Hewitson v Official Assignee - [2022] NZHC 57

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2021-425-000042

[2022] NZHC 57

BETWEEN
DARRYL ROBERT HEWITSON

Applicant

AND

THE OFFICIAL ASSIGNEE

Respondent

Hearing: 13 December 2021

Appearances:

R G R Eagles for Applicant

I M G Clarke and A M Piaggi for Respondent

Judgment:

31 January 2022

JUDGMENT OF DUNNINGHAM J

This judgment was delivered by me on 31 January 2021 at 11 am, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Introduction

[1]In 2014 Mr Hewitson was an undischarged bankrupt. His father gifted him

$250,000 from the sale of a business. With it, Mr Hewitson purchased back his former home which his mother had bought following adjudication. He spent the balance of the gift on an overseas trip and other items. When the Official Assignee (the Assignee) discovered the property was owned by Mr Hewitson, it was considered to be

HEWITSON v THE OFFICIAL ASSIGNEE [2022] NZHC 57 [31 January 2022]

after-acquired property which should be sold to meet the amounts outstanding to Mr Hewitson’s creditors.

[2] Mr Hewitson now seeks judicial review of the Assignee’s decision to sell the property. He says had the Assignee had proper regard to the circumstances under which he reacquired the property, and to the changed circumstances of his creditors, it was open to the Assignee to return the property to him under s 163 of the Insolvency Act 2006 (the Act).

[3] At issue is whether the Assignee, in deciding to sell the property for the benefit of creditors, failed to have regard to all relevant circumstances such that the Assignee should be directed to reconsider that decision.

Background

[4] In 1997 Mr Hewitson started his own accountancy business in Invercargill. Unfortunately, during that period he fell ill with pulmonary sarcoidosis, a respiratory complaint which adversely affected Mr Hewitson’s ability to engage in physical work. Mr Hewitson says that although he was not diagnosed with the illness until recently, his deteriorating physical condition caused him to suffer from depression, probably from as early as 2005. This, in turn, affected his ability to work. He says, by 2009, his concentration was failing and he often felt so exhausted he would go straight home to bed after work.

[5] In 2009 Mr Hewitson was served with proceedings by some of his clients, including one of his key clients, Allister Saville, a prominent builder in the Queenstown area. The plaintiffs claimed losses stemming from Mr Hewitson’s failure to file their tax returns. For example, Mr Saville says Mr Hewitson failed to file his tax returns for the tax years ending 31 March 2002 through to 31 March 2007, causing him to incur penalties and use of money interest totalling $110,371.31.

[6] Judgment was entered against Mr Hewitson for a total of $306,657.45 made up as follows:

(a)Allister John Saville $111,368.79;

(b)A J Saville Builder Ltd $45,205.36;

(c)Mill Creek Property Investment Ltd $35,670.88;

(d)Alvenbrooke Ltd $49,387.47;

(e)Christopher Peter Colvin $24,623.95;

(f)Colvin Construction Ltd…

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 Hewitson v Official Assignee

Details

AGLC: Hewitson v Official Assignee [2022] NZHC 57
Case: [2022] NZHC 57
Decision Date: 31 January 2022

CaseChat Overview and Summary

The case of Hewitson v Official Assignee involves an application for judicial review by Darryl Robert Hewitson, an undischarged bankrupt, against the Official Assignee's decision to sell his former home, which he had purchased with a gift from his father, to meet the amounts outstanding to his creditors. The Assignee had determined that the property was after-acquired property which should be sold to benefit the creditors. The primary legal issue was whether the Assignee, in deciding to sell the property, failed to consider all relevant circumstances, such as the circumstances under which Mr Hewitson reacquired the property and the changed circumstances of his creditors, such that the Assignee should reconsider the decision.

The court found that the Assignee's decision to sell the property was reasonable, taking into account the statutory scheme of the Insolvency Act 2006, which places the primary responsibility on the Assignee to realise and distribute the bankrupt's property to creditors. The court held that the Assignee had a broad discretion in administering the bankrupt's property but was not required to consider the bankrupt's personal circumstances unless explicitly mandated by the Act. The circumstances under which Mr Hewitson acquired the property and his mistaken belief that he was no longer bankrupt did not directly impact the Assignee's decision to sell the property. Additionally, while some creditors no longer existed or sought repayment, the court found that there were still substantial unpaid debts that necessitated the sale of the property to meet the creditors' claims.

In conclusion, the court dismissed Mr Hewitson's application for judicial review, finding that the Assignee's decision to sell the property was made in accordance with the law and considering all relevant circumstances. The court also reserved costs, with the Official Assignee seeking costs on a 2B basis.

Orders