Official Assignee v Seko

[2018] NZHC 815

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2016-404-958 [2018] NZHC 815

BETWEEN

THE OFFICIAL ASSIGNEE

Applicant

AND

LOTUFOU SEKO

First Respondent

AND

ARGON CONSTRUCTION LIMITED

Second Respondent

Hearing:	26 April 2018
Appearances:	C T Jones for the Official Assignee No appearance for the Respondents
Judgment:	26 April 2018

ORAL JUDGMENT OF ASSOCIATE JUDGE SMITH

[1]                  The First Respondent, Mr Seko, was adjudicated bankrupt on 11 August 2016. The only creditor was the Accident Compensation Corporation, with a debt of

$21,073.50 and a preferential costs and disbursements claim of $4,161.46.

[2]                  Mr Seko provided his statement of financial affairs on 14 October 2016. The date for his automatic discharge from bankruptcy will accordingly be 14 October 2019.

Official Assignee’s request for contributions from Mr Seko

[3]                  The Official Assignee called on Mr Seko to make contributions towards his debts, on 15 December 2016 (when the Official Assignee required him to make payments of $119 per week, commencing on 29 December 2016), and on 10 January

THE OFFICIAL ASSIGNEE v SEKO [2018] NZHC 815 [26 April 2018]

2017, when (in response to an email from Mr Seko advising that he could not afford that sum) the Official Assignee required him to start making contributions at the rate of $50 per week, commencing on 19 January 2017. The figure of $50 per week had been proposed by Mr Seko himself.

[4]                  The contributions which the Official Assignee required Mr Seko to make were required under s 147 of the Insolvency Act 2006 (the Act). That section provides:

147 Bankrupt may be required to contribute to payment of debts

(1)If required by the Assignee, the bankrupt must pay an amount or periodic amounts during the bankruptcy as a contribution towards payment of the bankrupt’s debts.

(2)The Assignee may impose conditions in respect of the payments.

(3)Before the Assignee may require the bankrupt to make the payment or payments, the Assignee must—

(a)   have regard to all the circumstances of the bankruptcy and the bankrupt’s conduct, earning power, responsibilities, and prospects; and

(b)   make reasonable allowance for the maintenance of the bankrupt and his or her relatives and dependants.

(4)The court may, on the application of the Assignee, order the bankrupt to pay the amount or amounts required by the Assignee.

(5)The court may, on the application of the Assignee, the bankrupt, or any creditor,—

(a)  vary, suspend, or cancel the bankrupt’s obligations to make the payments under this section:

(b)  vary, suspend, or discharge any order made under subsection (4):

(c)  remit any arrears owing by the bankrupt.

Contributions by Mr Seko to date

[5]                  Mr Seko paid $50 on 7 February 2017, and in the period February to June 2017 he made most of the expected payments. But from about July 2017 his payments became sporadic. A schedule of arrears produced by Mr Viljoen, a Deputy Assignee in the Auckland office of the Insolvency and Trustee Service, noted that (as at the date of his affidavit – 28 March 2018) the last payment was made by Mr Seko on 18 January 2018. The arrears at the date of Mr Viljoen’s affidavit stood at $1,750.

[6]                  This morning Mr Jones has told me that a further payment of $50 was made by Mr Seko on 18 April 2018. The arrears as at today’s date stand at $1,900.

The Application

[7]                  The Official Assignee now applies under s 147(4) of the Act for an order that Mr Seko pay the amount or amounts the Official Assignee has required, including the arrears. An application is also made under s 106 of the Act requiring the Second Respondent, who employs Mr Seko as a carpenter, to pay the sum of $50 per week to the Official Assignee on behalf of Mr Seko, as a first charge on any monies that are due or become due or payable by it to Mr Seko.

[8]Section 106 of the Act provides:

106 Court may order that money due to bankrupt is assigned to Assignee

(1)The court may, on the application of the Assignee, order that any money due to the bankrupt, or any money to become due or payable to the bankrupt, is assigned or charged to, or in favour of, the Assignee.

(2)The assignment or charge is a discharge to the person who pays the Assignee.

[9]The Official Assignee seeks the following specific orders:

(a)That the First Respondent pay $50 per week (or such lesser amount as the Official Assignee may require from time to time) to the Official Assignee as a contribution towards his debts from the date of the first payment ordered by the Court until he is discharged from bankruptcy;

(b)That the First Respondent pay an amount equal to the shortfall in payments which should have been made between 19 January 2017 (at the rate of $50 per week) until the date of the first payment ordered by the Court (Arrears), together with any costs awarded on this application (Costs);

(c)That the Second Respondent pay $50 per week (or such lesser amount as the Official Assignee may require from time to time) to the Official Assignee on behalf of the First Respondent, as a first charge on any monies that are due or become due or payable by it to the First Respondent, from the date of first payment ordered by the Court until such time as:

(i)the First Respondent has been discharged from bankruptcy; and

(ii)the Arrears and Costs have been paid to the Official Assignee by continued payments of $50 per week;

(d)That the First Respondent pay the costs of this application.

No steps taken by the Respondents

[10]              Mr Jones tendered a copy of an affidavit of service showing that Mr Seko was served with the application and supporting affidavit on 14 April 2018, and that the Second Respondent was served on 10 April 2018. Neither respondent has filed a notice of opposition or elected to appear today.

Discussion and conclusions

[11]              Section 147 was recently considered by Associate Judge Osborne in Official Assignee v van der Walt.1 His Honour referred to the judgment of Associate Judge Matthews in Official Assignee v van Heerden,2 where the Associate Judge identified the relevant considerations on an application under s 147(4) of the Act as follows:

(a)the fundamental consideration of the Court is whether the bankrupt will be able to meet the contributions assessed by the Assignee;

(b)the bankrupt is not to be emotionally and financially crippled by the contributions ordered;

(c)the contributions should strike a reasonable balance between the public interest in enabling a person, after surrendering all of their required assets, to start again with a clean slate, and the private interests of the creditors and the bankrupt estate in receiving some payment when the bankrupt is capable of achieving high earnings.

[12]              In van der Walt, Associate Judge Osborne added a further consideration, namely that regard should be had to the bankrupt’s occupation and station in life.3

1      Official Assignee v van der Walt [2017] NZHC 1664.

2      Official Assignee v van Heerden [2016] NZHC 360 at [7].

3      Official Assignee v van der Walt, above n 1, at [9].

[13]              In this case, I am satisfied on the evidence before me that Mr Seko will be able to meet the $50 contribution assessed by the Assignee. That sum was his own figure, and he has put nothing to the Official Assignee or to the Court to suggest that he is not able to pay it. Nor is there anything before the Court to suggest that making an order for payments at the rate of $50 per week commencing from the date of the next payment Mr Seko will receive from the Second Respondent, would emotionally or financially cripple him. I note in that regard that Mr Seko is said to have no dependants. I am also satisfied that the proposed order for payment at the rate of $50 per week strikes a reasonable balance between the public interest and enabling a person, after surrendering all of their required assets, to start again with a clean slate.

[14]              I conclude, then, that the order sought at paragraph 1(a) of the application is appropriate. I make an order under s 147(4) that Mr Seko is to make weekly payments at the rate of $50 until the date of his discharge from bankruptcy, with the first payment being made on the first date in May 2018 on which he receives a payment of wages from the Second Respondent. I reserve leave to the Official Assignee to apply by memorandum for any variation of that order which may be necessary having regard to the Second Respondent’s ability to arrange the payment direct to the Official Assignee on that first May 2018 pay date.

[15]              Turning to the arrears, which currently stand at $1,900, I am not prepared to make an order for the payment of the arrears in a lump sum. It appears that Mr Seko’s circumstances remain modest, and there would be little or no prospect of a sum in the order of $1,900 being paid immediately by him. Nor do I think that an order for periodic payment of the arrears should extend beyond the date of Mr Seko’s discharge in bankruptcy, presently scheduled for 14 October 2019. I think the appropriate order is to direct that Mr Seko pay an additional weekly sum, which will be sufficient to clear the arrears by 14 October 2019.

[16]              By my reckoning, there is a period of 76 weeks between the present date and 14 October 2019. I accordingly order that Mr Seko is to pay the $1,900 in arrears by weekly payments of an additional $25, commencing on the first pay date from the Second Respondent in May 2018. If and to the extent that the full $1,900 in arrears

has not been fully paid by 14 October 2019, any balance then remaining due is to be paid on or before that date.

[17]              The next part of the application is the application under s 106 of the Act, directing the Second Respondent to pay the amounts ordered by the Court direct to the Official Assignee as a charge on the wages payable by it to Mr Seko. Again, I am satisfied that the order sought is appropriate. I order that the Second Respondent is to pay the sums of $50 per week and $25 per week referred to above direct to the Official Assignee, as a first charge on monies that are now or will from the first pay date in May 2018 become due and payable by the Second Respondent to Mr Seko.

[18]              The Official Assignee did ask for an order for costs on the present application, but in view of the uncertainty over the effect a costs order might have on Mr Seko, Mr Jones sensibly abandoned the application for the costs order at today’s hearing.

Associate Judge Smith

POSTSCRIPT

The original of the affidavit of service referred to in paragraph [10] of this judgment has now been located. It was filed on 24 April 2018.