Deans
[2020] NZHC 2664
•9 October 2020
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2020-409-000463
[2020] NZHC 2664
UNDER the Insolvency Act 2006 IN THE MATTER
of the estate of Ian Bruce Deans
BETWEEN
ROBERT MAXWELL DEANS
Applicant
Hearing: On the papers Appearances:
B M Russell for Applicant
Judgment:
9 October 2020
JUDGMENT OF DUNNINGHAM J
This judgment was delivered by me on 9 October 2020 at 3.00 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date: 9 October 2020
Introduction
[1] The applicant, Robert Maxwell Deans, applies by way of originating application, without notice, for the following orders under ss 380 and 385 of the Insolvency Act 2006 (the Act):
RE DEANS [2020] NZHC 2664 [9 October 2020]
(a)the estate of Ian Bruce Deans be administered under Part 6 of the Act; and
(b)the applicant no longer administers the estate and that the Official Assignee administers the whole of the estate henceforth.
[2]Mr Deans also applies for orders:
(a)that this application be permitted to be made by way of an originating application and without notice;
(b)directions as to service of this application and order; and
(c)payment of costs of this application as proper costs in the due administration of the estate under s 393(1) of the Act.
Background to the application
[3] Mr Deans has filed a supporting affidavit to the application. He explains that he is the brother of the deceased who passed away on 16 August 2019. Unbeknown to Mr Deans, the deceased appointed him as the executor of the estate in a will dated 7 July 1992.
[4] The deceased was involved in farming and he structured his farming affairs as a partnership between himself and a company, Kilmarnock Farm Ltd (KFL) of which he was the sole director and shareholder (the partnership). As a result of being appointed executor of the estate, Mr Deans became the sole director and shareholder of KFL. The partnership owned four rural properties in New Zealand together with plant, equipment and livestock. Since the death of his brother, Mr Deans has sold these assets in order to reduce partnership debts.
[5] The deceased had an AMP life insurance policy and an account with the brokerage firm OM Financial Ltd. He used both to secure loans to the partnership. The proceeds of the policy and the account have been applied to the reduction of partnership debt.
[6] Mr Deans has had an accounting firm, BDO Christchurch Ltd, prepare an estimated statement of position of the partnership and the estate, a copy of which is annexed to his affidavit.
[7] Mr Deans also explains that the deceased had assets and income in Ireland, comprising property, life insurance, rental income and bank accounts and a Pepper Finance negotiable instrument. An estimated statement of position for the estate’s assets and income in Ireland has also been prepared by BDO and is attached to Mr Deans’ affidavit.
[8] Mr Deans attests to the fact that the partnership and the deceased owed significant debts, both in New Zealand and in Ireland. Mr Deans has engaged BDO to provide professional advice and that firm advises that the known creditors of the partnership have now been repaid in full with the exception of an amount of approximately $108,000 owing to IRD.
[9] Mr Deans explains that once the remaining debt is paid, both the partnership and KFL will have discharged their liabilities in full. The remaining creditors are creditors of the estate. KFL will be removed from the company’s register and its surplus assets will be transferred to the estate.
[10] Notwithstanding this, the estate is and will remain insolvent. The assets of the estate both in New Zealand and in Ireland, together with KFL’s surplus assets will not be enough to meet the current and anticipated claims of the estate. Mr Deans explains that, at present, there will be a shortfall to New Zealand creditors of approximately
$77,000 and in Ireland, a shortfall to creditors (both secured and unsecured) of
$569,000.
[11] Mr Deans explains why he considered it is appropriate that the estate be administered by the Official Assignee. He lives in Japan and he is not an accountant or an insolvency practitioner. He says that given the complexity surrounding the distribution of the estate and the fact that he does not reside in New Zealand, he considers the Official Assignee is better placed than him to administer the estate.
The procedural applications
[12] Leave is required for the application to be dealt with on a without notice basis and as an originating application, pursuant to HCR 7.46 and 19.5 High Court Rules 2016. I am satisfied that the interests of justice are served by dealing with the application on this basis, and the application is appropriately made as an originating application under pt 19 of the High Court Rules.
[13] There appears to be no other party who might be adversely affected by the orders and it is appropriate that the application proceeds on a without notice basis.
The application under ss 380 and 385 of the Act
[14]Section 380 of the Act provides:
380 Application by administrator, etc
(1)The administrator, or a person who is applying to the court for a grant of administration, may apply to the court for an order that the estate be administered under this Part if the administrator or person applying ascertains that the money in the estate, together with the proceeds of any assets in the estate that can conveniently be converted into money, will not be, or is not likely to be, enough to meet the several claims on the estate.
(2)The application may be—
(a)joined with an application for a grant of administration in respect of the deceased’s will or of the deceased’s property that does not form part of his or her estate; or
(b)made at any time after that grant of administration.
(3)An applicant under this section, in addition to the application, must file in the court an account that shows the assets, debts, and liabilities of the deceased, to the extent that the applicant knows what they are.
(4)The account—
(a)must be verified by affidavit; and
(b)may be amended from time to time; and
(c)must be filed—
(i)when the application is filed; or
(ii)within the prescribed time after the application is filed; or
within the additional time that the court allows.
[15] I am satisfied, having read Mr Deans’ affidavit, that the money in his deceased brother’s estate, together with the proceeds of any assets in the estate that could conveniently be converted into money, will not be enough to meet the various claims on his estate.
[16]Section 385 of the Act provides:
Court may order administration by Assignee or Public Trust
(1)This section applies if an application has been filed for an order to administer an estate under this Part, and the court thinks that the estate is likely to be better administered by one of the persons mentioned in subsection (2)(b) than by the person who is or may become the administrator.
(2)The court may, as part of its original order on the application or by any subsequent order, order that—
(a)the administrator (if there is one) must no longer administer the estate; and
(b)the Assignee, Public Trust, or some other person, as the court thinks appropriate, must administer the estate.
[17] Section 387 of the Act provides “[t]he whole of the estate at the date when the application for the order under this Part was filed vests in the person appointed by the court to administer it (the appointee)”.
[18] Given the complexity surrounding the distribution of the estate and the difficulties of Mr Deans’ administering this when he resides in Japan, I accept his view that the Official Assignee would be better placed than him to administer the estate. As the estate is clearly insolvent, and the administration of the estate will be complex, particularly given the cross-border insolvencies issues arising, I consider the Official Assignee is best suited to take over the estate administration.
Result
[19]Accordingly, I make the following orders:
(a)leave is granted to commence the proceeding by way of originating application without notice;
(b)the estate of the late Ian Bruce Deans is to be administered under pt 6 of the Insolvency Act 2006;
(c)the applicant no longer administers the estate and, in accordance with s 387 of the Insolvency Act, the Official Assignee is to administer the whole of the estate henceforth;
(d)payment of Mr Deans’ reasonable costs of, and incidental to, this application are payable to him as proper costs in the due administration of the deceased’s estate under s 393(1) of the Insolvency Act 2006.
[20]As a consequence of order (a) above, no directions as to service are required.
Solicitors:
Lane Neave, Christchurch
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