Official Assignee v Santipongchai (aka Harrison)
[2017] NZHC 2162
•7 September 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2013-404-001457 [2017] NZHC 2162
BETWEEN OFFICIAL ASSIGNEE in the bankruptcy
of CHAIRAT SANTIPONGCHAI (AKA HENRY HARRISON)
Applicant
AND
CHAIRAT SANTIPONGCHAI (AKA HENRY HARRISON)
Respondent
Hearing: 4 and 5 September 2017 Appearances:
G Neil/C Juneja for the Applicant
Mr Santipongchai in personJudgment:
7 September 2017
JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN
This judgment was delivered by me on
07.09.17 at 3:30pm, pursuant to
Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
OFFICIAL ASSIGNEE in the bankruptcy of CHAIRAT SANTIPONGCHAI (AKA HENRY HARRISON) v
CHAIRAT SANTIPONGCHAI (AKA HENRY HARRISON) [2017] NZHC 2162 [7 September 2017]
[1] Mr Santipongchai was adjudicated bankrupt on the petition of the Commissioner of Inland Revenue (the Commissioner) on 15 August 2013. Mr Santipongchai’s statement of affairs was received by the Official Assignee (Assignee) on 25 November 2013 and his three year term of bankruptcy began on that date.
[2] Mr Santipongchai was eligible for automatic discharge from bankruptcy on 25
November 2016. On 14 November 2016 the Assignee objected to Mr Santipongchai’s automatic discharge. Accordingly Mr Santipongchai remains undischarged from bankruptcy.
Public examination
[3] Having objected to Mr Santipongchai’s automatic discharge, the Official
Assignee was required to call him for public examination as soon as practicable.
[4] The Assignee has filed and served a report in advance of today’s hearing, reporting on:
(a) Mr Santipongchai’s affairs;
(b) The causes of the bankruptcy;
(c) Mr Santipongchai’s performance of his duties under the Insolvency Act
2006 (the Act);
(d) The manner in which Mr Santipongchai has obeyed orders of the court;
(e) Mr Santipongchai’s conduct before and after adjudication;
(f) Any other matter that would assist the court in making a decision as to
Mr Santipongchai’s discharge.
[5] The Assignee served the report upon Mr Santipongchai on 21 August 2017. An emailed copy has been sent to every creditor in the bankruptcy. No creditors have objected to Mr Santipongchai’s discharge from bankruptcy.
The Assignee’s position
[6] The Assignee considers Mr Santipongchai:
(a)To have engaged in pre-adjudication and post-adjudication conduct that warrants severe censure;
(b)Poses a significant risk to the community if he was to be discharged from bankruptcy and allowed to freely engage with the public and the business community in an unsupervised capacity.
[7] The Assignee seeks an extension of the term of bankruptcy for a period of at least three years and says this is appropriate having regard to Mr Santipongchai’s:
(a) Consistent failure to abide by his obligations as a bankrupt;
(b) Evasive and uncooperative manner in which he has dealt with the
Assignee;
(c) Commercial impropriety;
(d)Dishonest and misleading manner in which he has dealt with members of the public, lenders, and the general business community with whom he has engaged;
(e)Having caused loss to those who dealt with him both pre-bankruptcy and post-bankruptcy;
(f) Having caused loss to the public including Inland Revenue;
(g)Exposing the public and the business community to possible financial harm if he was to be discharged from bankruptcy and released from the Assignee’s supervision and associated restrictions.
Hearing considerations and outcome
[8] Section 298 of the Act sets out the court’s powers following the public examination. Available options include:
(a) An immediate discharge of bankruptcy; or
(b)A discharge on conditions which may include that Mr Santipongchai consents to any judgment or order for the payment of any sum of money; or
(c)Discharge from bankruptcy but for that order to be suspended for a period; or
(d) A discharge, with or without conditions, at a specified future date; or
(e)A refusal to order discharge and when the court may specify the earliest day thereafter that the bankrupt may again apply for a discharge.
[9] In these hearings, when the Assignee opposes an immediate discharge, the onus is on the Assignee to satisfy the court it is in the public interest that Mr Santipongchai’s bankruptcy should continue for a further period. Normally a bankrupt will obtain a discharge and in the absence of good reasons, that will occur. However, issues of public interest may compel the court to refuse or delay the issue of an order for discharge. Courts routinely consider the interests of the bankrupt, of creditors, the public interest, commercial morality, and frequently, the conduct of the bankrupt.
[10] It is a view of this court that the proper approach is to focus upon protecting the public and avoiding the risk of further conduct to the detriment of the community.1
[11] The focus of the Assignee’s concerns is stated to be the protection of the community and holding Mr Santipongchai to account for his misconduct. The Assignee says the administration of Mr Santipongchai’s bankruptcy has been hindered by a lack of cooperation and failure to disclose accurate and full information in respect of property, conduct and dealings. The Assignee says he was misled as to Mr
1 Bryers v Official Assignee [2015] NZHC 384, at [16].
Santipongchai’s affairs at the outset of his bankruptcy, predominantly by the statement of affairs he then completed, and by subsequent representations in respect of income, employment status and current activities.
[12] The Assignee alleges Mr Santipongchai:
(a) Failed to disclose his involvement in an incorporated company;
(b)Actively concealed his property from the Assignee including various funds in bank accounts;
(c) Dishonestly obtained credit;
(d) Travelled overseas without first obtaining the Assignee’s consent; and
(e)Failed to advise the Assignee he had changed his name and obtained a new passport.
[13] As to the latter point it is noted Mr Santipongchai changed his name to Henry Harrison in 2011 and this prevented the Assignee obtaining details of Mr Santipongchai’s assets through independent enquiries made of Customs, Inland Revenue Department, and mainstream banks.
[14] Fourteen criminal charges have been laid in the District Court against Mr Santipongchai in consequence of his alleged post-adjudication conduct and breaches of the Act. These include:
(a) Taking part in the management or control of a business (ss 149 and
436(1)(b));
(b) Eight charges of obtaining credit as an undischarged bankrupt over
$1,000 (s 433A);
(c) Four charges of concealing property from the Assignee to the value of
$500 or more (s 420(2)(a)); and
(d) Leaving New Zealand temporarily without having first obtained the
Assignee’s consent (s 433(1)(f)).
[15] The Assignee reports that creditor claims received in Mr Santipongchai’s bankruptcy estate totalled $512,782.10; that no assets were realised and there were no recoveries. The Assignee says Mr Santipongchai continued to earn income during his bankruptcy which he has not declared or disclosed for the benefit of his creditors.
[16] The Assignee places considerable focus upon claims of pre-adjudication conduct, in particular by reference to Mr Santipongchai’s commercial dealings as a real estate salesperson. On 28 January 2015 his licence was cancelled by the Real Estate Agents Disciplinary Tribunal (READT). The Assignee says Mr Santipongchai was found guilty of three charges of disgraceful conduct for misleading clients into paying him money which he misapplied for his own benefit. He was also charged with practising as a real estate salesperson without a licence. When found guilty on three of those four charges he offered for his reasons the fact that he had been bankrupted due to being unable to satisfy a debt because of the Christchurch earthquake. He was ordered to pay compensation but an amount of $20,499.00 remains unpaid of that.
[17] The Assignee claims Mr Santipongchai retains a “cavalier attitude”, continues with “dishonest dealings”, and still shows “flagrant disregard of the consequences”. His pre-adjudication behaviour included failing to pay GST for various periods between November 2007 and May 2012 while self employed as a real estate agent.
[18] The Assignee claims there is also significant evidence of post-adjudication conduct to justify an extension of Mr Santipongchai’s bankruptcy.
[19] In his statement of affairs Mr Santipongchai stated that he had not been employed for eight months and did not intend to gain employment in the next 12 months. Despite this it is said Mr Santipongchai entered into and took over control of a dwelling construction company called M D Global Developments Ltd (M D Global); he failed to disclose his involvement in that business and income earned from it. It is submitted by the Assignee that even if Mr Santipongchai did not take part in the
management or control of M D Global he was at the very least “employed”. His son was at the time sole director and shareholder of M D Global and s 149 of the Act prohibits an undishcarged bankrupt, without the Assignee’s consent, being directly or indirectly employed by a company that is owned, managed or controlled by a relative.
[20] The Assignee says Mr Santipongchai caused loss to several members of the public who contracted for work to be done that was not completed, work for which deposits were paid but which were not returned despite requests.
[21] The Assignee says Mr Santipongchai failed to disclose the existence of bank accounts he held in the name of Henry Harrison at the ASB and BNZ banks, post- adjudication. Enquiries of the banks disclosed they had no knowledge of his bankruptcy. From the ANZ he obtained a credit card with a limit of $10,000 and thereby breached his obligation not to obtain credit over $1,000. The ANZ bank advised they have suffered the loss due to Mr Santipongchai’s credit card payment defaults.
[22] It is claimed he took out personal loans from members of the public post- adjudication, without revealing he was a bankrupt and that he has failed to repay those.
[23] The Assignee says Mr Santipongchai failed to advise he had a current passport in the name of Henry Harrison, this having issued on 18 April 2011. Further that he changed his name to Henry Harrison without informing the Assignee that he had done
so, and following that name change, applied to Inland Revenue Department for a new
IRD number.
[24] Mr Santipongchai travelled overseas to Thailand on three occasions during his bankruptcy using the passport in the name of Henry Harrison. It is not known how
the trips were funded.
[25] Mr Santipongchai obtained a job as a sales director at Conrad Properties Limited on 14 December 2015 but did not inform the Assignee of this nor of the income that he was deriving from any employment. When the employer learned that Mr Santipongchai was bankrupt, it did not terminate his employment.
[26] On 2 February 2017 Mr Santipongchai was charged with 14 offences under the Act – largely in connection with those matters already referred to herein. Mr Santipongchai has pleaded not guilty to these. A hearing of those is yet to be scheduled.
The public examination
[27] Mr Santipongchai was self represented. He filed an opposition to the application opposing his automatic discharge. He submitted a lengthy memorandum when making his closing submissions. Those will be referred to following an examination of the Assignee’s case.
[28] The examination took one and a half days. Its purpose was to look at, inter alia, the Assignee’s reasons for opposing procedural discharge. Routinely this invites the court to examine aspects of pre-adjudication conduct, and as well and more routinely post-adjudication conduct.
Pre-adjudication conduct
[29] Evidence of pre-adjudication conduct focused primarily upon Mr Santipongchai’s practices as a real estate agent in Christchurch and on the remaining debts still owing to his former real estate clients. To READT he expressed remorse for his conduct and said that he intended to “turn to religion”, undertake “religious missionary work” and “straighten himself out” going forward.
[30] The Assignee submits that READT’s findings and penalty did not deter Mr
Santipongchai from engaging in similar conduct post-adjudication.
[31] Mr Santipongchai completed his mandatory statement of affairs on
11 November 2013.
[32] Evidence of the Assignee’s concerns with that statement is extensive. It included Mr Santipongchai failing to disclose by his statement of affairs:
(a) His legal change of name from Chairat Santipongchai to Henry
Harrison in 2011.
(b) That he had obtained a passport issued in the name of Henry Harrison.
(c) Him having made regular support payments to his three sons.
(d)The gifting of property within the previous two years whereby he transferred registered ownership of two motor vehicles to his sons within days of the bankruptcy notice being served on him.
(e) That he spent approximately $20 per week on lotto.
(f) That he held bank accounts in his name.
(g)Details of all of his assets including his part ownership with his wife in household furniture.
(h) His use of a motor vehicle owned by his wife.
(i)His directorship of a limited liability company within two years prior to his adjudication.
[33] The other concerns of the Assignee are about claims of breaches of s 145 of the Act by which Mr Santipongchai was bound to notify the Assignee of changes in his personal information. In that regard the following paragraphs contain relevant details.
[34] Mr Santipongchai and his wife, and it appears, also his sons, made a number of changes of address of residence which were not notified.
[35] He was engaged in employment, first with Ray White Real Estate in a sales agent consultancy position.
[36] He was employed and indeed controlled the affairs of M D Global which was owned by his son.
[37] He was employed as a sales director of a company called Conrad Property
Group in December 2015.
[38] He received undeclared income from home stay guests because his bank accounts disclose regular payments of $1,200 per month for one year from that source.
[39] That income was received by his wife and sons and was then paid into an account within his control.
[40] Mr Santipongchai loaned monies from a Mr Chan and a Mr Orrell and borrowed from the ANZ Bank when he did not disclose his bankruptcy to those entities.
[41] He received a gift of $5,000 from a friend for the purposes of funding a wedding but which was not applied for that purpose.
[42] He benefitted from income from the operation in his wife’s name of a restaurant and it was he who completed the financial application in the name of that restaurant.
[43] Mr Santipongchai arranged credit facilities exceeding $1,000 without disclosing his bankruptcy in amounts owing to:
$
• Mr Chan for approximately 70,000.00
• Mr Orrell (in connection with Mr Santipongchai’s operation of a business nominally owned and operated by his son, following his son’s departure from New
Zealand) 3,500.00
• OneCard Visa 2,546.78
• GEN Visa 3,181.73 • ANZ Visa
11,523.44
• ANZ Personal Loan (obtained on 19/2/2016)
25,250.00
[44] There appears to be no resource from which these can be repaid.
[45] There is clear evidence available that he assisted his son in the establishment of a building management business owned by M D Global. Shortly after the company was established his son departed New Zealand and Mr Santipongchai assumed responsibility for the control of the business.
[46] This control included access to the company’s bank account and the conduct and management of the business including receipts of deposits and payment of financial commitments.
[47] Mr Santipongchai borrowed funds from associates and/or via credit facilities and promising to pay from funds he expected would be available from his father’s estate in Thailand. It appears there was no issue with claims his father’s estate contained significant value. It provided Mr Santipongchai with claims, perhaps honestly believed by him, that his expected share of his late father’s estate would enable commitments for repayment of debt. However and lately he learned that his father’s entire estate went to his mother who is now 96 years of age.
[48] The restrictions that bankruptcy places upon an ability to leave New Zealand are well understood. Despite that understanding Mr Santipongchai clearly ignored his post-adjudication obligations. He left New Zealand on three occasions without the consent of the Assignee. He acknowledges doing so. Those trips were to Thailand – he says in connection with issues arising affecting his father’s estate. While he and his wife have now separated and she has returned to Thailand, one of his sons remains with him while the others have also returned to Thailand.
[49] Mr Santipongchai appears firm that he wishes to retain his right of residence in New Zealand.
[50] It is clear that regardless of which identity he uses for future travel purposes, his ability to leave New Zealand would henceforth be restrained.
Mr Santipongchai’s position
[51] Mr Santipongchai was examined for a day and a half. He appeared freely to answer all questions and did not deny his connection to credit facilities raised, bank accounts held, his assistance provided to the business of M D Global owned by his son, of his loans from associates or his creation of credit facilities. His position is that there were marriage difficulties. He said his focus was upon assisting his son’s business establishment.
[52] Mr Santipongchai says he wishes to develop his Christian community commitments. He claims he has acknowledged full details of that income he received but having not declared it. He admits transferring two vehicles owned by he and his wife after being served with the bankruptcy notice. He does not dispute that his bankruptcy debts exceed $500,000. He has continued his real estate interest because that is where his experience lies. Shortly after his son’s business M D Global was established, his son returned to Thailand and Mr Santipongchai has effectively controlled that business since – albeit without any reward to him, and despite the debts that business has since incurred. Those debts appear to be relatively modest.
[53] By his submissions, Mr Santipongchai acknowledges:
The gravity, magnitude and seriousness of what I have done and I am remorseful and I have learnt my lesson. I will never go into debt again. Since being on WINZ it made me realize that we can all do things through Christ to strengthen us, this verse teaches us that no matter how little money we have we can get through the with Christ. Some days my wallet is empty but somehow, I do not go hungry.
[54] Mr Santipongchai says he is too old and does not intend to repeat his mistakes. He claims he did not intentionally set out to cheat those from whom he borrowed money because he truly believed he could repay those from his inheritance but that those plans came to an end with the revelation of his father’s will.
[55] Those persons who dealt with M D Global and who incurred losses were, he said, aware it was his son’s business and that Mr Santipongchai was assisting in that business – for which he says he received no payment.
[56] Mr Santipongchai says that he has suffered in the last few years, and has a sense of guilt, and he acknowledges a loss of reputation and credibility and is aware of the disappointment and shame he has brought on himself and his family. His hope is to restore his marriage with his wife, who returned to Thailand in March 2017. He wants to be with his mother now 96 years old, in her last years and wants to save to earn a ticket to return to Thailand as soon as he can. He promises to repay the debts he has incurred.
[57] He says if still bankrupted he cannot gain employment and cannot support himself in New Zealand and does not wish to be a burden on the social welfare system. He remains adamant however that he wishes to retain his New Zealand citizenship.
Conclusions
[58] There is sufficient, in the evidence, to require the bankruptcy to continue beyond the standard three year term. His practises as a real estate agent fell far short of acceptable conduct and standards.
[59] The Official Assignee encourages the court to consider issues arising pre- adjudication ought also to persuade the court in its usual consideration of outcome, by reference to post-adjudication conduct.
[60] In all the circumstances, the court considers that assertion to bear weight in its decision. Persons dealing with Mr Santipongchai’s wife, through her restaurant business, and his sons have confided in and entrusted him to respect his lawful commitments when he has, for himself or others, borrowed funds and conducted the business affairs. Too often, debt was incurred and Mr Santipongchai’s claims of honesty and good faith have fallen far short of his commitment.
[61] This is not a proper case to permit Mr Santipongchai’s automatic discharge from bankruptcy due on 25 November 2016.
[62] Mr Santipongchai has not been honest and forthcoming in his financial affairs, his residency, travel restrictions and his obligations for full disclosure to the Assignee.
[63] In regard to those and to issues raised on behalf of the Assignee in its opposition to Mr Santipongchai’s automatic discharge, he now also faces criminal prosecution.
[64] For present purposes, and noting that Mr Santipongchai’s automatic discharge
is due on 25 November 2016, the court considers there is very good reason to extend the date of the automatic discharge.
[65] Mr Santipongchai wishes to remain a resident of New Zealand. That aspiration comes with obligations, and will prevent his departure from New Zealand meanwhile. His conduct has been reckless. His commercial dealings have lacked integrity, accountability and transparency. He has not complied with his obligations as a bankrupt.
[66] In the Court’s view and while most of Mr Santipongchai’s short failings relate to his efforts in maintaining his family’s wellbeing, it is clear that Mr Santipongchai’s full discharge ought to be delayed and should not take place before 25 November
2019.
Judgment
[67] The Court directs pursuant to s 298(1)(d) of the Act, that Mr Santipongchai will not be discharged from bankruptcy until 25 November 2019. Until then, Mr Santipongchai shall remain a bankrupt.
[68] Costs are reserved for consideration upon application.
Associate Judge Christiansen
0