provided this year provided to the Assignee was comprehensive and to the point.

[26]     The application and supporting evidence which Mr Clark filed on his own behalf were also well prepared and have enabled the Assignee to promptly file her report and the Court to promptly rule on the application.

[27]     I am aware from the papers filed that Mr Clark has been able to achieve these steps through significant assistance from the Community Law Centre.  I commend

the Centre and its staff and volunteers for the provision of that assistance and its quality.  I ask the Registrar to copy this Minute to the Co-ordinator.

Associate Judge Osborne

Solicitors:

Ministry of Business, Innovation and Employment, Christchurch (G E Slevin)

Copy to:

Mr K R Clark, Christchurch