Havenleigh Global Services Ltd v Henderson
[2014] NZHC 499
•18 March 2014
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2010-409-000559 [2014] NZHC 499
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:
Additional submissions in writing received:
27-28 February 2014
5 March 2014 and 7 March 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 documents applications
[1] The Official Assignee applies for directions in relation to the bankruptcy of
David Ian Henderson.
[2] The directions which the Assignee seeks are identified in two applications. The directions relate to:
HAVENLEIGH GLOBAL SERVICES LIMITED v HENDERSON [2014] NZHC 499 [18 March 2014]
(a) documents now in possession of Robert Walker, the liquidator of Property Ventures Ltd (in receivership and in liquidation) and a number of other entities previously related to Mr Henderson, which documents were recovered from Mr Henderson’s laptop in the central business district after the Christchurch earthquakes – the documents would be provided in the form of an external hard-drive and/or flash drives in which electronic documents are held;
(b) emails in Mr Henderson’s possession which were sent to or received
by him from named addressees/correspondents during his bankruptcy.
Background
[3] Mr Henderson was adjudicated bankrupt on 29 November 2010.
[4] He was to have been automatically discharged from bankruptcy in January
2014.
[5] The Assignee on 28 November 2013 filed a notice of objection to Mr
Henderson’s discharge, pursuant to s 292 Insolvency Act 2006.
[6] 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
[7] By reason of the objection to discharge, the Assignee is required2 to summon Mr Henderson to be publicly examined by the Court as soon as practicable after the expiry of the three-year period referred to in s 290 Insolvency Act 2006.
[8] An issue arose as to the appropriateness of a decision by the Assignee to defer issuing a summons to Mr Henderson after the three year period expired in January 2014. That issue was the subject of an application which I heard at the same
time as hearing these two applications. It is the subject of a separate judgment which
1 Havenleigh Global Services Ltd v Henderson [2014] NZHC 336.
2 Insolvency Act 2006, s 295.
I have earlier issued.3 Pursuant to that judgment, the Assignee will now summon Mr
Henderson to an examination in the High Court commencing 9 June 2014.
[9] Before that examination, the Assignee is required to prepare a report and file it.4 The prescribed subject matter of the Assignee’s report is extensive and includes generally the performance of the bankrupt’s duties under the Insolvency Act.
[10] It is that pending examination and report which provides the context in which the Assignee has pursued the documents which are the subject matter of these applications.
The hard drive application
The application itself
[11] What I will refer to as the “hard drive application” focuses on an external hard drive and flash drives held by Robert Walker as liquidator of Property Ventures Ltd and other liquidated companies.
[12] Specifically, the Assignee applies for an order that:
Robert Bruce Walker (“the Liquidator”) as liquidator of Property Ventures Limited (in receivership and in liquidation) and of companies associated with Property Ventures Ltd, is to deliver to the Official Assignee a copy of the external hard drive or, alternatively, the flash drives on which is stored electronic data extracted from a laptop obtained by Police pursuant to a search warrant executed on 8 April 2011 at premises at 96 and 110 Lichfield St, Christchurch.
[13] The Assignee proposes that the order be subject to a quarantine condition to
protect Mr Henderson’s privacy. It would read:
Documents that are not related to the bankrupt’s property, conduct or dealings and are located on the said external drive and flash drives are to be quarantined by the Official Assignee and not disclosed in the absence of further order of the Court (the term quarantine meaning to hold safe and inaccessible by any person other than the Official Assignee, the Official Assignee’s employees engaged in the conduct of the bankruptcy and the Official Assignee’s legal advisers).
3 Havenleigh Global Services Ltd v Henderson [2014] NZHC 498.
4 Insolvency Act 2006, s 296.
[14] The grounds of the Assignee’s application are that:
(a) Mr Walker is known to possess documents relating to Mr Henderson’s property, conduct or dealings (as that term is used in s 165 Insolvency Act);
(b)The information contained on the external hard drives and flash drives includes documents relating to Mr Henderson’s property, conduct or dealings;
(c) Mr Walker is prevented from providing the external hard drives and flash drives to the Assignee by virtue of orders made by the High Court.5
Mr Henderson’s opposition
[15] Mr Henderson opposes the hard drive application.
[16] Mr Henderson opposes any order that Mr Walker deliver to the Assignee a copy of the hard drive and the flash drives on the grounds that –
(a) the Assignee previously received and viewed that information, provided it to the National Enforcement Unit of the Ministry of Economic Development, and the information has been acknowledged not to disclose a breach of the Insolvency Act; and
(b) such an order would be unfair, oppressive and an abuse of the
Assignee’s power as it would be a fishing exercise.
[17] Mr Henderson opposes any order whereby the Assignee would quarantine irrelevant documents. Mr Henderson submits that the relevant documents should not
be retained by the Assignee should be delivered to Mr Henderson.
5 In two judgments of the Court in Commissioner of Inland Revenue v Property Ventures Ltd (in re and in liq) [2013] NZHC 1368 and [2013] NZHC 1847.
The liquidator consents
[18] The Assignee’s applications were served on Mr Walker.
[19] Mr Walker has filed a consent to the orders sought by the Assignee and more generally has agreed to abide by the Court’s decision as to the final terms of any orders to be made.
A brief history of Mr Henderson’s laptop
[20] Mr Henderson’s laptop was in his office in the Christchurch central business district at the time of the February 2011 earthquakes. Mr Walker obtained it following the issue of a search warrant. He had flash drives made containing copies of emails and made those available to the Assignee. The Insolvency and Trustee Service inspected the electronic documents. Some material was referred to the National Enforcement Unit of the Ministry of Economic Development (a step to which I will return). Mr Henderson raised issues as to the validity of the search and seizure of equipment and as to the copying of electronic information. The Police requested the Assignee to deliver flash drives to the Police which he did. The Police also asked the then Assignee to delete all information held by him which he did. The laptop was subsequently returned to Mr Henderson. The flash drives were returned
by the Police to Mr Walker on terms set out in the judgments of this Court.6
The Assignee pursues further information and documents
[21] Grant Slevin, a Senior Investigating Solicitor employed by the Insolvency and Trustee Service, has provided the evidence in support of the Assignee’s application.
[22] 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. Mr Henderson strongly refutes
the Assignee’s suspicions, but the contest on those issues is for another day.
6 See above n 5.
[23] On 9 December 2013, the Assignee requested from Mr Henderson copies of correspondence which he had had with a number of people including companies previously associated with Mr Henderson, an accountant and a lawyer.
[24] 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 Act which deals with the Assignee’s rights to require a bankrupt to produce documents within their possession or control.
[25] 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.
The statutory regime under Part 3 of the Insolvency Act 2006
[26] Parliament has in Part 3 of the Insolvency Act made a bankrupt’s “property, conduct or dealings” the prescribed subject matter of a number of steps which may or must be taken in relation to the administration of a bankrupt’s estate.
[27] First, there is under s 165 of the Act the examination before a District Court
Judge (or Assignee) to which the Assignee may summon the bankrupt and other
listed people. Those people may be examined in relation to the bankrupt’s property, conduct or dealings and may be required to produce documents that relate to the bankrupt’s property, conduct or dealings.
[28] In addition to the powers contained in s 165 of the Act, the Assignee may require the bankrupt and other listed people to deliver to the Assignee any document relating to the bankrupt’s property, conduct or dealings either in that person’s possession or control.
[29] Section 171 of the Act empowers the Assignee to require a bankrupt, the bankrupt’s spouse or any other person to produce to the Assignee:
… any document relating to the bankrupt’s property, conduct or dealings.
[30] When there is to be a public examination of the bankrupt in relation to his or her discharge (as in this case), s 177 of the Act which requires the bankrupt to attend the examination provides that the bankrupt may be examined as to the bankrupt’s conduct, dealings or property.
[31] Section 184 of the Act makes it mandatory for a person questioned under any power in the Act to answer all questions relating to the bankrupt’s conduct, dealings and property – s 184(2) removes the privilege against self-incrimination when answering such questions.
[32] Section 176 of the Act identifies the matters on which the Assignee must report before the public examination of a bankrupt. The three areas of report are:
the bankrupt’s estate; and
the bankrupt’s conduct; and
all other matters of which the Court should be informed.
[33] Section 225 of the Act authorises the Assignee to apply to the Court for directions on any question concerning the operation of the Insolvency Act.
The Assignee’s focus
[34] Mr Slevin in his evidence in support of the second application has explained
the Assignee’s focus in making the applications in this way –
… The Official Assignee has a public regulatory function and is entitled to object to a bankrupt’s automatic discharge from bankruptcy acting in the wider public interest. The Official Assignee believes it is in the public interest that all relevant evidence that should be reasonably available is put before the Court to enable it to properly weigh up whether the discharge of Mr Henderson will present an unacceptable risk to the community.
[35] In his earlier affidavit, Mr Slevin had referred to the Assignee’s suspicion that Mr Henderson had been involved in the management or control of businesses during his bankruptcy.7
[36] Mr Slevin noted the Assignee’s duty to make all reasonably obtainable information about any breaches available to the Court when considering Mr Henderson’s discharge.
The construction of the expression “the bankrupt’s property, conduct or dealings”
[37] The correct construction of the Insolvency Act provisions entitling the Assignee to obtain information as to the bankrupt’s property, conduct or dealings is to be ascertained from the text and the purpose of those provisions.8
[38] I begin with the text.
[39] At the time Mr Henderson was examined before Judge C P Somerville in the District Court on 21 January 2014, it appears that Mr Henderson took the view, based on prior discussions he had had, that what he was required to produce by way of documents relating to his “property, conduct or dealings” was documentation in some way relating to his property. That position was illustrated by the following
answer he gave at the examination:
7 See above at [22].
8 Interpretation Act 1999, s 5(1).
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.
[40] When Mr Henderson came to file his notice of opposition in February 2014, with identification to specific grounds to which I have referred,9 Mr Henderson chose not to identify the documents requested (as falling outside the subject matter of “the bankrupt’s property, conduct or dealings”) whether pursuant to an argument that such subject matter still has to relate to property, or otherwise. Mr Henderson’s grounds of opposition were centrally focused on the proposition that the Assignee’s pursuit of documents from Mr Walker and Mr Henderson himself was oppressive and abusive. His submissions were similarly focused on concepts of oppression and
unfairness.
[41] However, to the extent that Mr Henderson submitted also that the requests as currently framed are “too broad” it is appropriate that I first deal with that potentially separate concept.
[42] Neither Mr Vinnell nor Mr Henderson referred me to any case in which the construction of the term “the bankrupt’s conduct” had been considered.
[43] I consider that Mr Henderson was correct in tacitly abandoning the proposition that the “bankrupt’s conduct” as referred to in the Insolvency Act must have a relationship to the bankrupt’s property. The word itself as used in the legislation is not further defined or limited in that way. There is no reason in terms of the text itself to limit the sweep of the term.
[44] A broad construction of the need for the term “conduct” is reinforced by reference to the purpose of the Insolvency Act and of the particular provisions dealing with information and documents.
[45] These are provisions concerned with the need of the Assignee to be as fully
informed as possible in matters relating to the bankrupt’s affairs so as to enable the
Assignee to carry out any one or more of the functions which arise under the Act.
9 See above at [16].
Contrary to Mr Henderson’s apparent perception at the time of his District Court examination, those functions are not focused solely on identifying the bankrupt’s remaining property and recovering assets for the benefit of creditors. For instance, when the time arrives for the bankrupt’s otherwise automatic discharge from bankruptcy, the Assignee must consider the matters on which she is to report to the Court in any report under s 296(2) of the Act. Under that provision the Assignee must report as to :
(2) The Assignee must report as to—
(a) the bankrupt's affairs; and
(b) the causes of the bankruptcy; and
(c) the bankrupt's performance of his or her duties under this
Act; and
(d) the manner in which the bankrupt has obeyed orders of the
Court; and
(e) the bankrupt's conduct before and after adjudication; and
(f) any other matter that would assist the Court in making a decision as to the bankrupt's discharge.
[46] A question facing the Assignee is whether the bankrupt’s past conduct creates a risk of future conduct to the detriment of the community.10 The Assignee may suspect that a bankrupt has entered into the management or control of a business in breach of s 149 of the Act. The Assignee will then wish to have information which informs her as to the bankrupt’s conduct and his dealings with other people. Such information may establish a degree of management or control of a business by the bankrupt.
[47] While Mr Henderson expressly put the emphasis of his opposition upon the concepts of oppression and unfairness, there was a suggestion in Mr Henderson’s submissions that the Assignee’s applications should be dismissed at least in part because the material sought would encompass material of a purely personal nature.
For instance, Mr Henderson assured me that much of his purely personal
10 See Re Kelly ex p Structured Finance Ltd [2009] 2 NZLR 785 (HC) per Asher J at [63], adopted by Associate Judge Doogue in Re Armitage ex p Established Investments Ltd (in liq) HC Auckland CIV-2007-404-4280, 8 April 2011; that decision upheld on appeal – see Armitage v Established Investments Ltd (in liq) [2012] NZCA 439.
communication with his partner, Kristina Buxton, is contained in the electronic records held by Mr Walker. Mr Henderson invited me to conclude that Parliament could not have intended the Assignee to be able to gain access to such purely personal information.
[48] As a matter of interpretation of the provisions of the Act, I reject Mr Henderson’s approach. The “conduct” covered by the provisions of the Act remains “conduct” whether it is purely personal, business related or a mix of the two. A division between what is “personal” and what is “business” or “property” would also not be practicable. Ms Buxton, for instance, is a director and shareholder of companies previously associated with Mr Henderson. The full ambit of Mr Henderson’s correspondence with Ms Buxton is an obvious point of information for the Assignee in determining whether and to what extent Ms Buxton may have involved Mr Henderson in any business. Mr Vinnell noted, correctly in my view, that an interpretation of “conduct” which puts documents involving personal communications between the debtor and others beyond the reach of the Assignee would cut across the very legislative purpose of enabling the Assignee to make a fully informed decision on the very matters which Parliament has entrusted to her.
[49] There is nothing new in the broad approach I adopt. In relation to predecessor legislation (the Bankruptcy Act 1908), Hosking J in In re Hardy (a bankrupt) ex p Official Assignee said:11
The powers conferred on the Assignee are conceived in the most comprehensive terms … entitling him to make the most searching inquisition.
[50] In adopting this approach to the purpose of the Insolvency Act provisions, I adopt the approach of the Court of Appeal in Re Smith (a bankrupt).12 In that case the Court upheld the judgment of the High Court dismissing applications by the wife of a bankrupt. One application was to have set aside a summons issued by the
Official Assignee under what was s 68 Insolvency Act 1967 (now s 165 Insolvency
11 In re Hardy (a bankrupt) ex p Official Assignee [1922] NZLR 108 at 118 – 119 [In re Hardy].
12 Re Smith (a bankrupt) [1992] NZFLR 241 (CA) (alt cit Smith v Official Assignee).
Act 2006). Holland J, delivering the judgment of the Court, said of the purpose of the legislation:13
Section 68 of the Insolvency Act is for the purpose of enabling the Official Assignee to obtain information, and, to be as fully informed as possible relating to the property and transactions of the bankrupt. It is in part a recognition that in many cases information as to the bankrupt's affairs bankrupt's affairs and dealings will be incomplete.
[51] As s 68 of the 1967 Act stood at the time the Court of Appeal determined Re Smith (a bankrupt), the Assignee was entitled to examine identified people as to information respecting the bankrupt, his trade, dealings, or property. Hence the reference by Holland J to “information as to the bankrupt’s affairs and dealings”.
[52] The equivalent section (s 165) in the 2006 Act now refers to “the bankrupt’s property, conduct or dealings”. Accordingly, the Court of Appeal’s observations as to the Official Assignee having full information must now be read as relating to not only the property and transactions of the bankrupt but, as specified in s 165, the bankrupt’s property, conduct and dealings. What remains as it was when Re Smith (a bankrupt) was determined is that the information which the Official Assignee obtains should be that which fully informs her as to the prescribed matters.
The Court’s control – a balancing exercise
[53] It was common ground between Mr Henderson and Mr Vinnell that in exercising her powers under the Act the Official Assignee is obliged to act fairly and without oppression, and that in situations where she has failed to do so, the Court may control the exercise of those powers. In that regard both Mr Henderson and Mr Vinnell adopted what was recognised by the Court of Appeal in Re Smith (a
bankrupt).14 In that context, the Court must conduct a balancing exercise (one of
degree) balancing the importance to the liquidator of obtaining the information on the one hand and the degree of oppression to the person whose examination or
13 At 245.
14 At 243.
documents the Assignee seeks.15
[54] I also find helpful the observations of Lord Slynn in The House of Lords judgments in British and Commonwealth Holdings plc (joint administrators) v Spicer & Oppenheim.16 In that case, the Courts were concerned with their power to order discovery under the Insolvency Act 1986 when requested to do so by the office-holder of an insolvent company. The situation and provisions are different to that of an application in relation to a bankrupt estate in New Zealand but Lord Slynn
made observations as to the balancing exercise which is involved in relation to the Court’s judgment. His Lordship considered with apparent approval the approach to balancing taken by Brown-Wilkinson VC in the Cloverbay case.17 Lord Slynn
described what he referred to as a “proper case for such an order to be made”.18 His
Lordship observed:19
The proper case is one where the administrator reasonably requires to see the documents to carry out his functions and the production does not impose an unnecessary and unreasonable burden on the person required to produce them in the light of the administrator’s requirements. An application is not necessarily unreasonable because it is inconvenient for the addressee of the application or causes him a lot of work or may make him vulnerable to future claims, … but all these will be relevant factors, together no doubt with many others.
[55] Mr Henderson, in his notice of opposition and submissions, invited the Court to reject the orders sought by the Assignee as to the scope of examination and disclosure of documents upon the basis that they involved a fishing exercise, in which there was no evidence to support the materiality of the information or documents sought to any breach of the Insolvency Act by Mr Henderson.
[56] The single reference to a source of authority for declining an application as
amounting to “fishing”, as provided by Mr Henderson, lies in the Chancery decision
15 At 245, adopting the observations of Sir Nicholas Brown-Wilkinson VC in Cloverbay Limited (joint administrators) v Bank of Credit and Commerce International SA [1991] 1 All ER 894 (CA) at 898.
16 British and Commonwealth Holdings plc (joint administrators) v Spicer & Oppenheim [1992] 4
All ER 876 (HL) [Spicer].
17 At 880-881.
18 At 885.
19 At 885.
in Re a Debtor (No 12) of 1958.20 In that case, Goff J in distinguishing an earlier decision21 on the basis that the persons whom the trustee in bankruptcy wished to examine as to the possible concealment of assets by the bankrupt were not the bankrupt’s personal representatives. Goff J then remarked:22
It is true that in that case the court pointed out that they were not parties or privy to the dealings, but, in my judgment, that was only significant having regard to the facts of the particular case, and the enquiry in those circumstance [sic] and on those facts was properly characterised as “fishing”.
[57] It was the particular facts of the distinguished case (the proposed examinees not being party to the dealings of the bankrupt) which led to the “fishing” characterisation.
[58] A more relevant passage from the case comes in the judgment of Stamp J who agreed with Goff J in allowing an appeal and thereby requiring the summoned persons to attend for examination under the English Bankruptcy Rules. Stamp J described the correct approach to considering whether there ought to be an
examination in this way:23
… there is no strong evidence of fraud and, of course, counsel for the executors is right when he said that on the facts at present known it would be oppressive for the trustee to claim the whole of the bankrupt's estate. If one accepts the submission, however, that there is solid ground for thinking that the information sought may lead to discovery of assets which ought to have been disclosed, and if the information does in the event disclose such assets, that will be the moment to decide whether the non-disclosure was fraudulent or not, or whether, in the circumstances, some further order ought to be made. It is, moreover in my judgment, wrong to pre-judge that question. It is only at the point of time when the information has been ascertained that the question arises whether it would or would not be oppressive or unjust to proceed further in the matter. Again it is, in my judgment, quite impossible to say in advance whether that will or will not be so. With all respect to counsel's argument, it is putting the cart before the horse to say that an order under s 25 should not be made unless the trustee in bankruptcy is prepared to swear that he verily believes the bankrupt in this case to have fraudulently concealed assets.
20 Re A Debtor (No. 12) of 1958, ex p The Trustee of the Property v Clegg [1968] 2 All ER 425 (Ch) [Re A Debtor].
21 Re Maundy Gregory, ex p Norton v Trustee [1935] Ch 65.
22 Re A Debtor, at 436. This passage was referred to by District Court Judge T M Abbott in Reasons for a Ruling in Re Baird DC New Plymouth MA 102-93, 28 May 1993 at 8 when his Honour observed that the subject matter of documents requested by the Official Assignee could not be characterised as “fishing”, quoting Goff J.
23 Re A Debtor, at 434-435.
[59] The possible concealment of assets is not the issue in the present case. Rather the focus of the Assignee’s attention is on whether the bankrupt may have committed other breaches of the Insolvency Act such as in relation to the management of businesses. That said, the approach outlined by Stamp J is equally applicable to both situations.
The Official Assignee’s approach to balancing of interest in this case
[60] At the outset of her pursuit of documents and examination the Assignee recognised the concerns which Mr Henderson has as to the protection of material that is personal to him. Hence, as part of the order she sought the Assignee’s adoption of a condition as to the quarantining of personal information.24 The proposed quarantine order was drawn from the order which this Court made in relation to the electronic information on the computer equipment held by Mr Walker.25
Mr Henderson’s ground of opposition
[61] By his notice of opposition Mr Henderson relied upon three grounds which may be summarised as:
A previous determination that the documents do not disclose a breach of
the Act;
Unfairness and oppression because there is no evidence that the
documents sought are material to any breach;
Privacy – the quarantining of purely personal documents is inappropriate
– such documents should be returned to Mr Henderson.
[62] When Mr Henderson filed his written synopsis shortly before the hearing he
included an additional, fourth ground of opposition which may be summarised:
24 The order sought is set out above at [13].
25 Commissioner of Inland Revenue v Property Ventures Ltd [2013] NZHC 1368 and [2013] NZHC
1847.
A continuing privilege attached to the email correspondence, Mr
Henderson having not waived his legal professional privilege.
[63] I will examine those four grounds in order.
[64] I do so against a background whereby I must consider material not simply as filed before the hearing and delivered in the form of submissions but also –
(a) the cross-examination of Mr Slevin who had provided the evidence for the Assignee; and
(b)additional written submissions received after the hearing (pursuant to leave) as a result of Mr Henderson’s late introduction of the ground of opposition relating to privilege.
Ground 1 – previous determination
The issue
[65] Specifically Mr Henderson asserts that the Assignee has already received and viewed the documents now sought, and has had the information reviewed by the National Enforcement Unit of the Ministry of Economic Development (“NEU"). Mr Henderson asserts that the NEU has acknowledged that the material does not disclose any breach of the Act.
[66] It is common ground, as I have summarised at [20] above, that the electronic documents obtained by the liquidator through the Police search warrant were inspected by the Insolvency and Trustee Service; that material from that inspection was then referred on to the NEU; and that a prosecution for breaches (of s 146 of the Act) did not follow.
[67] Mr Slevin deposed as to the steps he took on receiving flash drives from the liquidator. He stated:
On reviewing the emails I formed the view that many of them showed that Mr Henderson had continued to act as a director of one or more companies after his adjudication. I accordingly forwarded the flash drives to the
National Enforcement Unit of the Ministry of Economic Development, which handled prosecutions of offences under the Companies Act 1993 and the Insolvency Act 2006. No action was taken to prosecute Mr Henderson as a result of this referral.
[68] Mr Slevin filed a further affidavit in which he explained the Assignee’s objection to Mr Henderson’s discharge. He deposed:
The detailed grounds for objecting to Mr Henderson’s discharge will be set out in the Assignee’s report to the Court under s 296 of the Act but include his involvement in numerous companies that have failed, causing substantial losses to creditors, and his failure to observe the restrictions imposed on him by s 149 of the Act.
The Official 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 section 149 of the Insolvency Act 2006, to a degree that warrants the Court’s investigation. The Official Assignee has a duty to make all reasonably obtainable information about these breaches, available to the Court when considering Mr Henderson’s discharge.
[69] Mr Slevin then proceeds to explain the reason for the second application with which I am concerned, namely an application for emails sent and received by Mr Henderson to six people during his bankruptcy (identified as Daniel Godden; Raj Patel; Wayne Bailey; Geoff Angus; Desmond Knowles; Ian Hyndman and Grant Smith).
[70] The email correspondence with those people was a subject of Mr
Henderson’s examination for Judge Somerville in January 2014. Mr Slevin deposes:
During the examination Mr Henderson confirmed that the seven email addressees relevant to the Official Assignee’s request, are people that he dealt with on a commercial basis prior to his bankruptcy. He confirms that he would have had email contact with them during his bankruptcy.
Having previously obtained copies of emails stored on a laptop computer that belongs to Mr Henderson by an exercise of the Assignee’s power to require the production of documents under s 171 of the Act I am aware that he has had correspondence with the addressees that is relevant to the Assignee’s grounds for objecting to his discharge. That correspondence covered the period before his bankruptcy and during his bankruptcy up to 21
February 2011, after which he did not have possession of the laptop. I no longer have these emails for the reasons set out in the Assignee’s application for an order authorising the liquidator of Property Ventures Ltd to release them to me …
[71] Mr Slevin then deposes that with the evidence the Assignee now holds Mr
Henderson prima facie was failing to observe the restrictions imposed on him by s
149 of the Act. Mr Slevin refers to “three examples”.
[72] First, he identifies correspondence in relation to RFD Finance Ltd between Daniel Godden and Raj Patel. In one email dated 9 May 2011 (some six months after Mr Henderson was adjudicated bankrupt) Mr Godden refers to the management changes needed for RFD by the operating companies. Mr Godden records:
I haven’t got a figure from Dave yet that he is happy with but we should use
$100,000 pa for Tay and $200,000 for Castle and that is what I inserted in the discovery documents pending his approval. Ultimately, Dave will need to get Ian’s signature as Director on here.
[73] Mr Godden also refers to RFD needing to reimburse another entity for time
spent by himself and “Dave”. Mr Godden records:
Dave asked me to keep timesheets in this regard which I have updated and attach.
[74] Mr Slevin deposed that in a telephone conversation with Mr Henderson in June 2012, Mr Henderson told Mr Slevin that he had been assisting the two trading entities trading as “Living Space” but that Mr Henderson had not disclosed the nature of his involvement.
[75] Secondly, Mr Slevin refers to Odeon Property Holdings Ltd (Odeon).
[76] Mr Slevin deposes that he had a conversation with Mr Henderson concerning Mr Henderson’s involvement in negotiating an insurance settlement on behalf of Odeon. Mr Slevin deposes that Mr Henderson said he was a trustee of the trust which owned Odeon; that he is not aware of any trust of which Mr Henderson is a trustee and that the Companies Office records indicate that Matador Trustee Services Ltd is the sole shareholder of Odeon. Mr Slevin deposes that Ian Hyndman was appointed as sole director of Odeon in July 2011. Finally, Mr Slevin exhibits correspondence in February 2012 from a solicitor, Grant Smith, to the Official Assignee (for the attention of Mr Henderson’s Insolvency Officer, Terry Marshall). Mr Slevin described the correspondence as involving a request to the Assignee to
consent to Mr Henderson acting as a negotiator for Odeon. Mr Slevin attaches a letter dated 2 March 2012 which Mr Slevin sent to Mr Smith. The letter refers to the obligation upon a bankrupt not to take part in the management or control of any business under s 149 of the Act, without the consent of the Assignee or the Court. Mr Slevin refers to the process for applications for consent in the prescribed form. Mr Slevin concludes the letter by stating that it is up to Mr Hyndman and Mr Henderson to take their own advice and to make their own decisions as to how they should conduct their affairs without breaching the restrictions imposed upon Mr Henderson under the Act.
[77] Thirdly, Mr Slevin refers to Liverton Technology Group Ltd. He attaches correspondence between Raj Patel and a Justin De Lille of Liverton. The correspondence occurs in June/July 2013. The correspondence indicates that Liverton had supplied services to AFB Treasury Ltd (a company previously associated with Mr Henderson of which Ms Buxton is director). Liverton was asserting that an invoice was outstanding. Mr Patel responds to Mr De Lille –
Just awaiting Dave’s instructions on payment of this invoice.
At that point, Mr Henderson becomes involved in the email exchange directly, refers to arrangements being made for payment and records:
Ian has asked Raj to pay that tonight.
[78] Mr Henderson filed an affidavit the day before this hearing. Mr Henderson refers to the circumstances in which Mr Slevin was involved with the electronic records obtained initially by the liquidator.
[79] Mr Henderson then deposes as to his understanding as to Mr Slevin’s
examination of the electronic records and subsequent conduct –
It is apparent to me now that Mr Slevin did indeed go through my entire computer, although he has never given me a full account of his actions in this regard.
I understand also that Mr Slevin provided what was then known as the National Enforcement Unit of the Ministry of Economic Development with a complete copy of my computer and several extracts from it.
I have sought from Mr Slevin details around this further distribution of my computer but he has not only refused to provide that but refuses to acknowledge even the nature of the interchange.
I have learned from the NEU that they considered Mr Slevin’s suggestion of
bringing charges against me but dismissed them.
[80] Mr Henderson refers to the liquidator’s conduct and deposes that Mr Slevin was –
… forced to return to the police the copy he had obtained and give the police a commitment that all information he had obtained was destroyed.
[81] Mr Henderson deposes also that he subsequently complained to Mr Slevin that Mr Slevin had breached obligations under s 21 New Zealand Bill of Rights Act
1990; that Mr Slevin had dismissed Mr Henderson’s complaints; and that Mr Henderson had therefore filed proceedings against Mr Slevin and the New Zealand Insolvency Service for breaches of s 21 of the New Zealand Bill of Rights Act.
[82] Mr Henderson finally exhibits to his affidavit an email in relation to Odeon. The email itself does not have a date but it appears to have been sent around 19
March 2012 (some two weeks after Mr Slevin had responded to Mr Smith on the topic of Odeon).26 The email is from Mr Marshall as a Principal Insolvency Officer of the Insolvency and Trustee Service to “Grant”. The “Grant” in quotes appears to me from the content of the email to be an error. The content of the email appears to indicate that Mr Marshall was replying to Mr (Chris) Hlavac but incorrectly thought that Mr Hlavac was “Grant”. When Mr Marshall copied this email to Mr Henderson on 20 March 2012, he described it as an email to Young Hunter (Mr Hlavac’s firm) sent on 19 March 2012. In the email Mr Marshall notes that Mr Henderson had
resigned as a director. He then records:
However Mr Hyndman of course is the remaining director and appears to have asked Mr Henderson to act for him and has confirmed that with you.
It is now up to you whether you accept that but there are no issues for the
Official Assignee as long as Mr Hyndman is making any financial decisions.
26 See above at [75] – [76].
[83] With Mr Henderson having introduced the March 2012 email exchanges as exhibits to an affidavit filed the day before the hearing, Mr Vinnell led from Mr Slevin additional evidence about two further emails. They were:
(a) An email dated 13 March 2012 from Young Hunter as solicitor for NZI to the Insolvency Service for the attention of Messrs Slevin and Marshall, seeking clarification whether it was appropriate for NZI to deal with Mr Henderson over the settlement of an insurance claim of Odeon; and
(b)An email dated 14 March 2012 sent by Mr Slevin explaining that the Assignee saw no legal impediment to NZI’s insurer dealing with Mr Henderson and recording that it was not the Assignee’s role to give an opinion on whether particular conduct might or might not conduct management for the purpose of s 149 of the Act, that being a matter which a Court would ultimately determine if there were a complaint.
Cross-examination – Mr Slevin
[84] Mr Henderson cross-examined Mr Slevin. The cross-examination covered both matters raised by Mr Henderson in his grounds of opposition and also matters not so raised. As Mr Henderson represents himself I allowed him more leeway in cross-examination than would be the case if he were represented. I will first refer to those areas of cross-examination which related more or less directly to the specific grounds of opposition previously signalled.
Decision of the NEU
[85] Mr Henderson cross-examined Mr Slevin as to the decision of the NEU not to prosecute Mr Henderson. Mr Slevin accepted (as he had in his evidence) that the NEU decided not to take the matters raised by Mr Slevin any further. Mr Slevin rejected the suggestion put to him by Mr Henderson that it was fair to assume that the NEU had found there was no basis to bring a prosecution. Mr Slevin responded that he was still satisfied that the material he had seen evidenced breaches of Mr Henderson’s duties. He also stated that he understood that the NEU were concerned
as to allegations made by Mr Henderson that the material provided by the liquidator had been illegally obtained and that it was as a result of that that the NEU decided not to take matters further.
Mr Slevin’s examples of suspected breaches
[86] Mr Slevin had identified three examples of suspected breaches, being in relation to RFD, Odeon and Liverton.27 In cross-examination, Mr Slevin stated that he believed that the three examples did raise a possibility of breaches.
[87] Mr Henderson in cross-examining Mr Slevin in relation to Odeon referred him to the email of around 19 March 201228 from Mr Marshall to “Grant” which I take to be in fact sent to Mr Hlavac of Young Hunter29 (the email having apparently been sent in the context of Mr Smith’s February correspondence relating to Mr Henderson’s involvement with Odeon).
[88] Mr Henderson took Mr Slevin to that part of the content of the email which I have set out at [82] above. He put it to Mr Slevin that Mr Marshall on behalf of the Official Assignee was making it very clear what his arrangements were with Mr Henderson. Mr Slevin did not respond directly to that cross-examination but noted Mr Marshall’s qualification as to Mr Henderson’s involvement with Odeon, which was stated to be –
As long as Mr Hyndman is making any financial decisions.
[89] Mr Slevin observed that it would ultimately be a question of fact as to what Mr Henderson was actually doing, a matter to be determined by this Court if the issue came before it.
[90] Mr Henderson then suggested to Mr Slevin that Odeon was no longer in business and that Mr Henderson would not have been involved in relation to Odeon in the management or control of the business. (In his 24 February 2012 letter, Mr
Smith had suggested that Mr Henderson did not require consent to a role in the
27 See above [72] – [77].
28 See above at [82].
29 See above at [82]
Odeon because there was no “business” that Mr Henderson would be controlling or managing). The 24 February letter indicates that Odeon had to deal with an insurance claim and the potential complete demolition of the building it owned, having no other “business” as such. Mr Slevin responded in cross-examination that it appeared to him that Mr Henderson and Odeon were dealing with the demolition and the insurance claim of Odeon’s principal asset.
[91] Mr Henderson did not cross-examine Mr Slevin as to Mr Slevin’s other two
examples (RFD and Liverton).
[92] Mr Henderson also cross-examined Mr Slevin as to any evidence Mr Slevin had as to Mr Henderson operating a business during his bankruptcy. Mr Slevin stated that one example seemed to be that Mr Henderson was in control of companies running businesses in SOL Square, (Christchurch). When Mr Henderson put it to Mr Slevin that those businesses closed with the September 2010 earthquakes, Mr Slevin accepted that he must be incorrect as to SOL Square.
[93] Mr Slevin then gave SOL Systems Ltd as another example of a business he believed Mr Henderson was operating, in particular by instructing solicitors and generally representing the company in negotiations with overseas parties. Mr Henderson put it to Mr Slevin that a Mr Eathorne in the liquidator’s office had made a complaint to the Assignee about Mr Henderson’s work for SOL Systems Ltd and that Mr Henderson had brought to the Assignee copies of communications between Mr Henderson and Mr Smith as the lawyer for SOL Systems Ltd. Mr Slevin answered that he would not be surprised if Mr Henderson had done that.
Discussion of opposition ground 1 – previous determination
[94] Against the background of that evidence I test Mr Henderson’s first ground of
opposition. I ask myself:
Has the previous decision of the NEU not to prosecute Mr Henderson resulted in some form of determination that renders the documents which the Assignee is seeking immaterial or irrelevant, precisely because the Assignee cannot suggest that Mr Henderson’s management of businesses is a live issue?
[95] I come to the clear conclusion that the first ground of opposition has failed.
[96] The fact the NEU decided not to prosecute Mr Henderson in relation to any alleged breaches is not determinative of whether there may arguably have been breaches. There is no admissible evidence as to why the NEU may have made its decision. There may be a number of explanations for that decision some of which may not turn on whether there was evidence of breaches. But more fundamentally, the view of the NEU does not give rise to an issue estoppel. It is for the Assignee in relation to her responsibilities under the Insolvency Act to reach her view. In turn, it is for this Court to consider in the context of Mr Henderson’s oppression submissions whether there is such an complete absence of reasonable suspicion that the directions sought by the Assignee should be refused.
[97] In the context of the present applications, it is not necessary for me to consider all the examples provided by Mr Slevin. While Mr Henderson chose to focus on one of the examples, Odeon, the Assignee is entitled to point to any of the examples.
[98] The RFD example (above at [72] – [74]) provides in my judgment what Stamp J in Re a Debtor described as a “solid ground for thinking that the information sought may lead to discovery”30 of relevant material. The email statements of Mr
Godden appear to indicate that –
some six months after Mr Henderson was adjudicated bankrupt he may have
been the person giving ultimate approval in relation to RFD;
Mr Henderson was the person giving ultimate financial approval in relation
to the business of RFD.
30 Re A Debtor, above n 20, at 434-435.
Mr Henderson was the person who had to approve discovery documents for
RFD.
Although Mr Hyndman was the director, it would be Mr Henderson
arranging to get in inter-company reimbursements.
[99] Clearly none of this evidence is determinative of the precise extent if any to which Mr Henderson was involved in the management of RFD. But what the communications provide is solid ground for a legitimate inquiry into the existence and extent of Mr Henderson’s involvement in management.
[100] The Liverton example (above at [77]) also provides solid ground for further inquiries into the existence and/or degree of Mr Henderson’s involvement in management. Mr Patel’s email at least possibly points towards Mr Henderson being the person responsible for decisions as to payments by AFB. Mr Henderson did not cross-examine Mr Slevin as to Liverton.
[101] Mr Henderson, in his focus on Odeon, highlighted the correspondence of the Insolvency Officer, Mr Marshall. His suggestion was that the Assignee may have been comfortable with Mr Henderson’s involvement with Odeon “as long as Mr Hyndman is making any financial decisions”. While Mr Slevin’s evidence (including his exhibited correspondence) indicated that Mr Henderson’s involvement with Odeon had never been signed off by the Assignee, the correspondence of Mr Marshall as produced by Mr Henderson appears to establish that at least Mr Marshall may have had some measure of comfort in relation to Mr Henderson’s role with Odeon.
[102] Where that leaves matters is that Mr Henderson is entitled to assert that the record establishes that there was serious endeavour on his part and on behalf of Odeon to deal with his involvement with Odeon openly. But such a position cannot negate the Assignee’s right to investigate the extent to which Mr Henderson involved himself in the affairs of Odeon. Mr Marshall’s email on which Mr Henderson places importance makes clear that Mr Henderson would be fettered in what he was permitted under the Insolvency Act to do for Odeon. With the Assignee’s knowledge
that Mr Henderson was involved with Odeon, it is appropriate that the Assignee investigates to what extent Mr Henderson was in fact involved.
[103] In conclusion, in relation to the earlier decision of the NEU not to take action against Mr Henderson, I find that the Assignee has solid ground for the investigation she wishes to make of documentation and that the documentation cannot be said to be immaterial or irrelevant by reason of the NEU decision. I do not overlook the evidence of Mr Henderson’s communications with the Insolvency Service and with Mr Marshall in particular. But Mr Henderson’s efforts to notify the Assignee of his involvement in various companies does not affect the Assignee’s entitlement to obtain documents which might inform the Assignee of the extent and nature of such involvement.
Ground Two – unfairness and oppression
The issue
[104] In Mr Henderson’s second and alternative ground of opposition he asserted that it would be unfair and oppressive if the Court were to direct the liquidator to provide the hard drive and flash drives to the Assignee. He says the Assignee’s seeking those electronic records is an abuse of the Assignee’s powers and amounts to “fishing”.
“Abuse of powers” and “fishing”
[105] The statutory entitlement of the Assignee is to obtain documents which relate to “the bankrupt’s property, conduct or dealings”. The entitlement is clearly not limited to documents relating to the property of the bankrupt, in the way suggested by Mr Henderson at his District Court examination. I did not understand Mr Henderson at this hearing to pursue such an argument. For the Assignee there will be numerous areas of legitimate enquiry which do not relate to a bankrupt’s property:
– an example is the very issue whether or not the bankrupt has managed a business
(which the Assignee wishes to investigate in this instance).
Discussion
[106] The two terms “conduct” and “dealings” are not to be read down. I adopt as equally applicable in the New Zealand context the observation of Hosking J in Re Hardy in which his Lordship described the powers conferred on the (English) Assignee as “conceived in the most comprehensive terms … entitling him to make the most searching inquisition”.31
[107] Mr Henderson’s cross-examination of Mr Slevin invited a categorisation of documents which is not possible before the event of inspection. Mr Henderson has an understandable concern for documents which contain as he puts it “deeply personal” material. He stated to me that the electronic records will contain his purely personal communications with Ms Buxton. But that example serves to illustrate the need for the Assignee’s comprehensive powers. Mr Henderson appears to accept that the requested files will contain many documents relating to business matters. At the other end of the spectrum are the documents he says will be purely personal. But a person such as Ms Buxton who was involved in both the business and personal life of Mr Henderson can be expected to have been sending and receiving emails which were either personal, commercial or a mixture of both.
[108] Such is the reality of a computer hard drive which a person uses for both
work and personal purposes. That was Mr Henderson’s decision and choice.
[109] The assembled material does not lend itself as it stands to a simple culling- out of the purely personal.
[110] When I put to Mr Henderson these consequences of the way he kept his electronic records, he suggested that there is a ready way of sorting content out, namely by looking at the subject matter at the top of any email. But such an approach makes unsafe assumptions, including that there is only one subject and that
the subject is meaningfully and correctly described at the top of the email.
31 In re Hardy, above n 11, at 118-119.
[111] The comprehensive powers of the Assignee in relation to documents relating to Mr Henderson’s conduct extend to all his conduct. As such his dealings with Ms Buxton whether personal or commercial fall within the ambit of s 171 of the Act.
[112] I recognise, and understood Mr Vinnell not to suggest otherwise, that there may be cases where the Court would reject as an abuse of process the Assignee’s attempt to obtain a document which is demonstrably personal. But the way Mr Henderson kept the documents sought by the Assignee in this case rules out any identification at this point of the demonstrably personal material.
[113] I view the Assignee’s offer to accept the quarantine condition (as set out at [13] above) as the Assignee’s attempt to recognise that there will be, if and when the requested documents are inspected, documents which contain nothing material to the Assignee’s responsibilities under the Act. I will then return to the question of the appropriate wording of my condition,32 but the fact the Assignee offered a quarantine condition evidences a recognition on her part of the sensitivities involved and is strong evidence against any inference that the Assignee, in pursuing a comprehensive order, is in some way abusing her statutory powers.
[114] I therefore reject Mr Henderson’s assertion that in terms of the scope of the
directions sought by the Assignee, there is any abuse or oppression or unfair conduct.
[115] I then turn to what I view as the different assertion of unfairness or oppression, which was not identified by Mr Henderson in his notice of opposition. The assertion appeared through his affidavit evidence filed the day before the hearing. It was further developed in Mr Henderson’s cross-examination of Mr Slevin. Mr Henderson asserts that Mr Slevin is not an appropriate person to be involved in receiving and handling the documents the liquidator holds. I summarise Mr Henderson’s concerns as I took them from his evidence and submissions:
(a) Mr Slevin obtained electronic records from the liquidator originally when he knew he was not entitled to them and that they had been
obtained inappropriately;
32 See below at [138].
(b) Mr Slevin had a cavalier attitude to Mr Henderson’s privacy rights;
(c) Mr Slevin had disregarded privilege and accessed privileged material; (d) Mr Slevin had refused to provide copies of communications between
Mr Slevin and the NEU, when requested by Mr Henderson to do so under the Official Information Act 1982 and the Privacy Act 1993;
(e) Mr Slevin was conflicted in relation to Mr Henderson. Mr Slevin had previously worked in the law firm Wynn Williams & Co. Wynn Williams & Co represent the Canterbury Mortgage Trust (CMT), a creditor of Mr Henderson. The partners of Wynn Williams & Co had an interest in CMT. Mr Slevin dealt with an information request made by Wynn Williams & Co about Mr Henderson;
(f) Mr Slevin has tried to portray Mr Henderson to the Court as uncooperative.
[116] These matters led Mr Henderson to have, as he explained it to me:
… a gross fear that if Mr Slevin gets possession of my entire computer he will behave in the same way he behaved previously …
[117] I understood Mr Henderson to be inviting the Court, so long as Mr Slevin was the Senior Investigating Solicitor employed at Christchurch by the Insolvency Service, to rule that the Assignee should not be entitled to the hard drive and/or the flash drives.
[118] I reject Mr Henderson’s invitation. It is based on a number of factual propositions or assumptions which are not established by evidence. I will explain why by reference to the same six assertions as relied on by Mr Henderson:
(a) (Improperly obtained material) – there is no evidence on which the Court could properly find Mr Slevin was aware of any impropriety or flaw in the procedure by which the liquidator obtained the computer equipment;
(b)(Cavalier approach to privacy) – there is no evidence that Mr Slevin had a cavalier attitude to Mr Henderson’s privacy rights. Mr Henderson referred Mr Slevin to a High Court claim which Mr Henderson had apparently filed just before this hearing, in which Mr Henderson is suing Mr Slevin (and others) for breach of his rights. The statement of claim was not produced. In any event, such a pleading (if it contains allegations of unlawfulness, does not constitute evidence of such unlawfulness).
(c) (Disregard of privilege) – this was a bare assertion. Mr Henderson did not put to Mr Slevin a single document accessed by Mr Slevin in breach of privilege. (I will return below at [122] to the question of privilege which might still arise).
(d)(Refusal of information request) – this was an allegation put to Mr Slevin but rejected by him. There is no evidence to support a conclusion that a lawful request was refused by Mr Slevin.
(e) (Conflict) – Mr Slevin was (I infer) an employee and not a partner of Wynn Williams & Co before being employed by the Insolvency Service. The relationship between the partners of that firm and CMT as creditor of Mr Henderson’s estate does not conflict Mr Slevin in relation to matters such as requests for information dealt with in the usual way.
(f) (Mr Henderson portrayed as uncooperative) – Mr Slevin’s personal views as to the extent of Mr Henderson’s cooperation did not appear to me to be as clearly expressed in the material in Court as Mr Henderson perceived. In any event, Mr Slevin’s views and expression of views on such a matter is far removed from whether the delivery of hard drives will be oppressive or unfair. The electronic information will be whatever it is, regardless of Mr Slevin’s view of it or of Mr Henderson.
[119] None of these six allegations from Mr Henderson amounts either individually or collectively to a circumstance which would render an otherwise lawful requirement for documents oppressive or unfair. None of them requires an order or condition whereby Mr Slevin is ruled out of involvement for the Assignee in the administration of Mr Henderson’s estate. It is a matter for the Assignee and Mr Slevin as to what involvement Mr Slevin has.
[120] Nor does Mr Henderson’s eleventh hour filing of a claim against Mr Slevin alter that conclusion. The Assignee is a statutory officer and is to be relied upon to be uninfluenced in her decision-making under the Insolvency Act by the mere fact that a bankrupt may issue his own proceeding for alleged past-misconduct on the part of the Assignee or her officers. Similarly, Mr Slevin is an officer of the Court, as well as the person performing duties under the Act. If he is comfortable in continuing at the Assignee’s direction or request to have a role in relation to Mr Henderson’s estate while a defendant in litigation brought by Mr Henderson, the Court can be confident that Mr Slevin understands that he will be required to discharge his duties uninfluenced by the civil claim that he and/or the Assignee face. Any other conclusion would be an invitation to bankrupts to file, even at the eleventh hour, claims against the Assignee and her officers when the Assignee is taking steps of which bankrupts do not approve.
Ground 3 – privacy – the return of purely personal documents
[121] In relation to Mr Henderson’s privacy, the appropriate order is that documents which the Assignee accepts to be purely private should be released to Mr Henderson rather than quarantined. In relation to any documents on which the Assignee anticipates a dispute but is of the view they are not purely private, there should be a quarantine condition of the general nature suggested by the Assignee.
Ground 4 – privilege
Issue
[122] Considerations of privilege were not invoked by Mr Henderson in his notice of opposition.
[123] In his affidavit filed the day before the hearing, Mr Henderson stated that the liquidator’s flash drives include privileged material. Mr Henderson submitted that the intermingling of that material within the records was a further reason for concluding that it would be oppressive or unfair if the Assignee were to obtain all the information including the privileged material.
[124] As the evidence in submissions in relation to privilege were raised very late, I reserved to the parties the right to file supplementary submissions after the hearing. They did so. I was particularly seeking submissions on the extent to which privilege might apply in relation to records held on Mr Henderson’s computer equipment.
Discussion
[125] In the event, I am satisfied that this is not the hearing on which to reach a conclusion as to whether privilege applies in relation to some of the requested documents or not. The Court has not been provided with an example of a single document which would illustrate the issue of privilege raised by Mr Henderson. Mr Henderson made reference to some situations in which he asserted the documents would be privileged. One was correspondence as between solicitors and a company, which would have been copied on to Mr Henderson. But it seems unlikely in such a situation that any privilege involved would be that of Mr Henderson (as against the company).
[126] The Court does not need to make a ruling in relation to the existence or otherwise of any privilege at this point. If there are issues of privilege which arise they should be determined as and when the relevant document is before the Court and any claim of privilege can be determined. The directions I make will not involve any finding as to privilege – the rights of all parties including Mr Henderson and any other person who might claim privilege are preserved.
Submissions as to privilege
[127] Notwithstanding my decision that it is appropriate to reserve decisions as to the privilege of any particular documents, I now note briefly competing submissions which I heard.
[128] Mr Henderson asserted that –
All the email correspondence referred to [in the directions requested by the Official Assignee] would be privileged [through legal professional privilege].
[129] He asserted that privilege is that of the company in question and not that of
Mr Henderson which the Official Assignee might waive.
[130] Mr Henderson in his submissions appeared to implicitly accept that in relation to documents as to Mr Henderson’s dealings with lawyers in relation to his own affairs, the privilege in any such documents resides in the Assignee. Such is the settled law.33 As accepted by Mr Vinnell for the Assignee, such vesting of privilege in the Assignee does not extend to advice obtained by the bankrupt in relation to his or her compliance with the Act or the bankrupt’s conduct of any step in a proceeding
between the bankrupt and the Assignee.
[131] The focus of Mr Henderson’s submissions on privilege was on documents involving the lawyers of companies with which Mr Henderson is associated. The assumption in the present case is that Mr Henderson would hold some documents which relate to advice obtained by such companies. Mr Vinnell noted Re
Konigsberg34 as authority for the existence of jointly-held privilege. Mr Vinnell
submitted in his additional submissions that the advice given to such a company will properly be obtained by the Assignee from Mr Henderson as it will fall into one or both of two categories:
(a) The company in providing Mr Henderson with a document has waived both its confidentiality and its privilege; and
(b) The privilege is jointly-held by Mr Henderson, with Mr Henderson’s
aspect of privilege parting to the Assignee.
[132] Where there is litigation privilege which might be claimed, such is a privilege against disclosure to another party in litigation. Mr Vinnell submits that the passing
33 Wong v Official Assignee [1997] NZFLR 300 (HC); Re Konigsberg [1989] 3 All ER 289 (Ch).
34 Re Konigsberg, above, n 33.
of documents from Mr Henderson’s hands to the Assignee does not offend litigation
privilege.
[133] Finally, Mr Vinnell also relies upon s 150 of the Act. The Assignee is thereby entitled to obtain the same documents sought from Mr Henderson (any documents relating to the bankrupt’s property, conduct and dealings) from a third party by warrant. Such a power reinforces Mr Vinnell’s primary arguments as to the Assignee’s right to obtain documents not being cut across by privilege.
Outcome
[134] Although the Assignee had proposed a quarantine condition in relation to some categories of document, she had not done so in relation to documents which are clearly privileged. This is not altogether surprising as the issue of privilege does not appear to have been raised earlier. Now that it has been raised there is an appropriate means of dealing with it (in parallel with the quarantine condition suggested by the Assignee) so as not to create unfairness to Mr Henderson.
Conclusion as to directions on hard drive application
[135] The Assignee is entitled to the order she seeks as to delivery of the
liquidator’s hard drive and flash drives.
[136] There fairly need to be conditions attaching to the order to protect Mr
Henderson’s privacy and the rights of privilege of Mr Henderson or any other.
[137] For documents which the Assignee recognises might arguably be the subject of privilege, there should be a quarantine condition. The quarantining rather than releasing of such documents recognises that privilege is a right which does not have to be claimed but also recognises, particularly in relation to the communications of Mr Henderson himself, that the relevant privilege may not be absolute but may be overridden by direction of the Court on public policy grounds.
Order on hard drive application
[138] I order:
(a) Robert Bruce Walker, as liquidator of Property Ventures Ltd (in receivership and in liquidation) and of companies associated with Property Ventures Ltd is to deliver to the Official Assignee a copy of the external hard drive and of the flash drives on which is stored electronic data extracted from a laptop obtained by Police pursuant to a search warrant executed on 8 April 2011 at premises at 96 and 110
Lichfield Street, Christchurch;
(b)There are conditions attaching to this order, that upon the receipt and examination of the documents by the Official Assignee or her officers:
(i)such documents as the Official Assignee accepts are of a purely personal nature are to be provided in electronic form to David Henderson and thereupon the Assignee is promptly upon receipt of David Henderson’s confirmation that he has received that electronic record is to delete her electronic record of the documents so released;
(ii)In the event the Official Assignee considers some documents not to be purely personal but comes to the view that David Henderson would reasonably consider them to be purely personal, such documents are to be quarantined by the Official Assignee and not disclosed in the absence of further order of the Court;
(iii)In the event that the Official Assignee considers that any document by its content might reasonably attract privilege (within the meanings covered by ss 54, 55 and 56 Evidence Act 2006) such documents are to be quarantined by the Official Assignee and not disclosed in the absence of further order of the Court;
(iv) The term “quarantine” in these conditions means “to hold safe
and inaccessible by any person other than the Official
Assignee, the Official Assignee’s employees engaged in the conduct of the estate of David Henderson, and the Official Assignee’s legal advisers”;
(v)In conditions (i), (ii) and (iii) references to the “Official Assignee” include those holding delegated authority from the Official Assignee.
The application in relation to Mr Henderson’s documents
The application itself
[139] By this application, the Assignee seeks directions in relation to documents held by Mr Henderson himself.
[140] Specifically, the Assignee applies for directions on the following questions:
1Is the Official Assignee entitled to require Mr Henderson to deliver up documents relating to his property, conduct or dealings by issuing a written notice (pursuant to s 171 of the Act) and/or a summons (pursuant to section 165 of the Act) to David Ian Henderson ("Mr Henderson") in the following terms:
The Assignee requires you to deliver to her, within 10 working days, copies of all email correspondence exchanged during your bankruptcy between yourself and Grant Smith that relate to your property, conduct or dealings, howsoever touching or concerning the affairs of any company or any subsidiary company of any company of which you are or have been either a shareholder or a director, or in which you have or have had any beneficial interest, since 9 July 2005.
2Is the Official Assignee entitled to require Mr Henderson to deliver up documents relating to his property, conduct or dealings by issuing written notice (pursuant to s 171 of the Act) and/or a summons (pursuant to section 165 of the Act) to David Ian Henderson ("the bankrupt") in the following terms:
The Assignee requires you to deliver to her, within 10 working days, copies of all email correspondence exchanged during your bankruptcy between yourself and each of Daniel Godden, Raj Patel, Wayne Bailey, Geoff Angus, Desmond Knowles and Ian Hyndman that relate to your property, conduct or dealings, howsoever touching or concerning the affairs of any company or any subsidiary company of any company of which you are or have been either a shareholder or a director, or in which you have or have had any beneficial interest, since 9 July 2005.
3Is it open to Mr Henderson to refuse to produce the documents referred to in paragraphs 1 and 2 on the basis the Assignee’s powers to require the delivery up of documents by a bankrupt are limited to documents which relate to his own property?
4Does the term ‘conduct’ in ss 171 and 165 Insolvency Act 2006 refer to conduct in relation to compliance with the duties and restrictions imposed on bankrupt persons by the Insolvency Act 2006.
No opposition to the application
[141] Mr Henderson refrained from filing opposition to the application. He accepted that the Court might appropriately make an order in relation to his own documents. He wished to be heard not as to the making of directions as such but as to protections to be built into the directions. Mr Henderson’s concerns driving those protections were parallel to the concerns raised in relation to the hard drive application. I have dealt with those concerns in the context of that application.
Discussion – the appropriate directions to be made
[142] As a consequence of my findings in relation to the hard drive application, it is equally appropriate that the Assignee be granted her requested directions in relation to Mr Henderson’s documents but with some amendments. The amendments, as with the directions given on the hard drive application, will address subject matter which is purely personal or which may attract privilege. As in the case of the hard drive application, there will be no amendment to direct the Assignee as to the personnel to be engaged in the administration in relation to Mr Henderson’s bankruptcy.
Order as to Mr Henderson’s documents
[143] I order:
(a) The Official Assignee is entitled to require Mr Henderson to deliver up documents relating to his property, conduct or dealings by issuing a written notice (pursuant to s 171 of the Act) and/or a summons (pursuant to section 165 of the Act) to David Ian Henderson ("Mr Henderson") in the following terms:
The Assignee requires you to deliver to her, within 10 working days, copies of all email correspondence exchanged during your bankruptcy between yourself and Grant Smith that relate to your property, conduct or dealings, howsoever touching or concerning the affairs of any company or any subsidiary company of any company of which you are or have been either a shareholder or a director, or in which you have or have had any beneficial interest, since 9 July 2005,
PROVIDED THAT in the event that the Official Assignee considers that any document by its content might reasonably attract privilege (within the meanings covered by ss 54 and 56 The Evidence Act
2006) or in the view of the Official Assignee might reasonably be considered by Mr Henderson to be of a purely personal nature, such documents are to be quarantined by the Official Assignee and not disclosed in the absence of further order of the Court, (the term “quarantine” having the meaning set out at [138](b)(iv) above, and references to the “Official Assignee” including those holding delegated authority from the Official Assignee).
(b)The Official Assignee is entitled to require Mr Henderson to deliver up documents relating to his property, conduct or dealings by issuing written notice (pursuant to s 171 of the Act) and/or a summons (pursuant to section 165 of the Act) to David Ian Henderson ("the bankrupt") in the following terms:
The Assignee requires you to deliver to her, within 10 working days, copies of all email correspondence exchanged during your bankruptcy between yourself and each of Daniel Godden, Raj Patel, Wayne Bailey, Geoff Angus, Desmond Knowles and Ian Hyndman that relate to your property, conduct or dealings, howsoever touching or concerning the affairs of any company or any subsidiary company of any company of which you are or have been either a shareholder or a director, or in which you have or have had any beneficial interest, since 9 July 2005.
PROVIDED THAT in the event that the Official Assignee considers that any document by its content might reasonably attract privilege (within the meanings covered by ss 54 and 56 The Evidence Act
2006) or in the view of the Official Assignee might reasonably be
considered by Mr Henderson to be of a purely personal nature, such documents are to be quarantined by the Official Assignee and not disclosed in the absence of further order of the Court, (the term “quarantine” having the meaning set out at [138](b)(iv) above, and references to the “Official Assignee” including those holding delegated authority from the Official Assignee).
(c) Mr Henderson is not entitled to refuse to produce the documents referred to in [143](a) and (b) if the only ground of refusal is that the Assignee’s powers to require the delivery up of document by a bankrupt are limited to documents which relate to the bankrupt’s own property;
(d) The term “conduct” as used in ss 165 and 171 Insolvency Act 2006
includes conduct in relation to compliance with the duties and restrictions imposed on bankrupt persons by the Insolvency Act 2006.
Costs
[144] Costs would normally follow the event. Mr Vinnell has indicated that, given Mr Henderson’s continuing bankruptcy, the Assignee does seek an order for costs or disbursements.
[145] There is no order for costs or disbursements in relation to this proceeding.
Associate Judge Osborne
Solicitors:
Luke Cunningham & Clere, Wellington
Insolvency and Trustee Service, Christchurch
D I Henderson, Christchurch
Anthony Harper, Christchurch
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