Official Assignee v Elite Telecomms Ltd - [2023] NZHC 2048

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2022-442-38

[2023] NZHC 2048

UNDER Sections 206(6) and 207 of the Insolvency Act 2006

IN THE MATTER

of the Bankruptcy of Mila Amber

BETWEEN

THE OFFICIAL ASSIGNEE

Applicant

AND

ELITE TELECOMMS LTD

Respondent

Hearing: 24 May 2023

Appearances:

P R W Chisnall and S A Davies for Applicant

M R C Wolff and A R Williamson for Respondent

Judgment:

3 August 2023

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 3 August 2023 at 11.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

THE OFFICIAL ASSIGNEE v ELITE TELECOMMS LTD [2023] NZHC 2048 [3 August 2023]

Table of Contents

Para No

The statutory provisions [4]

The issues

[12]

Background

[15]

Evidence of Mr Collins

[28]

Ms Amber’s solvency

[45]

Was the sale of 46 Weka Street intended by Ms Amber to prejudice a creditor?

[54]

Did Elite act in good faith?

[62]

Would a reasonable person in Elite’s position suspect Ms Amber was or would become unable to pay her due debts?

[70]

Did Elite provide value for the property in the reasonably held belief that the transfer of the property was valid and would not be cancelled?

[74]

Summary of conclusions

[76]

Remedies

[78]

Result

[82]

[1] Elite Telecomms Ltd (Elite) is a company incorporated in the United Kingdom.1 In December 2017, Mila Amber sold her property at 46 Weka Street, Nelson to Elite on terms that required payment of the purchase price over 25 years, without interest. At the time, Ms Amber was engaged in a dispute with the Inland Revenue Department (IRD) over her tax liabilities and she was adjudicated bankrupt on the Commissioner of Inland Revenue’s application in December 2020.

[2] The Official Assignee (the Assignee) considers the sale of 46 Weka Street was a scheme to defeat the IRD’s entitlement to payment of Ms Amber’s tax debt, and an irregular transaction under s 206 of the Insolvency Act 2006 (the Act). It applies for orders under s 207 of the Act cancelling the transaction and for the retransfer of the property to the Assignee.

[3] Elite argues the sale was not an irregular transaction, and the Court cannot make an order cancelling the transaction when it acted in good faith;2 a reasonable person in its position would not have suspected, and it did not suspect, that Ms Amber was or would become unable to pay her due debts;3 and it gave value for 46 Weka Street in the reasonably held belief the transfer was valid and would not be cancelled.4

The statutory provisions

[4] The statutory provisions that apply to this proceeding are not straightforward. To assist comprehension of what follows, I set them out below.

[5]The application is made under s 206 of the Act, which provides:

206 Procedure for cancelling irregular transactions

(1)The procedure set out in this section applies to the following irregular transactions:
…

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 Official Assignee v Elite Telecomms Ltd

Details

AGLC: Official Assignee v Elite Telecomms Ltd [2023] NZHC 2048
Case: [2023] NZHC 2048
Decision Date: 3 August 2023

CaseChat Overview and Summary

Elite Telecomms Ltd, a company incorporated in the United Kingdom, purchased property at 46 Weka Street in Nelson from Mila Amber in December 2017. The Official Assignee, acting on behalf of the bankruptcy estate of Ms Amber, brought proceedings against Elite seeking to cancel the transaction on the grounds that it was an irregular transaction under the Insolvency Act 2006. The Assignee argued that the sale was intended to prejudice Ms Amber's creditor, the Inland Revenue Department, and that Elite did not act in good faith, did not provide real value for the property, and did not reasonably believe the transaction was valid and would not be cancelled. Elite argued that it was not bound by the Assignee's claims because it acted in good faith, did not suspect Ms Amber would be unable to pay her debts, and provided value for the property. The court found that the transaction was an irregular transaction and should be cancelled. The court found that Ms Amber intended to prejudice her creditor, the IRD, by selling her property to Elite, and that she became insolvent as a result of the sale. The court found that Elite did not act in good faith, did not provide value for the property in the reasonably held belief that the transfer was valid and would not be cancelled, and that a reasonable person in Elite's position would have suspected Ms Amber was unable to pay her due debts. The court ordered that the property be retransferred to the Assignee and that Elite pay the Assignee's costs.

Orders