Mawhinney v Official Assignee - [2016] NZHC 2487

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-848 [2016] NZHC 2487

BETWEEN
PETER WILLIAM MAWHINNEY

Plaintiff

AND

OFFICIAL ASSIGNEE Defendant

Hearing: 19 July 2016

Appearances:

Plaintiff in person
G A D Neil & E Meade for Defendant

Judgment:

18 October 2016

JUDGMENT OF PAUL DAVISON J

This judgment was delivered by me on 18 October 2016 at 4pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Meredith Connell, Auckland

MAWHINNEY v OFFICIAL ASSIGNEE [2016] NZHC 2487 [18 October 2016]

Introduction

[1] The plaintiff has filed proceedings in which he challenges and seeks judicial review of the defendant’s exercise of jurisdiction under the Insolvency Act 2006 and the Companies Act 1993. Pending determination of those proceedings, he applies for an order for interim relief preventing the defendant, the Official Assignee (the Assignee), from taking any further action until the issues in the statement of claim and his application for legal aid have been determined.

Background

[2] The plaintiff is a bankrupt.1 He was the sole director and a shareholder of Forest Trustee Ltd (in liquidation) (FTL),2 and a trustee of the Waikato Forest Land Trust (WFLT) and other trusts.

[3] The Assignee is responsible for both the liquidation of FTL and the administration of the plaintiff’s bankrupt estate. Despite a number of formal notices issued and sent by the Assignee to the plaintiff, the plaintiff has failed to complete and provide a statement of affairs in relation to his bankruptcy and in relation to FTL. The Assignee wrote to the plaintiff multiple times, requesting that these statements be completed. The plaintiff failed to do so.

[4] The Assignee received three creditors’ claims in the bankrupt estate and five creditors’ claims in the liquidation, all arising from a forestry block at the northern end of Waitakere. The creditors include the Auckland Council and Nags Head Horse Hotel Ltd. The debt owed by FTL to the Auckland Council relates to unpaid rates and penalties in excess of $100,000 and the debt owed by the plaintiff to the Auckland Council relates to a costs award in excess of $500,000 made by the Environment Court on 14 June 2010. The debt owed by the plaintiff to Nags Head relates to four costs awards made in various legal proceedings. Other creditors’ claims arise from allegations of improper dealings by the plaintiff when acting for
the WFLT in the sale of land.

1 The plaintiff was adjudicated bankrupt on 24 February 2015 on the petition of the Auckland
Council.
2 FTL was placed into liquidation on 13 March 2015, and the Assignee was appointed liquidator.

[5] The information that has been gathered by the Assignee was obtained in the course of the administration of the plaintiff’s first bankruptcy and as a result of the Assignee’s own informal enquiries.

[6] The Assignee is concerned that there is property that may be realised for the benefit of creditors. The Assignee also has concerns that the plaintiff is engaging in business without the consent…

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.

Keep reading for free

Create a free CaseChat account to read Mawhinney v Official Assignee and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2016] NZHC 2487
Decision Date: 18 October 2016

CaseChat Overview and Summary

The case of Mawhinney v Official Assignee [2016] NZHC 2487 involved a dispute between the plaintiff, Peter William Mawhinney, and the defendant, the Official Assignee. Mawhinney, a bankrupt and former director of Forest Trustee Ltd (FTL), challenged the Official Assignee's exercise of jurisdiction under the Insolvency Act 2006 and the Companies Act 1993. The Official Assignee was responsible for both the liquidation of FTL and the administration of Mawhinney's bankrupt estate. The dispute centred on the Official Assignee's requests for Mawhinney to provide a statement of affairs and attend a creditors' meeting and liquidator's examination, which Mawhinney had failed to do. Mawhinney sought interim relief to prevent the Official Assignee from taking any further action until the issues in his statement of claim and his application for legal aid had been determined.

The legal issues in the case revolved around the scope of the Official Assignee's jurisdiction and the extent to which Mawhinney was required to cooperate with the Official Assignee's information-gathering process. The court had to determine whether the Official Assignee was entitled to question Mawhinney about his property held in trust, require him to produce trust documents, and examine him as a former shareholder or director of FTL in respect of property held in trust by FTL. The court also had to consider whether the interim orders sought by Mawhinney were necessary to preserve his position and whether the granting of such orders would be in the overall interests of justice.

The court concluded that the Official Assignee was entitled to gather information about Mawhinney's property held in trust, as the purpose of the Official Assignee's "searching inquisition" was to ensure that the Official Assignee was as fully informed as possible about Mawhinney's property, conduct, and dealings to enable the Official Assignee to carry out any of the functions which arise under the Insolvency Act. The court also found that the Official Assignee was entitled to examine Mawhinney as a former director and shareholder of FTL in respect of property held by FTL in trust, as the liquidator may require a director or former director or a shareholder of the company to be examined on oath or affirmation on any matter relating to the business, accounts, or affairs of the company. The court further held that even though Mawhinney's obligations of confidence as a trustee of the Waikato Forest Land Trust prevented him from disclosing confidential information to the Official Assignee, the Official Assignee was entitled to information about the trust in his capacity as a creditor of FTL.

The court rejected Mawhinney's application for interim orders, finding that the orders sought were not necessary to preserve his position and that the granting of such orders would serve to effectively approve and condone his non-compliance and lack of cooperation. The court emphasised the public interest in the efficient and expeditious administration of Mawhinney's bankrupt estate and the liquidation of FTL, and the need for the Official Assignee to obtain the requisite information in order to investigate and verify allegations of improper conduct by Mawhinney. The court concluded that the overall justice and balance of convenience clearly led to the conclusion that the application for interim orders should be declined.

Orders