Smith v Attorney-General

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-1880 [2016] NZHC 136

IN THE MATTER of the Insolvency Act

IN THE MATTER

of the bankruptcy of FRANZ MARCUS SCHWANNER

BETWEEN

ASB BANK LIMITED Judgment Creditor

AND

FRANZ MARCUS SCHWANNER Judgment Debtor

Hearing: 11 February 2016

Appearances:

Mr Wood for Judgment Creditor
Mr F Schwanner Judgment Debtor in person

Judgment:

11 February 2016

ORAL JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

ASB BANK LIMITED v SCHWANNER [2016] NZHC 136 [11 February 2016]

[1] The judgment debtor seeks an order adjudicating Mr Schwanner bankrupt. The debt upon which this application is made was entered in the District Court on 28
April 2015. One payment has been made reducing the debt at the pre-judgment stage of $1,000. The current amount owing is $45,881.93. Mr Schwanner says, and I have no reason to doubt his sincerity, that he would wish to repay the debt. However he has no assets apparently which can be applied to doing so and he bases his hope of paying the debt on a bonus and some unpaid wages that he hopes to receive in the future. Mr Wood for the judgment creditor says the bank has no confidence that the debt will ever be paid.

[2] Mr Schwanner also says that he has (commendably) been an unpaid volunteer for a charitable trust and the current trustees apparently seek to have Mr Schwanner on the board of trustees. I assume that that will not be possible if he is adjudicated bankrupt.

[3] One of the accepted objectives of bankruptcy law is to make persons who do not pay their debts accountable for their actions. In my view that is an important consideration in this case. Had the creditor in this case proceeded with haste and if it was a case where it could be said that the judgment debtor had not been given a fair chance to make payment then I might have considered further deferring the application for an adjudication order. I would have done so on the basis that it is necessary to be fair to both sides but the fact that this debt dates back so long and that the judgment was entered in April 2015 speaks for itself. Mr Schwanner has had time to make payment whether in total or partially. The fact that he has not availed himself of that opportunity really speaks volumes. I decline to adjourn the matter further and regrettably I consider that the Court has no alternative but to adjudicate Mr Schwanner bankrupt and there will be an order accordingly. The order is made at 10.12 a.m. The judgment creditor will have 2B costs and
disbursements as fixed by the Registrar.

J.P. Doogue
Associate Judge

CaseChat Overview and Summary

The High Court of New Zealand heard a case where ASB Bank Limited sought an order for the bankruptcy of Franz Marcus Schwanner. The debt at issue stemmed from a judgment entered in the District Court on April 28, 2015, with an initial amount of $1,000, reduced to $45,881.93 after one payment. Schwanner, the judgment debtor, expressed a desire to repay the debt but claimed to have no assets to do so, relying on future income from a bonus and unpaid wages. The bank, represented by Mr. Wood, expressed doubt about the debtor's ability to repay.

The legal issues before the court centered on whether Schwanner should be declared bankrupt given his inability to repay the debt and the long duration since the judgment was entered. The court had to balance the objectives of bankruptcy law, which include holding debtors accountable, with considerations of fairness to both parties. The court needed to determine if further adjournment was warranted or if declaring Schwanner bankrupt was the appropriate course of action.

In its reasoning, the court acknowledged Schwanner's commendable volunteer work for a charitable trust but noted that being on the board of trustees would not be possible if he were declared bankrupt. The court emphasized the importance of holding debtors accountable and observed that the long-standing debt and the entry of judgment in April 2015 provided Schwanner ample time to make payments. Given that Schwanner had not made any significant effort to repay the debt, the court concluded that it had no alternative but to adjudicate him bankrupt. The court ordered that Schwanner be declared bankrupt and that the judgment creditor would receive costs and disbursements as fixed by the Registrar.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

IN THE MATTER	of the Insolvency Act
IN THE MATTER	of the bankruptcy of FRANZ MARCUS SCHWANNER
BETWEEN	ASB BANK LIMITED Judgment Creditor
AND	FRANZ MARCUS SCHWANNER Judgment Debtor

Hearing:	11 February 2016
Appearances:	Mr Wood for Judgment Creditor Mr F Schwanner Judgment Debtor in person
Judgment:	11 February 2016