Panther v Panther

[2016] NZHC 809

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV 2016-470-54 [2016] NZHC 809

BETWEEN

DAVID MICHAEL ROSS PANTHER

Applicant

AND

JUDY-ANNE GLORY PANTHER Respondent

Hearing:	27 April 2016
Counsel:	C Murphy for Applicant No appearance by, or on behalf of Respondent
Judgment:	27 April 2016

(ORAL) JUDGMENT OF HEATH J

Solicitors:

MacKenzie Elvin, Tauranga

PANTHER v PANTHER [2016] NZHC 809 [27 April 2016]

The application

[1]      Mr Panther applies under s 119(1)(b) of the Insolvency Act 2006 (the Act) for an order vesting a one half share in each of two properties in him.  That share was previously held by his former wife, who has since been adjudged bankrupt.   Her interest passed to the Official Assignee.   Subsequently the Official Assignee disclaimed that proprietary interest as “onerous property”.   That is the context in which the present application is brought.

Background

[2]      Mr and Ms Panther were married on 10 August 1985.  During their marriage they purchased, in September 2005 and June 2010 respectively, two properties in Tauranga.  One is located in Brodie Place, Bethlehem, and the other in First Avenue, Tauranga.

[3]      Mr and Ms Panther separated in about April 2012.  While negotiations were underway in respect of relationship property, Ms Panther adjudged herself bankrupt. The bankruptcy commenced on 20 September 2013.  She remains undischarged.  I understand that no relationship property proceedings have yet been commenced.

[4]      After the Official Assignee had given consideration to the issues, he decided to disclaim Mr Panther’s half share in each of the two properties.  The ability for the Official Assignee to disclaim “onerous property” derives from s 117 of the Act.  No issue arises as to the validity of the disclaimer.

Legal principles

[5]      Sections 118 and 119 of the Act address the effect and consequences of a disclaimer:

118   Effect of disclaimer

A disclaimer by the Assignee—

(a) brings to an end, on and from the date of the disclaimer, the rights, interests, and liabilities of the Assignee and the bankrupt in relation to the property disclaimed:

(b) does not affect the rights, interests, or liabilities of any other person, except in so far as is necessary to release the Assignee or the bankrupt from a liability.

119 Position of person who suffers loss as result of disclaimer

(1)  A  person  suffering  loss  or  damage  as  a  result  of  disclaimer  by  the

Assignee may—

(a)      claim as a creditor in the bankruptcy for the amount of the loss or damage, taking account of the effect of an order made by the court under paragraph (b):

(b)apply to the court for an order that the disclaimed property be delivered to, or vested in, that person.

(2) The bankrupt may also apply for an order that the disclaimed property be delivered to, or vested in, the bankrupt.

(3) The court may make an order under subsection (1)(b) or (2) if it is satisfied that it is fair that the property should be delivered to, or vested in, the applicant.

[6]      While s 118(a) makes it clear that “the rights, interests and liabilities” of the bankrupt, as well as the Official Assignee, are brought to an end on disclaimer, under s 119(2) a bankrupt retains an ability to seek an order to revest the property in him or her.

[7]      Section 118(b) preserves the “rights, interests, or liabilities” of any other person, save to the extent that it is necessary to release the Assignee or bankrupt from a liability.  One of the rights that a third party may exercise is to seek an order that the disclaimed property be vested in him or her.1    Section 119(1) requires any person seeking a vesting order to establish “loss or damage as a result of” the

disclaimer.

1      Insolvency Act 2006, s 119(1)(b).

Analysis

[8]      Mr Panther applies under s 119(1)(b) for an order vesting the one half share of his former wife in each property in him.  He does so in order to regularise the title and to enable sales to be made.   As things present stand, the remaining one half interest in each property continues to be registered in the name of Ms Panther.  The Official Assignee did not take transmission of title after bankruptcy intervened.

[9]      There is no opposition to the application from either the Crown (in which disclaimed land would vest as bona vacantia)2  or the mortgagee of either property. The mortgagee, New Zealand Home Loan Co Ltd, has security over each property to cover the totality of the debt owed by Mr and Ms Panther to it.   As the Official Assignee has disclaimed the property there is no need for him to be heard on the application.

[10]     When considering the application on a without notice basis on 6 April 2016, I decided that it should be served on Ms Panther because there might be questions relating  to  relationship  property  that  could  have  affected  the  exercise  of  the discretion to grant relief in favour of her husband.  Ms Panther was served with the proceedings on 7 April 2016.  An affidavit of service has been filed.  No steps have been taken. The application was called today, pursuant to directions that I had earlier made to enable disposition at this time.

[11]     Ms Murphy, appeared for Mr Panther and has filed helpful submissions, for which I thank her.

[12]   It is clear that Mr Panther has suffered the type of “loss or damage” contemplated by s 119(1)(a).  His affidavit of 23 March 2016 outlines a number of specific issues.  In particular:

(a)       A significant amount is owing to the mortgagee, as at 23 March 2016.

The mortgage is being serviced by Mr Panther.

2      Rural Banking and Finance Corporation of New Zealand Ltd v Official Assignee [1991] 2

NZLR 351 (HC) at 355–357.

(b)The Brodie Place property is currently unsaleable due to weathertight problems discovered in 2011.  Remedial work required by the Body Corporate is estimated to require significant expenditure.   Those contributions will need to be paid by Mr Panther before the property is ready for sale.

(c)      Given the present condition of the Brodie Place property, and the amount of the secured debt, there is presently negative equity in each of the two properties.

(d)In November 2015, Mr Panther entered into a sale and purchase agreement for the First Avenue property.  However, he was unable to complete the sale due to the current state of the title.

(e)      Since   Ms   Panther’s   bankruptcy,   Mr   Panther   has   been   solely responsible for the secured debt.  He has also assumed all risk with respect to the properties.

[13]     I  accept  that  Mr  Panther  is  suffering  loss.     The  secured  debt  and weathertightness problems have created an undue financial burden on Mr Panther. Due to the Official Assignee’s disclaimer, Mr Panther is unable to dispose of the properties and relieve himself of the financial burden he is facing, and will continue to face for some time.

[14]     In those circumstances, I am satisfied that an order should be made.  While Ms Panther has not taken steps in the current proceeding, her relationship property rights remain unaffected.   Some adjustment could be sought in the course of any such proceedings, should that be necessary to accommodate the order that I have made and any consequences that flow from that.

[15]     The purpose of having Ms Panther served was to ensure that there were no specific issues that could be avoided.   As she has elected to take no steps, I am prepared to act on the basis that any prejudice to her may be cured through the exercise of the Family Court’s ability to adjust.

Result

[16]     In those circumstances, I make an order that the one half interest currently registered in the name of Ms Panther in each of the two properties, 10 First Avenue, Tauranga, (Identifier 369796 (SA)) and 31/19 Brodie Place, Bethlehem, (Identifier

76624 (SA)), be vested in David Michael Ross Panther.

[17]     Leave is reserved to apply for further directions in the event that any further clarification is required by the District Land Registrar before the vesting order is registered.

[18]     No order as to costs.

P R Heath