Havenleigh Global Services Limited v Henderson
[2014] NZHC 498
•18 March 2014
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2010-409-000559 [2014] NZHC 498
IN THE MATTER OF the Insolvency Act 2006
AND
IN THE MATTER OF the Bankruptcy of DAVID IAN HENDERSON of Christchurch
BETWEEN HAVENLEIGH GLOBAL SERVICES LIMITED and FM CUSTODIANS LIMITED
Judgment Creditors (Substituted
Creditors)
ANDDAVID IAN HENDERSON Judgment Debtor
Hearing: 27-28 February 2014
Appearances: D I Henderson (Bankrupt) in person
C R Vinnell for Official Assignee
Judgment: 18 March 2014
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
as to appeal from Official Assignee's decision
[1] This is David Ian Henderson’s appeal from a decision of the Official
Assignee as to when to issue a summons under s 295 Insolvency Act 2006.
Background
[2] Mr Henderson was adjudicated bankrupt on 29 November 2010.
[3] He was to have been automatically discharged from bankruptcy in January
2014.
HAVENLEIGH GLOBAL SERVICES LIMITED v HENDERSON [2014] NZHC 498 [18 March 2014]
[4] The Assignee on 28 November 2013 filed a notice of objection to Mr
Henderson’s discharge, pursuant to s 292 Insolvency Act.
[5] Additionally, two creditors have given notice of their opposition to the discharge and the Court has made a ruling as to their standing as creditors. 1
The requirements as to the examination of the bankrupt
[6] Section 295 Insolvency Act provides:
295 When bankrupt must be examined concerning discharge
(1) The Assignee must summon the bankrupt to be publicly examined by the Court concerning his or her discharge, and the Court must conduct the examination, if—
(a) the Assignee or a creditor has objected to the bankrupt's automatic discharge and the objection has not been withdrawn; or
(b) …; or
(c) …
(2) The Assignee must summon the bankrupt as soon as practicable after the expiry of the 3-year period referred to in section 290(1).
(3) …
(emphasis added)
[7] Although for Mr Henderson the defined three-year period expired in January
2014, the Assignee has yet to summon Mr Henderson for his examination.
[8] Through Grant Slevin, a Senior Investigating Solicitor employed by the Insolvency and Trustee Service, the Assignee has explained a decision on her part to defer the issuing of a summons.
[9] It is against the Assignee’s decision to defer the issuing of a summons which
Mr Henderson appealed under s 226 of the Act.
1 Havenleigh Global Services Ltd v Henderson [2014] NZHC 336.
[10] Adopting the approach of the Court of Appeal in Edmonds Judd v Hobbs2 the approach I must take on this appeal is to:3
… consider what in [my] view is the correct order to make on the material
before the Court as needed by the standard of reasonableness.
[11] The Court of Appeal recognised that the High Court in proceeding de novo
must also:4
… always pay due regard to the decision of the Assignee given that the Assignee is charged by statute with the administration of the bankrupt’s estate in terms of the Insolvency Act 2006 and given that the Assignee has the task of ensuring that the policy of the Act is given effect.
Reasons for the Assignee’s decision to defer issuing the summons
[12] Mr Slevin has deposed that the Assignee strongly suspects that Mr Henderson has entered into, carried on, or taken part in the management or control of businesses during his bankruptcy, contrary to s 149 of the Act, to a degree which warrants the Court’s investigation. Mr Henderson strongly refutes the Assignee’s suspicions, but the contest on those issues is for another day.
[13] On 9 December 2013, the Assignee requested from Mr Henderson copies of correspondence he had had with a number of people including companies previously associated with Mr Henderson, an accountant and a lawyer.
[14] On 13 January 2014, the Assignee summoned Mr Henderson to attend the Christchurch District Court on 21 January 2014 for an examination at which he was required to produce the requested documents. The examination was stated to be in relation to Mr Henderson’s “property, conduct or dealings”. The summons was issued pursuant to s 165 of the Act, which empowers the Assignee to summon the bankrupt and other specified people to be examined by a District Court. The documents which may be required to be produced are those relating to the bankrupt’s
“property, conduct, or dealings”, an expression which is duplicated in s 171 of the
2 Edmonds Judd v Hobbs [2000] 2 NZLR 135 (CA).
3 At [30].
4 At [30], adopting the observations of Penlington J in Murray v Official Assignee HC Hamilton
B318/92, 9 September 1992.
Act which deals with the Assignee’s rights to require a bankrupt to produce
documents within their possession or control.
[15] Mr Henderson was examined before Judge C P Somerville in the District Court on 21 January 2014. The examination was conducted by Mr Vinnell on behalf of the Assignee. A dispute emerged between Mr Henderson and the Assignee over the extent of the documentation which Mr Henderson should produce as relating to his “property, conduct or dealings”. Mr Henderson appears to have taken the view, based on prior discussions he had had, that all he was required to produce was documentation in some way relating to his property. His position is best illustrated by the following answer given at the examination:
There are no (sic) correspondence related to my property or my conduct or my dealings in respect to my property for the reasons I have outlined to you informally and formally, that I have no property.
Who might hold documents relating to the property, conduct or dealings of Mr
Henderson?
[16] An obvious person who may hold documents relating to the property, conduct or dealings of Mr Henderson is Mr Henderson himself.
[17] A second person who holds records (in electronic form) relating to Mr Henderson’s property, conduct or dealings is Robert Walker, the liquidator of Property Ventures Ltd (in receivership and in liquidation). For reasons which are identified in two judgments of this Court in Commissioner of Inland Revenue v Property Ventures Ltd,5 Mr Walker holds either an external hard drive or flash drives or both on which is stored electronic data form a laptop which was previously held at the offices of Mr Henderson and/or Property Ventures Ltd in Lichfield Street, Christchurch.
The Assignee’s desire to obtain Mr Walker’s and Mr Henderson’s records
[18] As well as requesting documents from Mr Henderson, the Assignee has requested from Mr Walker a copy of the hard drive or the flash drives. That request
5 Commissioner of Inland Revenue v Property Ventures Ltd [2013] NZHC 1368 and [2013] NZHC
1847.
has not been complied with at this point because Mr Henderson has objected to the extent of the request.
[19] The Assignee in the circumstances has made two interlocutory applications relating to the requested documents which were for convenience dealt with at the same hearing as this. My judgment in relation to those applications is reserved. It is however sufficiently clear in my judgment that there will be an outcome which requires the production of documents which will require analysis before the Assignee can be ready to have an examination of Mr Henderson conducted.
The Assignee’s position
[20] Through to the hearing, the Assignee asserted that it had been impracticable for her to summon Mr Henderson for an examination. Counsel referred to the Assignee’s unmet requirements in relation to documents which will take time to deal with in terms both of any orders which the Court makes and of the time taken to then digest the material obtained.
[21] The Assignee also referred to her obligation to prepare a report and file it under s 296 of the Act. The Assignee noted the extensive nature of matters on which she must report to the Court including generally as to the performance of the bankrupt’s duties under the Act.
[22] Rule 24.38 High Court Rules requires the Assignee to file and serve a copy of her report at least five working days before the date for examination.
[23] It is likely or at least possible that the Assignee’s report in relation to Mr Henderson will be lengthy and detailed. It was common ground between Mr Vinnell and Mr Henderson at the hearing that the Court may justly require Mr Henderson to have more than five days to digest the report before his examination. The suggestion I made in the course of the hearing, which I understood both Mr Vinnell and Mr Henderson to consider workable, was that Mr Henderson would have at least 15 working days with the report before the examination.
A pragmatic solution
[24] As these matters were discussed in the course of submissions, I observed to Mr Henderson and Mr Vinnell that there may be a practical course which might accommodate the Assignee’s concerns as to readiness to report and to conduct an examination. It would at the same time accommodate Mr Henderson’s interest in having his discharge from bankruptcy considered at an early date. The course would be for the Court to offer to the parties now a date which would take into account the things that have to happen between now and an examination.
[25] It was common ground that a two-day examination should suffice but that a third day should appropriately be reserved. The additional time has regard to the fact that two creditors have given notice of opposition and may well be represented at the examination.
[26] I identified to Mr Henderson and Mr Vinnell 9 June 2014 as a date which the
Court could allocate for the commencement of the examination.
[27] I subsequently confirmed to Mr Henderson and to Mr Vinnell that such a date (with two additional reserve days) would become a firm examination date but such would, as in relation to all matters before the Court, be subject to the Court’s overriding discretion in relation to any subsequent need for adjournment. Having the power of adjournment in the Court’s hand at that point, rather than in the sole discretion of the Assignee, has the benefit for Mr Henderson of leaving control of any subsequent adjournments with the Court.
[28] Since these matters were the subject of submissions at the hearing, the Assignee has seen fit to issue a notice summonsing Mr Henderson to an examination on 9 June 2014. This step overtakes the need for a direction which I otherwise would have made.
A summons now issued “as soon as practicable”?
[29] Mr Vinnell helpfully took further instructions in the course of the hearing. Mr Vinnell was then able to indicate to the Court upon discussion with Mr
Henderson that the Court may now make the orders which follow in this judgment by consent, so as to resolve this particular issue between the parties.
[30] Mr Vinnell, having regard to the submissions which he had earlier made, requested that the Court expressly record that the Assignee’s agreement to the following orders was without prejudice to her fundamental proposition that as a matter of her strict powers under the Insolvency Act, she could not be required to issue a summons at this point.
[31] Given the agreement between the parties it is unnecessary that I reach a firm conclusion as to how s 295(2) of the Act applies to the particular circumstances confronting the Assignee in this case. Any comments I make in this regard are therefore obiter. Out of recognition to the arguments I heard, and the authorities cited, I record briefly the conclusions I almost certainly would have reached had it been necessary.
[32] The key provision is s 295(2) of the Act which I repeat:
The Assignee must summon the bankrupt as soon as practicable after the expiry of the 3-year period referred to in section 290(1).
(emphasis added)
[33] The term “as soon as practicable” is not referable solely to the administrative task of preparing and issuing a summons – had such been intended by Parliament it would have been a simple task for Parliament to identify a limited period of working days within which that task should be completed.
[34] The adoption of a test of “practicability” imports into the timing of the issuing of the summons considerations as to whether the date specified for examination in the summons will be feasible and effective.
[35] Accordingly, when the Assignee issued her summons it was appropriately to an examination on a date which will be a realistic date for the examination (9 June
2014) and not merely a nominal date.6
Costs
[36] Through the orders which I will make by consent it may be suggested with some force that Mr Henderson has been a successful party in relation to this application. Having regard to the practical issues which fell to be taken into account between now and any examination, I would nonetheless have viewed this as an appropriate case in which costs should lie where they fall. A practical solution, based on a June examination, has been found by cooperation between the parties.
[37] In any event, Mr Henderson has represented himself. He has no costs or disbursements which he can appropriately recover.
Orders
[38] I order:
(a) I allocate as to the date for the public examination of David Ian
Henderson to be publicly examined by the High Court in terms of s
295(1) Insolvency Act 2006, 10.00 am, 9 June 2014;
(b)In variation of the requirements of r 24.38 High Court Rules the Official Assignee shall lodge in the Court a copy of her report under s 296 of the Act and serve a copy of the report on Mr Henderson and all creditors known to the Assignee by 16 May 2014 at the latest;
(c) Leave is reserved to the Official Assignee and to Mr Henderson to promptly apply for an adjournment of the examination date if it
becomes apparent that it will not be feasible to conduct and conclude
6 In this regard I would respectfully disagree with the approach of Master Kennedy-Grant in Re Gray (No 1) HC Auckland, B2593/92, 27 May 1997 in which his Honour’s approach to the point at which it was practicable to issue a summons was influenced by the ability of the Court to grant an adjournment to the Assignee to complete preparation for such an examination.
a comprehensive examination of Mr Henderson between 9 June 2014 and 11 June 2014;
(d) There is no order as to costs.
Associate Judge Osborne
Solicitors:
Anthony Harper, Christchurch for Official Assignee
Luke Cuningham Clere, Wellington
Insolvency and Trustee Service, Christchurch
D I Henderson, Christchurch
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