Burchell v Commissioner of Inland Revenue

• Jurisdiction: New Zealand
• Judge: R M Bell
• Judgment Date: 21 May 2021
• Neutral Citation: [2021] NZHC 1136
• Court: High Court
• Docket Number: CIV-2011-404-3464
• Date: 21 May 2021

UNDER the Insolvency Act 2006, section 294

IN THE MATTER OF an application for discharge from bankruptcy of LLEWELLYN WILLIAM BURCHELL

Between

Llewellyn William Burchell

Applicant

and

Commissioner of Inland Revenue

First Respondent

Official Assignee

Second Respondent

[2021] NZHC 1136

JUDGE R M Bell

CIV-2011-404-3464

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

Insolvency — application for discharge from bankruptcy — the applicant had been adjudicated in 2011 — the applicant had failed to advertise his application as required by the High Court Rules and as directed by an Associate Judge — failure to file a proper statement of affairs — procedural defects — applicable principles — procedure — statutory framework — jurisdiction — exercise of discretion — Insolvency Act 2006

Appearances:

Applicant is self-represented

N Malarao for the First Respondent

C Jones for the Second Respondent

Copy for:

L W Burchell, Auckland, the Applicant

JUDGMENT OF ASSOCIATE JUDGE R M Bell

This judgment was delivered by me on 21 May 2021 at 11:00am

pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

1 Mr Burchell applied under s 294 of the Insolvency Act 2006 to be discharged from his bankruptcy. At the end of the hearing I said that he was discharged. I now give my reasons.

2 He was adjudicated bankrupt on 16 December 2011. Under s 290 of the Insolvency Act, a bankrupt is automatically discharged three years after they file a statement of affairs under s 46 or s 67 of the Insolvency Act. The Official Assignee says that Mr Burchell has not filed a proper statement of affairs and he therefore remains bankrupt. Accordingly, the questions are:

• (a) Has Mr Burchell has already been automatically discharged under s 290 of the Insolvency Act? and

• (b) If not, should he be discharged now?

3 Mr Burchell applied for other orders against the Commissioner of Inland Revenue and the Police (who were not served and are not a party). I am dealing with this matter under the Insolvency Act. The other orders Mr Burchell seeks are outside the Insolvency Act and I do not have the jurisdiction to decide them.

4 While providing a report and helpful submissions, the Official Assignee did not oppose Mr Burchell's application. The Official Assignee's position was that while Mr Burchell was not entitled to an automatic discharge under s 290, there was no reason why the court could not order a discharge on Mr Burchell's application.

5 The Commissioner of Inland Revenue is the only creditor who claimed in Mr Burchell's bankruptcy. While the Commissioner remains unpaid, she abided the decision of the court. Mr Malarao appeared on instructions to address Mr Burchell's allegations against the Inland Revenue, but not to oppose the discharge application.

6 Unfortunately Mr Burchell was slow to understand that if he played his cards right, he would have an easy run. Instead he took a combative attitude towards the Assignee and the Commissioner. The hearing did not go smoothly. He made it hard for himself.

7 The Commissioner of Inland Revenue obtained judgment against Mr Burchell in the District Court at North Shore in December 2010 for some $34,000. She served Mr Burchell with a bankruptcy notice based on the District Court judgment. The Commissioner applied for Mr Burchell's adjudication in bankruptcy in July 2011, relying on Mr Burchell's non-compliance with the bankruptcy notice. Mr Burchell opposed the bankruptcy application and appeared at the hearing on 16 December 2011 but the judgment records that Mr Burchell left the court as the judge was about to give his judgment.

8 In September 2018, Mr Burchell applied under s 309(1)(a) of the Insolvency Act to have his bankruptcy annulled on the ground that he should not have been adjudicated bankrupt. Associate Judge Smith carefully reviewed how the Commissioner obtained judgment against Mr Burchell. The judge was satisfied that Mr Burchell was properly adjudicated bankrupt. He dismissed the annulment application. 1

Two procedural matters, advertising and the public examination

9 Under r 24.37(b) of the High Court Rules 2016, a bankrupt applying for a discharge must advertise the application and the hearing date. In a minute of 4 March 2021, Associate Judge Andrew directed Mr Burchell to have an advertisement published before 1 May 2021. Mr Burchell did not advertise as directed. His explanation was that the Official Assignee had thwarted his attempts to advertise by instructing the media not to allow his application to be advertised. He offered no evidence to support this extraordinary allegation. This is an example of far-fetched matters that Mr Burchell raises. More about that below.

10 Notwithstanding Mr Burchell's refusal to follow the rules and to comply with Associate Judge Andrew's direction, the lack of advertising should not stand in the way of his discharge application. For the Official Assignee, Mr Jones pointed out that

advertising has an important role in most bankrupts' applications for discharge under s 294 of the Insolvency Act. Under s 290 of the Insolvency Act there is an automatic discharge three years after the bankrupt files their statement of affairs. An automatic discharge is not advertised, although the fact of the discharge will be shown in public registers under the Insolvency Act. On the other hand, in the general run of cases bankrupts apply for discharge under s 294 before the three years under s 290 has run out or where there is an objection to the automatic discharge. Advertising is appropriate in those cases because the bankrupt is seeking some departure from the three year rule under s 290. Creditors should be given the opportunity to take part

11 In Mr Burchell's case, close to 10 years have passed since his adjudication. His only known creditor, the Commissioner of Inland Revenue, has taken part in the application. The Official Assignee is not concerned that other creditors may wish to be heard on his discharge application. It is unrealistic to expect anyone to respond to an advertisement of the discharge application.

12 Under s 418 of the Insolvency Act, a proceeding must not be invalidated or set aside for a defect (which includes an omission) in a step that must be taken as part of, or in connection with the proceeding, unless a person is prejudiced by the defect. As no one has been prejudiced by the absence of advertising, the discharge application is not invalid. Ordering Mr Burchell to advertise the application and adjourning in the meantime would be pointless. It is safe for the application to continue without advertising. Accordingly, I dispense with advertising.

13 As for an examination, under s 294(3) of the Insolvency Act the hearing of a bankrupt's application for discharge must be in accordance with s 177, which provides for an examination of the bankrupt in court. Mr Jones for the Official Assignee did not wish to examine Mr Burchell — nor did counsel for the Commissioner. While an examination may be important when a bankrupt is applying for an early discharge, or where there are objections to an automatic discharge, those considerations do not apply in this case where the only issue is Mr Burchell's alleged delay in filing a statement of affairs. Accordingly, I did not require Mr Burchell to be examined.

14 The dispensations from advertising and from an examination under s 177 reflect the Official Assignee's position not to object to Mr Burchell's discharge application.

Mr Burchell's complaints

15 In his discharge application, Mr Burchell says that the Official Assignee has no reason to keep him bankrupt for over nine years for no legal reason and the Inland Revenue has no reason to keep him bankrupt either. The Official Assignee and the Inland Revenue have an agenda to harass him and keep him bankrupt. The Inland Revenue Department is only malicious and instructed its staff to assault Mr Burchell when Mr Burchell wants to resolve matters. The Official Assignee has phoned Mr Burchell and claimed that he will keep Mr Burchell bankrupt forever and will get the police to charge Mr Burchell if Mr Burchell were to attempt to get this matter before the courts. The Official Assignee has assaulted Mr Burchell. When Mr Burchell brought papers in to the Official Assignee the Official Assignee “dumped the papers in the bin” saying he refused to accept any paperwork from Mr Burchell. This was a way to keep Mr Burchell bankrupt as a favour to his friend, Mr Bruce Urlich. The application also complains about the police, but that is not relevant to this case.

16 In his affidavit in support of his application Mr Burchell says that he handed the documents, fully completed, to the Official Assignee, but the documents were thrown away and the Official Assignee assaulted him violently and punched Mr Burchell without any legal reason. The police refused to investigate when Mr Burchell complained. His affidavit suggests that the Official Assignee is following instructions from Mr Bruce Urlich, with whom Mr Burchell has had a long-running dispute. He complains about the police seizing his motorbikes on instructions from the Official Assignee, and being assaulted by the police. He also alleges that he tried to file documents in court but the court staff refused to accept the documents. He alleges that the Inland Revenue created false information which led to him being locked up, and the Inland Revenue lied to the court to have him made bankrupt. He alleges that an Inland Revenue officer admitted giving false information to the court in order to bankrupt Mr Burchell. He alleges that Associate Judge Smith deliberately abused him and was involved in protecting criminal activity against Mr Burchell by the Inland Revenue and by the Official Assignee. He alleges that the Official Assignee plans to keep Mr Burchell bankrupt...