Official Assignee v Matete - [2014] NZHC 1685

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-955 [2014] NZHC 1685

BETWEEN
OFFICIAL ASSIGNEE in the bankruptcy

of the property of Chris Heta Matete
Applicant

AND

CHRIS HETA MATETE First Respondent

ROBYN MARGARET MATETE Second Respondent

Hearing: 16 July 2014

Appearances:

G Caro for Applicant
A W Johnson and M Beattie for Respondent

Judgment:

18 July 2014

JUDGMENT OF LANG J

[on application for directions under s 225 of the Insolvency Act 2006]

This judgment was delivered by me on 18 July 2014 at 2.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

OFFICIAL ASSIGNEE v MATETE [2014] NZHC 1685 [18 July 2014]

[1] The sole issue in this proceeding is whether a redundancy payment received by a bankrupt during the term of the bankruptcy vests in the Official Assignee and is thereby available for distribution to creditors.

Background

[2] Mr Matete was adjudicated bankrupt on 24 June 2011.1 At the time of his adjudication, he was employed by a major airline in its Technical Operations division. Mr Matete’s position was subsequently disestablished, and he ceased to be employed by the airline as from 28 June 2013. On that date he received the net sum of $91,760.86, comprising a redundancy payment of $66,146.42 and final remuneration in the sum of $25,614.44.

[3] The Official Assignee initially made a claim in respect of the whole of the payment that Mr Matete received. Subsequently, however, the Official Assignee accepted that Mr Matete’s wife should receive a sum equivalent to one-half of the payment. The Official Assignee made that decision in exercise of his discretion under s 163 of the Insolvency Act 2006 (“the Act”). This section permits the Assignee to make an allowance out of the bankrupt’s property to any relative or dependant of the bankrupt for the support of any such person.

[4] During the hearing, counsel for Mr Matete accepted that the remunerative component of the payment vested in the Official Assignee. The only remaining issue is therefore whether the balance of $33,073.21 also passed to the Assignee. The Official Assignee seeks a direction under s 225 of the Act that he is entitled to proceed on the basis that it did.

The legislative scheme

[5] Section 102(1) of the Act provides as follows:

102 Status of property acquired during bankruptcy

1 Mr Matete was discharged from bankruptcy on 24 June 2014, but that fact does not affect the issue decided in this proceeding.

(1) Between the commencement of bankruptcy and discharge of the bankrupt,—

(a) all property (whether in or outside New Zealand) that the bankrupt acquires or that passes to the bankrupt vests in the Assignee without the Assignee having to intervene or take any other step in relation to the property, and any rights of the bankrupt in the property are extinguished; and

(b) the powers that the bankrupt could have exercised in, over, or in respect of that property for the bankrupt's own benefit vest in the Assignee.

…

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.

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Details

Case: [2014] NZHC 1685
Decision Date: 18 July 2014

CaseChat Overview and Summary

In Official Assignee v Matete, the High Court of New Zealand addressed the issue of whether a redundancy payment received by a bankrupt during the term of the bankruptcy vests in the Official Assignee, making it available for distribution to creditors. The primary legal issue was whether the redundancy payment, which was received by Mr Matete after his employment was disestablished, should be considered property that vests in the Official Assignee under the Insolvency Act 2006.

The court examined the statutory provisions under the Insolvency Act 2006, which generally provide that all property acquired by a bankrupt during the bankruptcy term vests in the Official Assignee. However, the Act also contains a common law exception for certain personal causes of action that do not pass to the Official Assignee. Mr Matete argued that the redundancy payment fell within this exception as it was meant to compensate him for personal inconvenience and hurt. The court considered the source of Mr Matete's right to receive the payment, which was based on a collective employment agreement rather than a personal injury claim. It concluded that the redundancy payment was a contractual right to receive a specified sum upon redundancy, which constituted property that vests in the Official Assignee.

The court found that the redundancy payment did not fall within the common law exception, as it was not a personal injury compensation but rather a contractual right arising from Mr Matete's employment terms. The policy considerations underlying the exception, which aim to protect creditors' interests in the bankrupt's income and assets, supported the conclusion that the payment should vest in the Official Assignee. The court therefore directed that the redundancy payment was available for distribution to Mr Matete's creditors.

Orders