Hampton v Official Assignee - [2014] NZHC 1458

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2011-409-002055 [2014] NZHC 1458

BETWEEN
DAVID JOHN HAMPTON

Applicant

AND

THE OFFICIAL ASSIGNEE First Respondent

AND

THE COMMISSIONER OF INLAND REVENUE

Second Respondent

AND

MINTER ELLISON RUDD WATTS Third Respondent

Hearing: 19 June 2014

Appearances:

Mr D J Hampton in person
G E Slevin for First Respondent
P J Shamy for Second Respondent
D P MacKenzie for Third Respondent

Judgment:

26 June 2014

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1] Mr Hampton was adjudicated bankrupt on 5 June 2013. He applies for annulment of his bankruptcy under s 309(1)(a) and (c) of the Insolvency Act 2006:

309 Court may annul adjudication

(1) The Court may, on the application of the Assignee or any person interested, annul the adjudication if –

(a) the Court considers that the bankrupt should not have been adjudicated bankrupt; or

(b) …

(c) the Court considers that the liability of the bankrupt to pay his or her debts should be revived because there has been a

D J HAMPTON v THE OFFICIAL ASSIGNEE [2014] NZHC 1458 [26 June 2014]

substantial change in the bankrupt’s financial circumstances
since the date of adjudication;

(d) …

[2] Whilst the Official Assignee, as first respondent, maintains a neutral stance on the application, it is opposed by the Commissioner of Inland Revenue (the Commissioner) and by Minter Ellison Rudd Watts (Minter Ellison), which was the judgment creditor which applied for, and obtained, the adjudication order.

[3] This is the second application for annulment by Mr Hampton. The first was dismissed by the Court after a defended hearing, on 17 September 2013. As noted in the judgment,1 the Judge proceeded on the basis that Mr Hampton relied on s 309(1)(a) and (c). As noted, these are the paragraphs on which he relies in this application. Counsel for the Commissioner and for Minter Ellison both say that Mr Hampton is, in this application, trying to re-argue the exact points that he made
on his first application.

[4] There is strength in that submission. However, as Mr Hampton argued before me an issue of fact not specifically canvassed in the context of s 309(1)(a) in the former judgment I prefer to proceed on the basis that this application should be considered on its merits.

[5] The learned Judge on the first application set out certain principles that the Court will apply when considering an application under s 309(1)(a). The learned Judge said:2

[34] I adopt the summary of relevant circumstances enunciated by
Robertson J in [Re Hunter ex parte Commissioner of Inland Revenue (2000)
19 NZTC 15,722 (HC) at 15,730] and also the correct observation by the commentators [P Heath and M Whale (eds) Heath and Whale on Insolvency (looseleaf ed, LexisNexis at [9.26]] and Brookers Insolvency Law and Practice (looseleaf ed, Brookers) at [IN 309.05 and IN 309.06(2)]] that this is a narrow jurisdiction. I am not entitled to interfere with an adjudication by an order of annulment simply because I might have decided…

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 Hampton v Official Assignee

Details

AGLC: Hampton v Official Assignee [2014] NZHC 1458
Case: [2014] NZHC 1458
Decision Date: 26 June 2014

CaseChat Overview and Summary

The High Court of New Zealand, Christchurch Registry, was presented with an application by David John Hampton, who sought to have his bankruptcy annulled. Hampton's application was based on sections 309(1)(a) and (c) of the Insolvency Act 2006, which allow for the annulment of a bankruptcy if the court believes that the adjudication should not have occurred or if there has been a substantial change in the bankrupt's financial circumstances since the adjudication. The Official Assignee, the Commissioner of Inland Revenue, and Minter Ellison Rudd Watts, the judgment creditor, were all respondents in the case, with the Official Assignee taking a neutral stance and the other two opposing the annulment.

The central legal issues that the court needed to decide were whether the bankruptcy adjudication should not have occurred (under s 309(1)(a)) and whether there had been a substantial change in Hampton's financial circumstances since the adjudication (under s 309(1)(c)). The court considered these issues in light of the principles established in previous judgments, which emphasize the narrow scope of the court's jurisdiction to annul a bankruptcy. The court concluded that the adjudication was correctly made and that there had not been a substantial change in Hampton's financial circumstances. The court based its decision on the evidence of Hampton's prior act of bankruptcy, his inability to pay his debts, and the fact that the sum he received from the sale of his property was insufficient to cover his debts.

The court further found that Hampton's arguments regarding potential changes in his financial situation, such as receiving funds from the Earthquake Commission, did not alter the outcome. The court held that these matters were speculative and would not have affected the decision to adjudicate Hampton bankrupt. Additionally, the court dismissed Hampton's claims regarding public interest factors and the application of freezing orders to the insurance funds, ruling that these did not provide grounds for annulment. Consequently, the court dismissed both parts of Hampton's application.

In its final orders, the court ruled that Hampton must pay costs to the Official Assignee, the Commissioner of Inland Revenue, and Minter Ellison Rudd Watts, on a solicitor-client cost basis plus disbursements. The court found that there was good reason for each respondent to be awarded costs separately, as their interests differed materially and they could not have joined in their defense of the application.

Orders