M v H

Case [2024] NZCA 243 19 June 2024

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NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURT ACT 1980.

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA720/2022

[2024] NZCA 243

BETWEEN
M

Appellant

AND

H

Respondent

Hearing:
21 August 2023

Further submissions filed 19 February, 8 March, 22 March and 10 June 2024

Court:

Wylie, Ellis and van Bohemen JJ

Counsel:

E Telle and K A K Koo for Appellant No appearance for Respondent

G A D Neil and R M G Hindriksen for Official Assignee

Judgment:

19 June 2024 at 3 pm

JUDGMENT OF THE COURT

AThe appeal is allowed.
BThe order adjudicating H bankrupt is annulled, with effect from the date of adjudication, being 30 June 2021.
CThe High Court order directing M to pay H’s costs in the High Court is set aside, and the question of costs is to be reconsidered by the High Court in light of this decision.
DThe respondent is to pay the appellant’s costs on the appeal on a Band A basis for a standard appeal, together with usual disbursements.

M v H [2023] NZCA 243 [19 June 2024]

E The Official Assignee’s costs of administration are to be paid by the respondent and may be secured by way of charge over his interest in the Property.

REASONS OF THE COURT

(Given by Ellis and van Bohemen JJ)

Table of Contents

Para No

Introduction [1]

H’s bankruptcy [5]

The relationship breakdown [5]

The decision to apply for adjudication [22]

Post-bankruptcy events [27]

M’s application [36]

Relevant legislation [40]

Insolvency Act 2006 [41]

Property (Relationships) Act 1976 [53]

The Associate Judge’s decision [60]

Issues on appeal [68]

Circumstances in which the courts have found a bankruptcy

should be annulled because adjudication should not have

occurred [70]

Re Ell (1885) [72]

Re Painter (1895) [77]

Re Aekins (1911) [84]

Ireland v Ireland (1911) [87]

Re Majory (1955) [92]

Re Byron (1965) [97]

Re Baker (1995) [98]

Paulin v Paulin (2009) [99]

JSC Bank of Moscow v Kekhman (2015) [107]

Re Willis (2017) [113]

Lin v Gundmundsson (2021) [117]

Summary of principles emerging [118]

Has the enactment of the IA 2006 changed anything? [122]

Sole or predominant improper purpose? [132]

The question of leave [133]

Which is the correct test? [136]

Has M established that H had a potentially vitiating collateral

or improper purpose when he applied for adjudication? [141]

Documentary record [144]

H was not insolvent and had no bankruptcy purpose in

seeking the adjudication [146]

Effect of adjudication on M [149]

Conclusion: improper purpose

Costs

Costs on appeal
Assignee’s costs of administration

Result

[153]

[156]
[157]
[165]

[166]

Introduction

[1] M appeals the decision of Associate Judge Gardiner dismissing her application to annul the adjudication in bankruptcy of her former partner, H,1 under the Insolvency Act 2006 (IA 2006).2 M says the Associate Judge applied the wrong test when considering whether H’s application for voluntary bankruptcy…

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 M v H

Details

AGLC: M v H [2024] NZCA 243
Case: [2024] NZCA 243
Decision Date: 19 June 2024 at 3 pm

CaseChat Overview and Summary

M appeals the decision of Associate Judge Gardiner dismissing her application to annul the adjudication in bankruptcy of her former partner, H. M says the Associate Judge applied the wrong test when considering whether H's application for voluntary bankruptcy was an abuse of process, was in error in finding that H had legitimate reasons for applying for bankruptcy and was in error in holding that, in order for the bankruptcy to be annulled, M had to establish that H's sole purpose in seeking adjudication was to thwart M's claims under the Property (Relationships) Act 1976 (PRA). H played no part in the High Court hearing before Associate Judge Gardiner or in the hearing of this appeal. The Official Assignee (Assignee), however, was represented at both hearings and opposed both M’s application and appeal. The Court of Appeal holds that the Associate Judge applied the wrong test. The court considered that an application for adjudication made for an improper or collateral purpose may be annulled even where it is not the petitioner’s sole purpose. The Court found that H's application to be adjudicated bankrupt should be annulled as it was made for an improper purpose. The appeal is allowed. The order adjudicating H bankrupt is annulled, with effect from the date of adjudication, being 30 June 2021. The High Court order directing M to pay H’s costs in the High Court is set aside, and the question of costs is to be reconsidered by the High Court in light of this decision. The respondent is to pay the appellant’s costs on the appeal on a Band A basis for a standard appeal, together with usual disbursements. The Assignee’s costs of administration are to be paid by the respondent and may be secured by way of charge over his interest in the Property.

Orders