Official Assignee v Eggers

[2015] NZHC 1475

IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY

CIV-2010-443-000229 [2015] NZHC 1475

BETWEEN

OFFICIAL ASSIGNEE

Plaintiff

AND

MATTHEW JOSEPH EGGERS Defendant

Hearing:	24 February 2015
Appearances:	P Cornegé on instructions for the Official Assignee M J Eggers in Person S Hughes QC for the Creditor, Ms Pool
Judgment:	29 June 2015

JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 29 June 2015 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors / counsel:

C&M Legal, New Plymouth

S Hughes QC, New Plymouth

P Cornegé, Hamilton

OFFICIAL ASSIGNEE v MATTHEW JOSEPH EGGERS [2015] NZHC 1475 [29 June 2015]

[1]      Mr  Eggers  was  adjudicated  bankrupt  on  14  September  2010  on  the application of Helen Pool, his former wife.  Mr Eggers was due to be automatically discharged  from  bankruptcy  pursuant  to  s  290  of  the  Insolvency Act  2006  on

18 October 2013, having filed the required statement of affairs on 18 October 2010. However, on 16 October 2013 the Official Assignee filed an objection to his discharge.  His entitlement to discharge has been delayed accordingly.

[2]      Before  me  is  the  matter  of  Mr  Eggers’  application  for  discharge  from bankruptcy. The application is made pursuant to s 294 of the Insolvency Act 2006 and has triggered the need for a public examination.  The need for the examination is also required pursuant to the summons that Mr Eggers was served with by the Official Assignee.  The  summons  was  served  by  way  of  substituted  service  on Mr Eggers’ mother. Mr Eggers has now attended this Court for his public examination.

[3]      In the course of the hearing for the examination, Mr Eggers submitted that such service is defective.   His complaint is ill-founded, as substituted service was made pursuant to the Court’s order made on 31 October 2014. Mr Eggers also submitted that his bankruptcy is illegal.  I also put that submission aside.  The order of adjudication was a final order not subject to challenge by appeal. Accordingly, it stands and it is binding.

[4]      The  Official  Assignee’s  position  is  that  there  are  good  reasons  not  to discharge Mr Eggers from bankruptcy at the present time.  I accept the submissions made in support of that position by counsel for the Official Assignee and Ms Hughes QC for Ms Pool. The submissions they have made are fully justified by the examination of Mr Eggers, who has done nothing to advance his own case.

[5]      I begin with the submissions of Ms Hughes.  She submits in essence that:

(a)      Mr Eggers does not accept the Family Court’s order that he pay his former wife $500,000 as her entitlement under the Property (Relationships)  Act  1976.  He  has  no  intention  of  accounting  for

$350,000 that his mother uplifted from a bank account on his behalf

before  his  bankruptcy  in  order  to  defeat  Mrs  Pool’s  chance  of

recovery or of assisting the Official Assignee to locate that money.

(b)Mr Eggers has failed to provide satisfactory and convincing answers on the disposition or otherwise of the $350,000 that he acknowledges was his.

(c)      Mr Eggers now “recollects” spending in the money throughout 2009 and 2010.  But on 11 August 2009 in the Family Court hearing, he had claimed the money had gone. At the examination he claimed that he was living at home and not living an expensive lifestyle.

(d)Mr Eggers’ explanations as to what has happened to the money are not credible, and his examination should not be concluded until he produces the funds or provides a proper explanation that they do not exist.

[6]      Ms Hughes submits that until Mr Eggers gives satisfactory answers the investigation and examination cannot be concluded.  She relies on s 179(2) which provides that the Court “must not make an order that the examination is ended” unless it is satisfied that the bankrupt’s conduct, dealings, and property have been sufficiently investigated and that the investigation has finished.

[7]      I am not so satisfied. As Ms Hughes points out, based on Mr Eggers’ own concessions, the money was withdrawn on 28 September 2008 to avoid the consequences  of  a  possible  adverse  judgment  in  the  property  dispute  between himself and Ms Pool, which was heard in the District Court in August and October

2009.  The District Court’s judgment was issued on 18 December 2009 in favour of Mrs Pool. Ms Hughes submits, with considerable force, that Mr Eggers has been evasive about what he has done with the money, and continues to be evasive. As she points out it is noted in the notes of evidence for the hearing in the District Court (which Mr Eggers accepts as a correct record) that  he was directed by the Court to answer questions put to him, including the question where he had put the money, to which he gave various answers. Those answers included, following a direction from

the Court that the time had come to answer the question, “Okay then, I’ve spent it then”. Such answers can only be described as evasive. It remains the case now, as then, that Mr Eggers continues to decline to answer the question in a candid manner.

[8]      I accept, as Ms Hughes QC submits, that it is plain that Mr Eggers has scant regard for the Court’s process and the administration of justice. He refuses to recognise that his bankruptcy is the consequence of his own actions.  He describes the causes of his insolvency as adverse legal action, domestic discord or relationship breakdowns,  and  Family  Court  corruption.    He  is  determined  to  prevent  the Official Assignee undertaking the proper administration of his bankrupt estate.  He is determined to prevent Mrs Pool from ever seeing her entitlement.

[9]      I turn then to counsel for the Official Assignee’s submissions, which are along  the  same  lines.  He  accepts  Mr  Eggers  has  been  in  bankruptcy  for  a considerable time but the Official Assignee’s objection was filed on time because it was within 3 years after the statement of affairs was filed he submits there are sound reasons for not allowing a discharge at the present time because his compliance with his obligations has been poor and he has routinely failed to co-operate with the Official Assignee’s office. He has failed to account for the $350,000 and until he does so the administration of his bankruptcy remains incomplete.   Additionally, counsel submits:

(a)      Self-evidently Mr  Eggers  has  not  been  candid.    He  has  failed  to provide a detailed account of when and how he spent funds uplifted from the bank by his mother on his behalf.  At the time of the District Court hearing he claims to have spent the funds and not to remember where they went, but his memory loss should not have been as acute then as he claims it is now.  This indicates an ongoing intention to be obstructive.

(b)He needs to be candid and to account, to the extent he can – conscientiously,  to  the  best  of  his  ability  –  so  that  the  Official Assignee can scrutinise the position carefully.  It is simply not helpful to Mr Eggers’ own position to persist in saying he does not remember.

His reliance upon memory loss from as early as the Family Court examination is not plausible.

(c)      Mr Eggers’ claim that he spent the funds because he did not want to comply with the District Court’s judgment is of concern, and not to be taken at face value.  It calls for investigation.  It is simply not credible that he spent $350,000 with no record of any of that expenditure and no-one who can corroborate any of the expenditure.

(d)If Mr Eggers in the future owes money, his approach may well be that rather than paying the money he will dispose of any funds.  There is an issue of commercial morality involved.

(e)      It is to be expected that Mr Eggers cannot recall every Lotto purchase (but he says he spent $1,000 from time to time on Lotto tickets – that seems implausible).   Tellingly, he has managed to remember some details today in the course of his examination, while taking refuge in the  claim  that  he  cannot  remember  in  respect  of  others.    It  is reasonable to expect he is capable of making a better effort.  The onus should be on him.

(f)      The real issue is that the administration of his estate is not properly complete.  The concern is that he has not properly accounted for the money,   and   the  clear   inference  is   that   there  may  be   money somewhere.  Only Mr Eggers and his family know.

(g)If he can provide details the Official Assignee’s office could check – it could talk to others to verify.  If there was satisfactory information the Official Assignee would not take the matter further, but the position must be verified.

[10]     Counsel  seeks  that  Mr  Eggers  not  be  discharged  from  bankruptcy.    He submits that the Court may impose such conditions as it sees fit on satisfying the Official Assignee and exercise that discretion in a way to ensure that the Official Assignee can investigate.

Mr Eggers’ submissions in opposition

[11]     I do not accept Mr Eggers’ submissions in response.   He relies essentially upon the claim that he cannot remember specifically where he spent the $350,000. He claims he spent up large on Lotto tickets, beer and holidays.  He submits that the Court  should  accept  that  it  is  most  unlikely that  there  would  be  anybody who remembered him spending the money – he says among other things that nobody from whom he bought Lotto tickets or beer would know or remember him, and that those from whom he chartered fishing boats or helicopter trips would just have put the money in their pockets.

[12]     He also contends that he spent quite a lot of money on living expenses, as he could not find suitable work flying helicopters, and he “wasn’t going to go and milk cows  as  suggested” by the Official Assignee.    He says,  “I never had  a person I haven’t paid, except for one who did not perform, and Mrs Eggers.”  He contends nothing is to be gained by further investigation, and therefore that there is little or no point in extending his bankruptcy.  He says if he cannot now remember whom he paid in the past, he is not going to be able to recall that information in the future, and added that the Court can extend his bankruptcy as long as it likes but that will not assist his memory.

[13]     Mr Eggers also emphasised his belief that “Just because the Family Court says I owe a debt”, he should not be held to that debt, adding, “I only have to abide by the law, and the Family Court got the law wrong.”

[14]     These are hardly the words of a person who takes his obligations seriously, and they give rise to a significant issue of commercial morality.

Decision

[15]     In all the circumstances I can only conclude that it is in the public interest that  Mr Eggers’ bankruptcy be  extended.    He  must  understand  that  his  present approach is not assisting his position, and that he has a serious obligation to assist the Official Assignee to complete the investigation into his affairs.

[16]     Mr  Eggers  is  accordingly  barred  from  making  a  further  application  for discharge from bankruptcy for two years from the date of this judgment, with the proviso that if Mr Eggers makes full and candid disclosure to the Assignee such that the Assignee can complete the investigation and the administration of his estate, he may make an earlier application for discharge.

[17]     Costs are reserved.  If any party seeks costs, that party is to file and serve a memorandum within 10 working days.

Associate Judge Sargisson