Kennedy aka Walker

[2023] NZHC 83

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2015-485-259

[2023] NZHC 83

UNDER	the Insolvency Act 2006
IN THE MATTER	of the bankruptcy of REBECCA KENNEDY aka SARENA WALKER

Hearing:	On the papers
Appearances:	T Bain for the Official Assignee T Bamford for the Bankrupt
Judgment:	3 February 2023

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1]    The bankrupt, Rebecca Kennedy who is also known as Sarena Walker, was adjudicated bankrupt on 11 August 2015, and was due to be discharged from bankruptcy on 17 August 2018.

[2]    Pursuant to s 292 of the Insolvency Act 2006, the Official Assignee objected to her automatic discharge. This brought into play s 173 of the Insolvency Act 2006 necessitating a public examination of the bankrupt and requiring the Court to determine whether or not she should be discharged, and, if so, in what terms.

[3]    The   public   examination   was   duly   conducted   before    Registrar    Anne Murdoch-Moar on 15 November 2022, and the Court has before it a full transcript of the same.

Re Rebecca Kennedy aka Sarena Walker [2023] NZHC 83 [3 December 2023]

[4]    Registrar Murdoch-Moar also made timetabling directions in which she directed that the Official Assignee file submissions by 30 November 2022 and the bankrupt (who was represented by counsel at the examination) file submissions in reply by 14 December 2022.

[5]    The Official Assignee’s submissions were filed and served on 25 November 2022.

[6]No submissions have been filed or served by or on behalf of the bankrupt.

[7]    Notwithstanding the Official Assignee’s formal objection to the bankrupt being discharged automatically, Mr May indicated that the Official Assignee did not oppose a discharge. Essentially, the Official Assignee’s position is that there is no practical reason why the Court should not discharge the bankrupt because there is no realistic prospect of uncovering any further assets for distribution to creditors. However, the Official Assignee contends that in discharging the bankrupt the Court should impose conditions on the discharge.

[8]    As the bankrupt has elected not to respond to the Official Assignee’s submissions, I am taking it that she accepts that the course  proposed  by  the  Official Assignee is appropriate.

[9]Nevertheless, the Court must of course exercise an independent judgement.

[10]   I summarise below the views I have reached having regard to the evidence before the Court.

[11]   As Mr May submits, the Official Assignee’s report dated 28 October 2022 and the bankrupt’s evidence at the public examination raises serious concern about the ongoing risk that she continues to pose to the public.

[12]Factors that support that contention include the following:

(a)at the conclusion of the three-year statutory bankruptcy period, she owed her creditors close to $1 million;

(b)there is contested evidence that the bankrupt has defrauded third parties of approximately $1.7 million. She has been charged with various offences in relation to these actions;

(c)there is evidence that the bankrupt attempted to conceal bank accounts from the Official Assignee during the course of her bankruptcy, the amounts involved being in the region of $500,000;

(d)there is evidence that the bankrupt failed to comply with her obligations under the legislation in various ways including by changing her name and travelling abroad without first obtaining permission.

[13]   As Mr May submits, nothing emerged during the public examination which would suggest that these concerns are overstated. On the contrary, my review of the bankrupt’s evidence suggests to me that she continues to dissemble whenever she perceives that it is in her interest to do so. Since the bankrupt does not oppose the Official Assignee’s contention that any discharge should be accompanied by strict conditions, I do not consider it necessary to specify the aspects of the evidence that have lead me to that view.

[14]   In the end, I accept the argument advanced on behalf of the Official Assignee that the bankrupt will continue to present a significant risk to the public and that the only way of mitigating that risk is to impose strict conditions on her. It is, in my view, incumbent on the Court to take adopt that course.

[15]   The Court’s jurisdiction in this regard is outlined in ss 298 and 299 of the Insolvency Act.

298Court may grant or refuse discharge

(1)When the court hears an application under section 294 for discharge, or conducts the examination of the bankrupt under section 295, the court may, having regard to all the circumstances of the case,—

(a)immediately discharge the bankrupt; or

(b)discharge the bankrupt on conditions (which may include a condition that the bankrupt consents to any judgment or order for the payment of any sum of money); or

(c)discharge the bankrupt but suspend the order for a period; or

(d)discharge the bankrupt, with or without conditions, at a specified future date; or

(e)refuse an order of discharge, in which case the court may specify the earliest date when the bankrupt may apply again for discharge.

(2)If the court discharges the bankrupt on the condition that the bankrupt consents to any judgment, and the bankrupt does consent, the court may vary the judgment as it thinks appropriate.

299Court may restrict bankrupt from engaging in business after discharge

(1)The court, when it makes an order of discharge or at any earlier time, may prohibit the bankrupt after discharge from doing any or all of the following things without the court’s permission:

(a)entering into, carrying on, or taking part in the management or control of any business or class of business:

(b)being a director of any company:

(c)directly or indirectly being concerned, or taking part, in the management of any company:

(d)being employed by a relative of the bankrupt:

(e)being employed by a company, trust, trustee, or incorporated society that is managed or controlled by a relative of the bankrupt.

(2)The court may—

(a)prohibit the bankrupt for a specified period, or without a time limit:

(b)at any time vary or cancel the prohibition.

[16]   On behalf of the Official Assignee, Mr May submits that the Court should impose all of the conditions in s 299. I agree.

[17]   I have considered whether those conditions should be imposed for a period of time (which, in this case, could not realistically be less than three years) or whether they should be imposed without a time limit. Given that the bankrupt’s evidence suggests that she has learnt nothing from her bankruptcy, I have reached the view that the most appropriate course would be to impose those conditions on a permanent basis,

noting that the conditions can be cancelled or varied at any time upon application to the Court.

[18]   There will be an order discharging the bankrupt from 4.00 pm on the date of this judgment on the following terms which are imposed pursuant to s 299(1) of the Insolvency Act:

(a)The bankrupt is prohibited from:

(i)entering into, carrying on, or taking part in the management or control of any business or classes of business;

(ii)       being a director of any company;

(iii)being concerned, directly or indirectly, or taking part, in the management of any company;

(iv)being employed by a relative;

(v)being employed by a company, trust, trustee, or incorporated society that is managed or controlled by a relative of the bankrupt.

[19]The above conditions are imposed without a time limit.

[20]The bankrupt may apply at any time to vary or cancel the same.

Associate Judge Johnston

Solicitors and counsel:

Luke Cunningham and Clere, Wellington for Official Assignee T Bamford, Barrister, Nelson for Bankrupt