Official Assignee v Harman - [2019] NZHC 101

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-0095

[2019] NZHC 101

UNDER s 252 of the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of Edward Harman

BETWEEN

OFFICIAL ASSIGNEE in the bankruptcy of the property of EDWARD HARMAN Applicant

Defendant

Hearing: On the papers

Counsel:

G Neil for the Official Assignee

J Lethbridge for Grant Robert Graham and Brendon James Gibson, as liquidators of Fairthorne Investments NZ Ltd (In Liquidation) and other companies in liquidation

Judgment:

7 February 2019

JUDGMENT OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 7 February 2019 at 3.30pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors / Counsel:
Meredith Connell, Auckland Lowndes, Auckland

OFFICIAL ASSIGNEE v HARMAN [2019] NZHC 101 [7 February 2019]

Introduction

[1] Under ss 251 and 252 of the Insolvency Act 2006 (the Act), the Official Assignee (the Assignee) may estimate the amount for which a creditor's claim in a bankrupt's estate will be admitted if the claim is for damages, or is for some other reason uncertain (s 251). Alternatively, the Assignee may elect to apply to the Court to determine the amount of the uncertain creditor's claim (s 252).

[2] In this case, the Assignee of the estate of Edward John Harman (Mr Harman) elected to apply to the Court under s 252 for an order determining the amount of the claims made by the liquidators of a group of companies in liquidation of which Mr Harman had previously been a director.

[3] An affidavit was filed in support of the Assignee's application by Anthony Stephen Pullan, a Deputy Assignee who has been responsible since March 2016 for the administration of Mr Harman's bankrupt estate. Affidavits in support of the liquidators' claim have been filed by one of the liquidators, Mr Graham. Mr Pullan provided an affidavit in reply.

[4] There has been no issue over liability; the only issue has been the amount for which the liquidators should be entitled to prove in Mr Harman's estate.

[5] On 8 March 2018 the Court directed the parties to engage and agree on as many issues as possible, and to file a memorandum setting out the areas of agreement and any resulting agreed orders, with each party recording any consequential amendments to the approach taken in their earlier submissions. The parties subsequently engaged in negotiations and agreed on a quantum figure to jointly recommend to the Court for its consideration in fixing the amount of the liquidators' claim. The amount recommended by the Assignee and the liquidators in counsel's joint memorandum (the joint memorandum) was $7,127,278.70. They invited the Court to determine the amount of the claim accordingly.

[6]I now give judgment on the Assignee's application under s 252 of the Act.

Background

[7] Mr Harman was adjudicated bankrupt on 26 February 2009.1 He was discharged from bankruptcy on 26 October 2012, but his discharge does not affect the matters to…

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 Harman

Details

AGLC: Official Assignee v Harman [2019] NZHC 101
Case: [2019] NZHC 101
Decision Date: 7 February 2019

CaseChat Overview and Summary

In the case of Official Assignee v Harman, the Official Assignee, acting on behalf of the bankrupt estate of Edward John Harman, sought to determine the amount of a claim made by the liquidators of several companies in which Mr Harman had previously been a director. The liquidators alleged that Mr Harman breached his duties as a director, resulting in significant financial losses. The primary legal issues were the date of insolvency of the companies, the extent of the financial deterioration, the proportion of the deterioration caused by Mr Harman's breaches, and the appropriate level of culpability and deterrence. After reviewing the evidence and submissions from both sides, the Court determined the insolvency date as 31 March 2007, the extent of financial deterioration as $10,853,548.15, the proportion of the deterioration caused by Mr Harman's breaches as $9,181,826.72, and the level of culpability and deterrence as 70%. Consequently, the Court determined that Mr Harman's responsibility for the net deterioration in the pooled companies' financial positions between 31 March 2007 and the dates for their liquidations would be assessed at $6,427,000.

Orders