Foster - [2023] NZHC 334

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2014-409-000405

[2023] NZHC 334

UNDER the Insolvency Act 2006

IN THE MATTER

of an application to be employed by a family business

BY

BARRY HENRY GRANT FOSTER

Applicant

Conferences: 14 December 2022 and 15 February 2023

Counsel:

D M Jackson for Applicant

Judgment:

28 February 2023

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 28 February 2023 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

RE FOSTER [2023] NZHC 334 [28 February 2023]

[1] This is an application under 299(2)(b) of the Insolvency Act 2006 to vary a prohibition imposed upon Barry Foster that for five years from his discharge from bankruptcy he was not to be employed by any business owned, governed, controlled or managed by any relative of his.

[2] The prohibition was imposed by Associate Judge Johnston in a judgment of 12 July 2019 following the hearing of the Official Assignee’s objection to Mr Foster’s discharge from bankruptcy.1

[3] Mr Foster now applies to take up employment with a company, Selwyn Earthworks JV Ltd (SEJV), which he describes as a “family company”. The shares in the company are owned by a trust of which his mother is a trustee. Family members have been and are employed by the company.

[4] The Official Assignee has not opposed the application and abides the decision of the Court.

Background

[5] Mr Foster was declared bankrupt on 27 November 2014 by an order of the High Court on the application of the Commissioner of Inland Revenue. He was due to be automatically discharged from his bankruptcy on 13 January 2018. However, the Official Assignee filed an objection to the automatic discharge of his bankruptcy on 10 January 2018.

[6] On 21 November 2018, the Official Assignee summoned Mr Foster to be examined under s 295 of the Insolvency Act. The hearing occurred on 2 and 3 July 2019. Prior to this hearing, the Official Assignee filed a report under s 296 of the Insolvency Act. The report stated that Mr Foster had provided a list of creditors owed
$8,225,284. Subsequently, the creditors who made claims in his bankruptcy were owed more than $9,000,000.

1 Commissioner of Inland Revenue v Foster [2019] NZHC 1639.

[7] In his judgment dated 12 July 2019, Associate Judge Johnston discharged Mr Foster from his bankruptcy with prohibitions that were to apply for a five-year period.2 As noted above, one of those was that Mr Foster “will not … be employed by any business owned, governed, controlled, or managed by any relative of his”.3

[8] Associate Judge Johnston found the Official Assignee had made out a number of the allegations that led the Assignee to object to Mr Foster’s discharge from bankruptcy. In relation to those matters (which formed the basis for the imposition of prohibitions) the Associate Judge said:

[19] I am satisfied that the Official Assignee…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Foster

Details

AGLC: Foster [2023] NZHC 334
Case: [2023] NZHC 334
Decision Date: 28 February 2023

CaseChat Overview and Summary

In the High Court of New Zealand, Barry Henry Grant Foster applied for an exemption from a prohibition imposed upon him as part of his discharge from bankruptcy. The prohibition, which was set to last for five years, prevented Mr Foster from being employed by any business that was owned, governed, controlled or managed by a relative of his. Mr Foster sought to be employed by a company, Selwyn Earthworks JV Ltd (SEJV), which he described as a family business. The Official Assignee did not oppose the application.

The court considered whether Mr Foster's application met the requirements under s 299(2) of the Insolvency Act 2006. The court noted that the prohibition was not to be relaxed unless the risks associated with Mr Foster's conduct were avoided in the structuring of the intended role. The applicant had the onus to prove the public and community interest, which informed the imposition of the prohibition, would continue to be adequately protected.

The court concluded that Mr Foster's application fell short of satisfying that the public interest that required the imposition of the prohibition would be adequately protected if rescinded. The court found that the application did not provide sufficient evidence of the ownership and management structure of SEJV, the role that Mr Foster will undertake or any specific measures that are proposed to eliminate any risk that he may be involved in the governance or management of the business. The application was dismissed.

The final orders of the court were that Mr Foster's application to be employed by SEJV was dismissed.

Orders