Official Assignee v Trustees Executors Ltd - [2014] NZHC 345

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2013-485-450 [2014] NZHC 345

UNDER the Declaratory Judgments Act 1908, the
Insolvency Act 2006 and KiwiSaver
Act 2006

IN THE MATTER OF a proposed exercise of power under
Rule 10 of Schedule 1 of the KiwiSaver
Act 2006

BETWEEN THE OFFICIAL ASSIGNEE Plaintiff

ANDTRUSTEES EXECUTORS LIMITED Defendant

Hearing: 24-25 February 2014

Counsel: M Andrews, R D Garden and G E Slevin for Plaintiff
C M Stevens and N D Chapman for Defendant
J L Marshall QC as Amicus Curiae

Judgment: 21 March 2014

JUDGMENT OF RONALD YOUNG J

(Re-released pursuant to r 11.10 High Court Rules)

Introduction

[1] These proceedings raise the following question: can the Official Assignee (“Assignee”) use a bankrupt’s KiwiSaver account to help pay the bankrupt’s creditors?

[2] The Assignee seeks 11 declarations to authorise the use of a bankrupt’s KiwiSaver account to help pay the bankrupt’s creditors. The Assignee submits that the declarations would reflect a proper analysis of the Insolvency Act 2006 and the
KiwiSaver Act 2006.

OFFICIAL ASSIGNEE v TRUSTEES EXECUTORS [2014] NZHC 345 [21 March 2014]

[3] Trustees Executors Limited, the trustees for the KiwiSaver accounts of the two bankrupts immediately affected by these proceedings, and the amicus on behalf of the two bankrupts, all submit that none of the declarations should be made. They submit that a proper reconciliation of the KiwiSaver Act 2006 and the Insolvency Act 2006 means the Assignee cannot access a bankrupt’s KiwiSaver account for any purpose.

[4] All parties agree, however, that the answer to the question I have posed raises three questions. The answer to these questions, they say, will in turn enable me to decide which, if any, of the 11 declarations sought by the Assignee should be made.

The issues for determination

[5] The three questions (as framed by the Assignee) are:

(a) are the bankrupts’ KiwiSaver interests “property” for the purpose of the Insolvency Act 2006? If yes;

(b) on insolvency, do the KiwiSaver interests of a bankrupt vest in the

Assignee? If yes;

(c) can the Assignee access the bankrupts’ KiwiSaver interests under the early withdrawal provisions of the KiwiSaver Act 2006, in particular the “significant financial hardship” provision?

Background facts

[6] These issues arose when the Assignee requested Trustees Executors Superannuation Limited (the defendant’s predecessor) to release the funds in the KiwiSaver accounts of two bankrupts (Mr T and Mr H) to the Assignee pursuant to
the hardship provisions of the KiwiSaver Act 2006.1

1 KiwiSaver Act 2006, sch 1, r 10.

[7] Trustees Executors refused to release the funds; they said that the bankrupts’ KiwiSaver interests were not property. The KiwiSaver interests of a bankrupt therefore did not vest in the Assignee on bankruptcy and, in any event, the significant financial hardship provision in the KiwiSaver Rules would not permit early release of the funds.

[8] Mr T has been a member of a KiwiSaver scheme since 2007. He was adjudicated bankrupt in June 2010. His proofs of debt were…

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 Trustees Executors Ltd

Details

AGLC: Official Assignee v Trustees Executors Ltd [2014] NZHC 345
Case: [2014] NZHC 345
Decision Date: 21 March 2014

CaseChat Overview and Summary

Official Assignee v Trustees Executors Ltd was a case before the New Zealand High Court, where the Official Assignee sought to use bankrupts’ KiwiSaver accounts to help pay their creditors. The Assignee sought 11 declarations to authorise the use of the bankrupts’ KiwiSaver accounts. Trustees Executors Limited, the trustees for the KiwiSaver accounts of the two bankrupts, and the amicus on behalf of the two bankrupts, submitted that none of the declarations should be made as a proper reconciliation of the KiwiSaver Act 2006 and the Insolvency Act 2006 meant the Assignee could not access a bankrupt’s KiwiSaver account for any purpose. The court had to decide three questions: whether the bankrupts’ KiwiSaver interests were “property” for the purpose of the Insolvency Act 2006; on insolvency, whether the KiwiSaver interests of a bankrupt vested in the Assignee; and whether the Assignee could access the bankrupts’ KiwiSaver interests under the early withdrawal provisions of the KiwiSaver Act 2006. The court found that a bankrupt’s interest in KiwiSaver was property for the purposes of the Insolvency Act 2006, and that a KiwiSaver interest was not a mere expectancy. The court also found that a KiwiSaver interest accumulated during bankruptcy was “property” for the purpose of s 102 of the Insolvency Act 2006. Finally, the court found that ss 101 and 102 of the Insolvency Act 2006 applied to a bankrupt’s KiwiSaver account, and that the Assignee could exercise any rights over property of the bankrupts that the bankrupts could have exercised. The court refused to make declarations (g), (h), (i) and (j), which related to the significant financial hardship provisions. The court held that the value of a KiwiSaver account, accumulated up to and including the period of bankruptcy, vests in the Assignee. The Assignee will need to apply to the trustee for early release of the KiwiSaver funds if the Assignee considers that after bankruptcy the member’s significant financial hardship will be or is likely to be alleviated by such a payment.

Orders