Official Assignee v McCreath
[2020] NZHC 343
•2 March 2020
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2019-409-106
[2020] NZHC 343
IN THE MATTER OF the Insolvency Act 2006 AND
IN THE MATTER OF
the Bankruptcy of Mark Anthony McCreath
BETWEEN
THE OFFICIAL ASSIGNEE
Applicant
AND
MARK ANTHONY McCREATH
Respondent
Hearing: 20 February 2020 Appearances:
Mr D Dingwall for the Applicant
M A McCreath in person Respondent
Judgment:
2 March 2020
JUDGMENT OF ASSOCIATE JUDGE LESTER
This judgment was delivered by me on 2 March 2020 at 12.30pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar 2 March 2020
THE OFFICIAL ASSIGNEE v McCREATH [2020] NZHC 343 [2 March 2020]
[1] Mr McCreath was bankrupted for the fourth time on 21 March 2016. That bankruptcy along with his prior bankruptcies was initiated by him.
[2] Pursuant to s 290 of the Insolvency Act 2006 (“the Act”), the bankrupt was due for automatic discharge on 21 March 2019. That was overtaken by an objection by the Official Assignee under s 292 of the Act.
[3] Mr McCreath’s examination took place on 20 February 2020 having been previously adjourned at Mr McCreath’s request. The Official Assignee completed a report for the examination which Mr McCreath had reviewed prior to the examination. Mr McCreath did not file any papers for the examination.
The Official Assignee’s report
[4]The following timeline arises from the report.
21 March 2016: Bankruptcy. 7 September 2016:
Date of offence of accessing computer system for dishonest purpose – convicted 14 February 2018.
December 2016:
Tip to the Official Assignee that bankrupt had established business.
17 March 2017:
Date of offence for burglary – convicted 14 February 2018.
November 2017:
Investigation into bankrupt’s alleged trading completed and prosecution commenced.
27 April 2018:
Mr McCreath pleads guilty to the following:
(1)Failing without reasonable excuse to notify the Official Assignee of a change of address and income;
(2)Entering and carrying on, taking part and management and control of a business while an undischarged bankrupt;
(3)One charge of making a false entry in a document as a representative charge under the Act and the Companies Act 1993;
(4)Being a party to carrying on a business with intent to defraud creditors;
(5)Representative charges of obtaining by deception;
25 July 2018: Insolvency defences in relation to credit. Sentenced two years, prohibition and prohibited from being a director (which I will return to later). October 2018 to
January 2019:
Official Assignee alleges that the bankrupt was undertaking a new business using an alias– denied by the bankrupt.
[5] Mr McCreath did not take issue with any of the above, save as indicated. That was not surprising given his guilty pleas to the charges listed above and to the history of convictions produced to the Court.
Legal principles
[6] Mr Dingwall for the Official Assignee accepted the onus was on the Official Assignee to satisfy the Court that it was in the public interest that the bankruptcy, which would otherwise be automatically discharged after three years, should continue for a further period.
[7] The Court has a broad discretion to exercise, having regard to all the circumstances of the case, but in the absence of good reasons, the bankrupt should normally obtain a discharge. The public interest, however, may mean an order of discharge should be refused.1
[8] The circumstances of the particular case, having regard to the guidance provided by the scheme and purpose of the Act, govern the exercise of discretion.2
1 Re Whitelaw HC Hamilton CIV-2004-419-1647, 10 September 2010 at [20].
2 Havenleigh Global Services Ltd v Henderson [2016] NZHC 2969 at [13].
[9] Associate Judge Osborne, as he then was, in Havenleigh Global Services Ltd v Henderson, lists a number of factors relevant to the enquiry which I reduce to the following:3
(i)protecting the public from the risk of injury;
(ii)the interests of creditors;
(iii)the interests of those who might have business dealings with the bankrupt;
(iv)the nature of any offending by the bankrupt;
(v)the general character of the bankrupt.
[10] To some extent the above overlap with the factors that the Official Assignee must report on under s 296(2) of the Act. The report must cover the bankrupt’s affairs, the causes of bankruptcy, the bankrupt’s performance of his duties under the Act, compliance by the bankrupt with any orders of the Court, the bankrupt’s conduct before and after adjudication and any other matters that would assist the Court.4
Discussion
[11] In my opinion, bankruptcy for Mr McCreath is a tool which he utilises to avoid his debts. During his examination Mr McCreath expressed something akin to frustration that the examination was taking place suggesting that it was a waste of time and he said that he did not care about remaining in bankruptcy. One suspects that is the problem, that he does not see bankruptcy as something of significance and does not see himself as affected, that is limited, by bankruptcy.
[12] Mr McCreath was examined on whether after his convictions referred to in the timeline above, he went on to commence another business being the disputed aspect of the timeline. He denied this was the case.
3 Havenleigh Global Services Ltd v Henderson, above n 2.
4 Insolvency Act 2006, s 296(2)(a)-(f).
[13] The evidence relied on by the Official Assignee in that regard was not direct evidence of Mr McCreath being involved in a business. Mr McCreath under examination acknowledged using numerous aliases and that he did so to avoid the impact of his prior bankruptcies. The renewed business activity put to Mr McCreath referred to a “Mark Framer”, a “Mark Savelkoel” or a “Mark Carpenter” seeking to commence a new property maintenance/cleaning business under the name “On2It Property Care”. Mr McCreath denied using these names.
[14] Mr McCreath was taken to the Facebook page of a Ms Savelkoel. Mr McCreath was in a relationship with Ms Savelkoel but in response to a question from me, was unable to say when that relationship came to an end.
[15] Mr McCreath under one of his accepted aliases is listed as a Facebook friend of Ms Savelkoel. There is also listed as a Facebook friend of Ms Savelkoel, a person called “Mark Carpenter”, alleged by the Official Assignee to be an alias of Mr McCreath. Mr Carpenter is said to operate a business called “On2It Property Care”. Mr McCreath denied he was Mark Carpenter.
[16] On Mr McCreath’s statement of position completed at the time of his latest bankruptcy when asked if he was trading as a sole trader, he named as his business “On2It Property Care”.
[17] Mr McCreath could throw no light on how it was someone using his Christian name, essentially the same business name and in particular the style of “On2It”, was a Facebook friend of his partner, but was not him. In short, Mr McCreath’s position seemed to be that that it was all a coincidence. I do not accept this. I do not accept Mr McCreath’s denials and find that he was attempting to set up a business operation even after his convictions for doing so.
[18] I accept the report produced by the Official Assignee says his new business was being set up by Mark Carpenter, Mark Framer or Mark Savelkoel and that Mr McCreath denied using any of those names. At the end of the day Mr McCreath was ready to accept matters put to him which he had already admitted or were matters
of record but became less forthcoming on matters where he knew the Official Assignee held limited records.
[19] While this factor is indicative of Mr McCreath’s disregard for the fact that he is bankrupt, I do not give it undue weight given the contents of the Official Assignee’s internal report, which is produced to the Court. The report says there is little or no evidence that the operation said to be operated by Mr McCreath was deriving much income and there was insufficient income to consider prosecuting Mr McCreath at that time.
[20] I mention one further factor that came up in Mr McCreath’s examination. He was asked if he was in employment and he said he was not and that he was receiving a Work and Income Job Seeker Benefit.
[21] Mr McCreath was sentenced to intensive supervision for the offences I have already referred to. Mr Dingwall put to Mr McCreath two documents which were produced as exhibits. The first being a letter written by a Mr Hoani Wakefield (Managing Director) addressed “To Whom It May Concern” dated 13 February 2020. This was in effect a reference purporting to be from an employer designed to bolster Mr McCreath’s position with the Court. It expressly refers to Mr McCreath being in employment when he was not.
[22] Mr McCreath attempted to explain this away by saying that because he was not being paid he was not being employed. Mr McCreath’s explanation in respect of this document was unconvincing. He later said that Mr Wakefield had committed to pay him $1,000 per week once the cashflow of the business allowed. The short point is, Mr McCreath’s use of the document shows his preparedness to use a false document to advance his own position.
[23] The second document purported to be an offer by him to buy into Mr Wakefield’s business for $100,000. The offer had been signed by Mr Wakefield and on its face, it appears to be a concluded agreement. Mr McCreath said the document had been created to get Mr Wakefield “off his back” as that person had been acting in a manner he considered inappropriate. Mr McCreath does not have the
$100,000 referred to in the document. I need not decide whether or not that explanation is true or not as the document is again an example of Mr Wakefield being prepared to produce a patently false document to advance his own ends. At face value, Mr McCreath’s explanation is an admission by him that he is prepared to produce false documents if it suits him.
[24] The extent of Mr McCreath’s indebtedness in respect of his latest bankruptcy is not great, being $41,267. In his third bankruptcy the amount was considerably higher, nearly $125,000.
[25] In the sentencing notes in respect of the above offences, Judge Neave described Mr McCreath as follows:5
I do not think there is any doubt that he is a menace to the business community.
[Mr McCreath] has an appalling history of dishonesty extending now over some 30 years. The pre-sentence report notes 103 previous convictions.
He was well aware of his obligations and it was a significant falling off from them to undertake these fairly detailed, complicated and sustained acts of dishonesty and fraud involving innocent people…
[26] The offending was described as “cynical”. The business community and the public in general are entitled to protection from Mr McCreath’s practices.
[27] Having regard to Mr McCreath’s performance of his duties during his period of bankruptcy, the fact that this is his fourth bankruptcy, what I found to be his preparedness to continue to try and trade while he was bankrupt, despite convictions for doing so during bankruptcy, and his preparedness to use false documents when it suits him, means it is appropriate that under s 298(1)(e) I refuse an order of discharge and specify the earliest date when the bankrupt may apply for discharge. I order accordingly.
[28] I make that date 25 July 2023, that being the date when the five-year prohibition on being involved in business management expires. The prohibition arises as a result of his recent convictions.
5 R v McCreath [2018] NZDC 11444 at [2], [10] and [11].
[29] I have not overlooked that Mr McCreath said he wanted to pursue some tertiary study but because he was bankrupt he would not qualify for a student loan. I have requested the Official Assignee to investigate whether it is possible for Mr McCreath to obtain a student loan, and Studylink have confirmed a loan is not available during bankruptcy. While I recognise that is a disadvantage to Mr McCreath, his conduct while he was bankrupt and the matters I have outlined, make a discharge from bankruptcy untenable at the present time.
Associate Judge Lester
Solicitors:
Mr D Dingwall, Insolvency and Trustee Services
Copy to:
Mr M A McCreath (Respondent in person)
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