McKee v Official Assignee - [2013] NZHC 340

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2008-404-3442 [2013] NZHC 340

UNDER the Insolvency Act 2006

IN THE MATTER OF the bankruptcy of DONALD RUSSELL McKEE

BETWEEN DONALD RUSSELL MCKEE Applicant

ANDOFFICIAL ASSIGNEE Respondent

Hearing: 26 February 2013

Appearances: R S Pidgeon for Applicant
G Neil for Respondent

Judgment: 26 February 2013

ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL

Solicitors:
Pidgeon Law (R S Pidgeon) P O Box 6535 Auckland 1141, for Applicant
Email: Richard@pidgeonlaw.co.nz

Meredith Connell, P O Box 2213 Auckland 1140, for Respondent
Email: gareth.neil@meredithconnell.co.nz / Rebecca.Thomson@meredithconnell.co.nz

MCKEE V OFFICIAL ASSIGNEE HC AK CIV-2008-404-3442 [26 February 2013]

[1] This case concerns Mr McKee’s discharge from bankruptcy. He was adjudicated bankrupt on a creditor’s application on 23 October 2008. That was after the Insolvency Act 2006 had come into force. If he had been adjudicated bankrupt under the Insolvency Act 1967, he would have been eligible for automatic discharge
after three years, unless the Official Assignee or a creditor had objected.[1] However,
[1] Insolvency Act 1967, s 107(1) and (3).

the automatic discharge provision of the Insolvency Act 2006 is different.

[2] Under s 290, a bankrupt is automatically discharged from bankruptcy three years after the bankrupt files a statement of affairs under s 46 or s 67, but he may apply to be discharged earlier. According to the Official Assignee, Mr McKee did not file his statement of affairs under s 67 of the Insolvency Act 2006 until
24 September 2012, more than three years after his adjudication. Because his statement of affairs was not filed until 24 September 2012, Mr McKee would have to wait until 24 September 2015 to be eligible for automatic discharge under s 290. That means that he would serve nearly seven years as an undischarged bankrupt. It is already 4 years 4 months since his adjudication.

[3] Mr McKee has applied for an early discharge under s 294 of the Insolvency Act. However, in submissions today, Mr Pidgeon said that Mr McKee also sought a declaration that he had already attained an automatic discharge under s 290 because he had filed his statement of affairs under s 67 by 9 December 2008. Mr McKee’s application did not expressly seek orders asking for a declaration to that effect. Mr Pidgeon sought leave to amend his application to cover that aspect as well.

[4] I am satisfied that there is no prejudice to the Official Assignee in allowing that amendment to Mr McKee’s application. Mr Neil submitted that there would be prejudice because, if a declaration were made to that effect, the Official Assignee would lose the right to object to Mr McKee’s discharge under s 290 as the time for the Official Assignee to lodge any objection to an automatic discharge would have
already passed. I am not satisfied that that is a relevant head of prejudice.

If Mr McKee’s application had sought the declaration when it was first filed, the

Official Assignee would still be out of time…

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 McKee v Official Assignee

Details

AGLC: McKee v Official Assignee [2013] NZHC 340
Case: [2013] NZHC 340
Decision Date: 26 February 2013

CaseChat Overview and Summary

The case of McKee v Official Assignee concerns Donald Russell McKee's application for discharge from bankruptcy. McKee was adjudicated bankrupt on 23 October 2008 under the Insolvency Act 2006. McKee applied for an early discharge from bankruptcy under section 294 of the Insolvency Act, as well as seeking a declaration that he had already attained an automatic discharge under section 290. The Official Assignee argued that McKee did not file his statement of affairs under section 67 until 24 September 2012, more than three years after his adjudication, and therefore he would not be eligible for automatic discharge until 24 September 2015.

The court found that McKee had not satisfied the burden of proof to show that his statement of affairs was filed with the Official Assignee in December 2008. The Official Assignee's evidence showed that the statement of affairs was not received until September 2012, and McKee had not provided sufficient evidence to convince the court otherwise. The court declined to accept McKee's claim that he had filed the statement of affairs in December 2008.

The court considered the purposes of bankruptcy and found that the administration of the bankruptcy had been completed, and there was no reason to prolong McKee's bankruptcy based on the delay in filing the statement of affairs. The court also found that while there was pre-adjudication misconduct, any punishment had already been served, and post-adjudication misconduct was minor. The court considered the risk to the community and concluded that while there were risks associated with McKee re-entering property development or becoming a company director, these could be mitigated through conditions on his discharge.

The court granted McKee's application for an early discharge, subject to conditions that he not hold office as a company director for one year and not enter into or carry on the management and control of any property development business for five years. The court instructed counsel to draft an order for its consideration, to be finalized at the next sitting in bankruptcy.

Orders