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Re Henderson

Re Henderson

Case [2017] NZHC 474 16 March 2017

Limitation Periods

Protection of Public Interest

Deterrence

Maintenance of Business Standards

Judicial Review

Insolvency Law

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THIS JUDGMENT CONTAINS REDACTIONS

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2010-409-000559 [2017] NZHC 474

UNDER the Insolvency Act 2006

and

IN THE MATTER

of 18 applications by DAVID IAN HENDERSON to be involved in company management

DAVID IAN HENDERSON Applicant

Hearing:
17 February 2017

(Further written submissions: 7 March 2017)

Representation:

D I Henderson (Applicant) in person

Judgment:

16 March 2017

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

[on applications for permission (s 299 Insolvency Act 2006)]

Re Henderson [2017] NZHC 474 [16 March 2017]

CONTENTS

Introduction [1]

Restrictions from engaging in business after bankruptcy [3]

The statutory regime [3] The prohibition [5] The rationale of prohibition [7] The reasons for Mr Henderson’s prohibition [10] The Court’s approach to permission under s 299 Insolvency Act [21] The discretion under s 299 [21] Comparison with s 382(1) Companies Act [23] The protective purpose of prohibition/disqualification [24] The deterrent purpose of prohibition and the maintenance of business standards [29] Relevant considerations on an application for permission [34] Particular considerations [40] The purpose of protection [40] The purpose of deterrence and the maintenance of business standards [41] The onus (once a prohibition is in place) [42] Demonstration of continued protection [45] Deficiencies leading to prohibition – the applicant’s unfitness [49] Consequences of deficiencies [51] Applicant’s comprehension of unfitness and acceptance of the need for prohibition [52] Applicant’s subsequent conduct (for better or worse) [55] Structure of the identified entity [57] The business and financial performance of the entity [62] Definition of the applicant’s intended role in the entity [65] Risks associated with applicant’s intended role [68] The applicant’s needs [72] Third parties’ needs [81] View of relevant authorities [84] Identification of safeguards/conditions [87] Procedural and evidential requirements [93] Relevant considerations – my summary [97] (A) Over-arching considerations [97]

(B) Relevant considerations [97]

(C) Procedural and evidential requirements [97]

Mr Henderson’s applications for permission [98] Eighteen applications [98] Conduct in relation to which Mr Henderson requires permission [103] The entities’ governance and management structures and contractual arrangements [106] Examination of applications [112] BC 434940 [113] The Body Corporate [113] Conduct for which permission sought [117] Conclusion [125] The other 17 applications [127] The concepts of “management or control” [130] The absence of a contradictor [132] Case management of future occasions [135] Absence of procedural rules [135] The Court’s case management approach and Mr Henderson’s response [136] Discussion [143] Suppression [149] Orders [153]

Introduction

[1] David Ian Henderson was adjudicated bankrupt on 29 November 2010. He was not automatically discharged from bankruptcy in the usual way because the Official Assignee objected. Following a public examination, Mr Henderson was discharged from bankruptcy from 27 January 2017. The Court, on discharging Mr Henderson from bankruptcy, placed comprehensive business restrictions upon him, under s 299 Insolvency Act 2006 (the Act), for a period of six years (“the
prohibition”).1

[2] Mr Henderson has now filed 18 applications for permission to be involved in the management or other activities of 12 entities which would otherwise be precluded under the…

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 Re Henderson

Details

AGLC: Re Henderson [2017] NZHC 474
Case: [2017] NZHC 474
Decision Date: 16 March 2017

CaseChat Overview and Summary

David Ian Henderson sought permission to be involved in the management of twelve entities. Henderson was discharged from bankruptcy on 27 January 2017, subject to restrictions under s 299 of the Insolvency Act 2006. Henderson's applications were dismissed, and the applications were adjourned with leave to re-apply. Henderson's applications were dismissed as the Court was not satisfied that the public interest would be protected if Henderson was allowed to be involved in the management of the entities. Henderson's applications lacked sufficient detail, including information about the governance and management of the entities, and Henderson's role within them. The Court concluded that Henderson's approach to the applications suggested that he had not recognised the issues of unfitness raised by his past conduct. Henderson's applications were adjourned with leave to re-apply if they were amended and supported by additional evidence.

Orders