Hodder v Official Assignee

[2016] NZHC 981

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2012-441-316 [2016] NZHC 981

UNDER

the Insolvency Act 2006

IN THE MATTER OF

the bankruptcy of Michelle Jane Hodder

BETWEEN

MICHELLE JANE HODDER Applicant

AND

THE OFFICIAL ASSIGNEE First Respondent

BERYL MARY HENSHAW Second Respondent

On the Papers
Counsel:	J Krebs for the Applicant
Judgment:	16 May 2016

JUDGMENT OF ASSOCIATE JUDGE SMITH

[1]      Ms Hodder was adjudicated bankrupt by this Court on 5 June 2014.  She now resides  in Australia.   The debts  in  Ms Hodder’s  bankruptcy total  approximately

$15,000, and the Official Assignee did not recover any assets in the bankruptcy. However Ms Hodder has  a potential  claim  against  her father’s  estate  under the Succession Act 1981 (Queensland).

[2]      The Official Assignee did not have available resources to pursue that claim, and Ms Hodder sought  the consent of the Official Assignee to pursue the claim herself, on the basis that she would retain the benefit of any recovery in the proposed litigation.  That proposal was subsequently amended to a proposal that any recovery would  be  shared  equally  between  Ms Hodder  and  the  Official Assignee,  after

payment of costs.

MICHELLE JANE HODDER v THE OFFICIAL ASSIGNEE [2016] NZHC 981 [16 May 2016]

[3]      The   Official Assignee   applied   to   this   Court   for   approval   to   assign Ms Hodder’s claim under the Queensland legislation to her, on the basis that the proceeds  of  the  claim  would  be  shared  equally  between  Ms Hodder  and  the Official Assignee.  In a judgment delivered on 6 August 2015 I refused approval of the proposed assignment.

[4]      Since that decision, the Official Assignee has given a notice of disclaimer, disclaiming  the  property  comprising  the  cause  of  action  against  the  estate  of Ms Hodder’s father. The notice of disclaimer was given on 21 August 2015.

[5]      Ms Hodder now applies for an order under s 119 of the Insolvency Act 2006 vesting the disclaimed property in herself.   In her application, the property is described as:

The cause of action by way of family provision application against the estate of Edward David Jones pursuant to the provisions of Part 4 of the Succession Act 1981 (Queensland legislation).

[6]      For  convenience,  I  will  refer  to  this  cause  of  action  as  “the  disclaimed property”.

[7]      Section 118   of   the  Act   sets   out   the   effect   of   a   disclaimer   by   the

Official Assignee. The section provides:

118      Effect of disclaimer

A disclaimer by the Assignee—

(a)       brings to an end, on and from the date of the disclaimer, the rights, interests, and liabilities of the Assignee and the bankrupt in relation to the property disclaimed:

(b)       does not affect the rights, interests, or liabilities of any other person,  except  in  so  far  as  is  necessary  to  release  the Assignee or the bankrupt from a liability.

[8]      The right of a person suffering loss or damage as a result of disclaimer by the Official Assignee to apply for an order vesting property in that person, is contained in s 119 of the Act. That section provides:

119     Position of person who suffers loss as result of disclaimer

(1)      A person suffering loss or damage as a result of disclaimer by the

Assignee may—

(a)       claim as a creditor in the bankruptcy for the amount of the loss or damage, taking account of the effect of an order made by the court under paragraph (b):

(b)       apply to the court for an order that the disclaimed property be delivered to, or vested in, that person.

(2)       The  bankrupt  may  also  apply  for  an  order  that  the  disclaimed property be delivered to, or vested in, the bankrupt.

(3)       The court may make an order under subsection (1)(b) or (2) if it is satisfied that it is fair that the property should be delivered to, or vested in, the applicant.

[9]      The Official Assignee now has no interest in the disclaimed property, and will abide the decision of the Court.  The second-named respondent, who acts as executor in the estate of the late Mr Jones, has been served with a copy of Ms Hodder’s application.  He too has advised that he will abide by the decision of the High Court in respect of the application.

[10]     By Minute dated 10 March 2016 I directed that the application should also be served on the Secretary to the Treasury, representing the Crown.   Following the Official Assignee’s disclaimer, the ownership in the disclaimed property vested in the Crown as bona vacantia.1    By letter dated 21 April 2016, the Secretary advised that the Crown does not object to the Court making an order that the former ownership interest of Ms Hodder in the disclaimed property be re-vested in her.  The

Secretary advised that the Crown will abide by the order of the Court.

[11]     I am satisfied that it is appropriate to make an order under s 119(3) of the Act vesting the disclaimed property in Ms Hodder.  The effect of the disclaimer is that the Queensland claim will not be pursued at all unless the right to claim is re-vested in Ms Hodder, and the claim may well have some value: Ms Hodder’s Australian solicitors advised in October 2014 that their preliminary view was that the claim

appeared to have some prospects of success.   Also, Ms Hodder has provided an

1      Panther v Panther [2016] NZHC 809, at [9], referring to Rural Banking & Finance Corporation of New Zealand Ltd v Official Assignee [1991] 2 NZLR 351 (HC) at 355-357.

affidavit showing that she is currently in difficult financial circumstances.   She is unable to obtain employment due to a serious injury she sustained approximately two years ago, and she has a daughter who is very ill.  There are ongoing medical expenses for both herself and her daughter.  She and her husband have no significant assets aside from $15,000 in superannuation entitlements.

[12]     If the claim had been pursued by the Official Assignee, a recovery might have been made that would have been sufficient to pay all of Ms Hodder’s creditors and the Official Assignee’s costs, and possibly provide additional funds sufficient for Ms Hodder to apply to have her bankruptcy annulled.   The disclaimer has effectively deprived  her  of  that  opportunity.    In  those  circumstances,  I  am  satisfied  that Ms Hodder comes within the s 119(1) requirement of having suffered loss or damage as a result of the disclaimer.

[13]     The next question is whether it is fair that the disclaimed property should be re-vested  in  Ms Hodder.    Again,  I  am  satisfied  that  such  an  order  is  fair  and appropriate.   No other person has any interest in the property, and Ms Hodder’s difficult personal circumstances make it fair that she should have the opportunity to pursue the claim.  It appears that she has Australian solicitors who are prepared to prosecute the claim on her behalf.

[14]     I am accordingly satisfied that grounds for the vesting order have been made out.  I order that the disclaimed property, being the cause of action by way of family provision against the estate of Edward David Jones pursuant to the provisions of p 4 of the Succession Act 1981 (Queensland) be and is hereby vested in the bankrupt, Michelle Jane Hodder.

Associate Judge Smith

Solicitors:

Gifford Devine, Hastings for the applicant