Walia v Official Assignee
[2022] NZHC 485
•15 March 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2010-404-6006
[2022] NZHC 485
UNDER the Insolvency Act 2006, section 294 IN THE MATTER OF
an application for discharge from bankruptcy
BETWEEN
NAMRTA WALIA
ApplicantAND
OFFICIAL ASSIGNEE
Respondent
Hearing: 15 March 2022 Appearances:
Shafraz Khan and R K Mann for the Applicant No appearance for the Official Assignee
(abides the decision of the Court)
Cloete Van Der Merwe for the Commissioner of Inland Revenue
Judgment:
15 March 2022
ORAL JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
Solicitors:
Fortune Manning (Shafraz Khan/R K Mann), Auckland, for the Applicant
Official Assignee (Richard Lowe), MBIE Companies Office, Auckland, for the Respondent
Inland Revenue Department (Cloete Van Der Merwe), Auckland, for the Commissioner of Inland Revenue
WALIA v OFFICIAL ASSIGNEE [2022] NZHC 485 [15 March 2022]
[1] The judgment debtor (Ms Walia) was adjudicated bankrupt on 14 December 2010 on the application of Westpac New Zealand Limited. She has remained bankrupt ever since, because she did not file the required statement of affairs with the Official Assignee’s office until 23 February 2021. Although more than three years has passed since the date of adjudication, Ms Walia remains bankrupt by virtue of s 290(1) of the Insolvency Act 2006 (“the Act”) which provides that a bankrupt is automatically discharged from bankruptcy three years after he or she files a statement of affairs. As such, Ms Walia will only be eligible for automatic discharge from her bankruptcy on 23 February 2024.
[2]Ms Walia has applied for discharge from bankruptcy under s 294 of the Act.
Ms Walia’s affidavit in support of her application for discharge from bankruptcy
[3] Ms Walia deposes that at the time of her bankruptcy she was 25 years old. She had lived a very sheltered life, being looked after by her parents as was normal in the Indian culture.
[4] She deposes that the money owed to Westpac was for a loan for a property that she had purchased with her sister. She and her sister also had a small shop in the Albany Mall. She deposes that things started going wrong when the tenant of the property stopped paying rent. Also, the shop was not doing very well either, and she and her sister could not afford to keep paying all the expenses. The global financial crisis also intervened, causing sales of the business to decline. This led to the closing of the business operated by Ms Walia and her sister, and losing the property.
[5] She deposes that she was not aware of the High Court bankruptcy proceedings against her, and she did not attend the Court for the bankruptcy hearing. Following her adjudication she received a letter from the Assignee with a form to fill out which she now understands was the statement of affairs. She deposes that she remembers
filling out the form and posting it. She did this with her sister. She never heard back from the Official Assignee and did not think any further of it.
[6] She deposes that the only interaction she had with the Official Assignee after the bankruptcy was when she sought permission to travel overseas in or around 2011. The permission was granted.
[7] She deposes that at no time was she advised by the Official Assignee that he had not received her statement of affairs, and she always assumed it had been received. She was under the misapprehension that it took seven years to be discharged from bankruptcy and have a clean record. She did not receive any legal advice. This was also her sister’s understanding. Being of the belief that she could not do anything for seven years, she continued to wait. As is common in the Indian culture, her parents supported her and she lived in her parents’ house and did not have any expenses. She briefly worked as a part-time hairdresser.
[8] She deposes that in 2014 she met her husband and married in 2016. Her husband moved to New Zealand and found a job and he has supported her. In 2020 she had her first child and is currently pregnant with her second child.
[9] She deposes that her sister, in 2021, discovered that the bankruptcy did not automatically terminate. The Official Assignee had not received the statement of affairs. She deposes that she has no other debts apart from what she had at the time of her bankruptcy.
Application for discharge
[10] Ms Walia now applies for discharge from her bankruptcy under s 294 of the Act. The section provides:
294 Bankrupt may apply for discharge
(1)The bankrupt may at any time apply to the court for an order of discharge from bankruptcy.
(2)However, if the court has previously refused an application by the bankrupt for a discharge, and has specified the earliest date when the
bankrupt may again apply, the bankrupt must not apply before that date.
(3)The hearing of the application must be in accordance with section 177.
[11] As noted above, Ms Walia has provided a detailed affidavit in support of her application, setting out the circumstances in which she was adjudicated bankrupt, why she did not appreciate that the three year period for automatic discharge was not running, and what she has been doing during the period since her adjudication.
Advertisement and service
[12]Rule 24.37 of the High Court Rules 2016 states:
24.37 At least 20 working days before the hearing date, the bankrupt must –
(a)serve on the Official Assignee and every creditor whose debt has been proved, notice of application for discharge under section 294 of the Act;
(b)cause the notice of application and hearing to be advertised.
[13] Notice of the application was advertised in The New Zealand Gazette on 10 February 2022 and the Official Assignee and all proven creditors were served with notice of the application at least 20 working days prior to the date of the hearing. These matters have been confirmed in the affidavits of service which have been filed with the Court.
[14] The Inland Revenue filed an appearance and indicated that the Commissioner would abide by the decision of the Court. No creditors have opposed the application and no other parties have taken any steps in relation to the application.
Official Assignee’s report
[15] The Official Assignee has provided a report dated 16 February 2022. The report is provided pursuant to the provisions of s 296 of the Act, and r 23.38 of the High Court Rules.
[16] The Official Assignee has no objection to the applicant’s discharge, and will abide the decision of the Court.
Legal Principles
[17] The Act requires the Official Assignee’s report to address the matters set out in s 296(2) of the Act. Those matters are:
(a)the bankrupt’s affairs;
(b)the causes of the bankruptcy;
(c)the bankrupt’s performance of his or her duties under this Act;
(d)the manner in which the bankrupt has obeyed orders of the Court;
(e)the bankrupt’s conduct before and after adjudication; and
(f)any other matter that would assist the Court in making a decision as to the bankrupt’s discharge.
[18] In this case, the Assignee has reported that no significant assets were recovered. The debt has totalled $469,084.91. The largest creditor was Westpac, upon whose application Ms Walia was adjudicated bankrupt.
[19]The Official Assignee reported that fees and disbursements to date come to
$3,849.05.
[20] The Assignee reported that Ms Walia attributed the cause of her bankruptcy to the failure of her business.
[21] The Assignee does note that he was initially hampered in the administration of the bankrupt’s estate due to Ms Walia’s failure to file a statement of affairs. The Assignee attempted to contact her at the adjudication address, 18 Lavender Court, St Johns, Auckland, which was apparently her parents’ address, but received no
response. Attempts to contact her by phone were also unsuccessful. The last known numbers were no longer active.
[22] Ms Walia phoned the Assignee on 12 September 2011 to say that she wished to apply to travel overseas. The estate officer advised her that she still needed to complete and file a statement of affairs. On 13 September 2011, she submitted a request to travel to Hong Kong on 4 October 2011 and return on 12 October 2011. Her parents confirmed that they would be meeting all expenses and she was granted written consent to do so, on the condition that she filed her statement of affairs prior to departure. She failed to do so.
[23] The Official Assignee’s report also noted Ms Walia states in her affidavit at [7] that she and her sister had posted their statements of affairs together. However, nothing was received from either of them. Her sister eventually filed a statement of affairs in September 2020 and the Court granted her application for an early discharge on 29 September 2021.
[24] The Official Assignee notes that since filing her statement of affairs on 23 February 2021, Ms Walia has co-operated with the Assignee and there is nothing untoward to report regarding her conduct.
Analysis
[25] The broad approach of the Court to applications for discharge from bankruptcy are summarised by the Court of Appeal in ASB Bank v Hogg as follows:1
In conferring a discretion expressed in the broadest terms, the legislation recognises that each case will be different, that the relevant factors may vary from case to case and that the exercise of the discretion must be governed by the circumstances of the particular case having regard to the guidance provided by a consideration of the scheme and purpose of the legislation. In providing for automatic discharge after three years, the legislation recognises that it is not in the public interest that the bankruptcy should endure indefinitely. In providing for earlier discharge, s 108 [see now 294 of the Insolvency Act 2006] recognises that continuing the bankruptcy to the end of the three years may not be in the public interest. Whether or not it is will be a matter for decision on the particular facts. In that regard, guidance is provided by s 109(2) [see now s 296 of the Insolvency Act 2006] which lists
1 ASB Bank v Hogg [1993] 3 NZLR 156 (CA), at 157-158.
matters on which the assignee is to report to the High Court in such a case. The Court is to consider the assignee's report as to the affairs of the bankrupt, the causes of the bankruptcy, the manner in which the bankrupt has performed the duties imposed on him or her under the Act and his or her conduct both before and after the bankruptcy, and also any other fact, matter or circumstance that would assist the Court in making its decision. Clearly the Court apprised of the matter will consider the legitimate interests of the bankrupt, the creditors, and wider public concerns, but it is neither required nor entitled to impose threshold requirements in the exercise of the discretion so as to derogate from the breadth of the powers conferred under s 110 [see now s 298 of the Insolvency Act 2006]. The applicant has the onus, in the sense of adducing evidence, to show good cause for ordering an early discharge, but his obligation goes no further than that.
[26] It is clear that the Court has a very broad discretion to do justice in the circumstances of each particular case. The stand-out feature of this case is obviously the fact that Ms Walia has now been an undischarged bankrupt for over 11 years, far longer than is normally the case. Accordingly, this is not one of the situations where a bankrupt is asking the Court to shorten the time of a normal bankruptcy.
[27] It is very obviously in Ms Walia’s best interests to have the discharge application granted. Little would be served by requiring her to serve out the bankruptcy period to February 2024. She has clearly gained in life experience and wisdom, is now married and a mother of one child and pregnant with a second child. If discharged now, it will enable her to get on with her life as a married woman and a mother.
[28] I see nothing in the circumstances put before the Court that would suggest any reason not to grant the discharge. Accordingly, I order discharging Ms Walia from bankruptcy immediately under s 298(1)(a) of the Act.
…………………………….. Associate Judge Taylor
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