Gollan v Official Assignee Hc Ham

• Jurisdiction: New Zealand
• Judge: Faire
• Judgment Date: 30 July 2012
• Neutral Citation: [2012] NZHC 1869
• Docket Number: CIV-2012-419-646
• Court: High Court
• Date: 30 July 2012

In the Matter of the Insolvency Act 2006

and

In the Matter of the bankruptcy of JP Gollan

BETWEEN

James Patrick Gollan

Applicant

and

Official Assignee

Respondent

[2012] NZHC 1869

CIV-2012-419-646

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

Application under s226 Insolvency Act 2006 (“IA”) (appeal from Assignee's decision) to reverse Official Assignee's (“OA”) decision not to seek leave to continue applicant's proceeding under the Law Reform (Testamentary Promises) Act 1949 (“LRTPA”) — applicant and his wife both adjudged bankrupt — were each bringing LRTPA claim against the estate of applicant's deceased mother-in-law — OA decided not to proceed with the claim — whether a claim under LRTPA vested in the OA — whether OA's decision not to seek leave to proceed with proceeding was justified.

Counsel:

CT Jones for respondent

JP Gollan, applicant in person

JUDGMENT OF ASSOCIATE JUDGE Faire

[on application to reverse decision of Official Assignee]

The application

1 Mr Gollan applies for an order to reverse a decision made by the Official Assignee on 26 April 2012. The application is made in reliance on s 226 of the Insolvency Act 2006.

The decision

2 The Official Assignee's decision was that he would not seek the leave of the High Court to continue a proceeding commenced by Mr Gollan. The proceeding was commenced by Mr Gollan on 14 August 2009. It seeks relief in the form of an order pursuant to the Law Reform (Testamentary Promises) Act 1949 against the estate of Irene Ivy Maud Luders.

The statutory basis for the application and the decision

3 Section 226 of the Insolvency Act 2006 provides:

226 Appeal from Assignee's decision

• (1) A person (including the bankrupt or a creditor) whose interests, monetary or otherwise, are detrimentally affected by an act or decision to which this section applies may apply to the Court to reverse or modify the act or decision.

• (2) This section applies to-

  • (a) an act or decision of the Assignee; or

• …

• (4) The Court may confirm, reverse, or modify the act or decision.

4 Section 217(2) of the Insolvency Act 2006 provides:

217 Assignee's general powers

• (1) The Assignee has the powers-

  • (a) necessary to carry out the functions and duties of the Assignee under this Act; and

  • (b) conferred on the Assignee by this Act.

• (2) In particular, the Assignee has the powers set out in Schedule 1.

5 The relevant parts of Schedule 1 of the Insolvency Act 2006 for the purposes of this application provide as follows:

Schedule 1 Assignee's general powers

• The Assignee has the power to-

• …

• (c) with the leave of the Court, continue in the Assignee's name legal proceedings begun by the bankrupt before adjudication:

Mr Gollan's adjudication in bankruptcy

6 Mr Gollan was adjudicated a bankrupt on 19 March 2012 in the High Court at Hamilton. His estate is being administered by the Hamilton office of the Official Assignee. As a result of his adjudication as a bankrupt his cause of action vests in the Official Assignee. 1

7 Mr Gollan initially submitted that the cause of action under the Law Reform (Testamentary Promises) Act 1949 was a cause of action akin to a personal tort, which therefore does not pass to the Official Assignee in bankruptcy.

8 This issue was considered by Barker J in re Meller. 2 The Court was there concerned with an application under the Family Protection Act 1955. The judgment reviewed the authorities which are helpfully considered in Leach v Official Assignee. 3 The authorities disclose that a right of action does not pass where the damages are to be estimated by immediate reference to pain felt by the bankrupt in respect of his body, mind or character and without immediate reference to his rights of property. A claim under the Family Protection Act, however, is not such a claim. It is, in fact, a proprietary claim. 4 It is appropriate to record that there is no provision

in the Family Protection Act 1955, or for that matter the Law Reform (Testamentary Promises) Act 1949, which prohibits relief granted under either statute from passing to the assignee

9 There is no justification for a proposition that a claim under the Law Reform (Testamentary Promises) Act 1949 should be treated any differently, as far as the law of bankruptcy is concerned, from a claim under the Family Protection Act 1955. For that reason, I conclude that Mr Gollan's action, which is the foundation for his claim in the current Law Reform (Testamentary Promises) proceeding, in fact vested in the Official Assignee by virtue of s 101 of the Insolvency Act 2006 upon his adjudication in bankruptcy.

10 This conclusion necessitates a consideration of the decision made by the Official Assignee to not seek leave to proceed with Mr Gollan's Law Reform (Testamentary Promises) proceeding.

11 A question arises in this case as to the standing of Mr Gollan to bring his application under s 226 of the Insolvency Act 2006. In short, it is accepted that Mr Gollan's substantive rights have been adversely affected by the decision of the Official Assignee to decline to seek leave to proceed the claim. 5 I therefore conclude that he has standing to bring this application.

The Court's approach to an appeal from an Assignee's decision

12 In Glynbrook 2001 Ltd v Official Assignee the Court of Appeal gives helpful guidance as to the approach which the Court will take pursuant to s 226 of the Insolvency Act 2006. 6 The Court said: 7

When considering the question of the standard of review under s 86 of the Act, it is necessary to distinguish between the discretionary powers of the High Court under s 86 to confirm, reverse, or modify the Official Assignee's act or decision and to make such order as it thinks fit and the nature of the statutory provisions under which the Official Assignee acted or decided. This

distinction is important because the standard of review by the High Court will depend on whether or not the Official Assignee was making a decision that is subject to a general right of appeal or exercising a discretionary statutory power, which is subject to a more limited right of appeal.

13 In this case, the decision of the Official Assignee is a decision made pursuant to the powers vested in the Official Assignee pursuant to s 217 and Schedule 1.

14 Mr Jones rightly submitted, in my view, that a decision by an Assignee whether or not to continue proceedings commenced by a bankrupt before adjudication requires the Assignee to use his or her discretion.

15 It follows that in this case, I am not dealing with the exercise of a general right of appeal but an appeal against a decision made in the exercise of discretion. The result is, as the Supreme Court explained in Kacem v Bashir that the criteria for a successful appeal are stricter, namely: 8

• (a) Error of law or principle;

• (b) Taking account of irrelevant considerations;

• (c) Failing to take account of relevant considerations;

• (d) The decision was plainly wrong. 9

The inquiries made by the Official Assignee

16 Mr LGA Currie, the Official Assignee in Hamilton, has filed and served an affidavit in relation to this application which sets out the inquiries which were specifically undertaken relative to a possible continuation of the Testamentary Promises claim. Mr Currie became aware of the claim in the context of Mr Gollan's wife's bankruptcy. Mrs Gollan was adjudicated on 5 May 2008. Her estate is being administered in the Hamilton office.

17 Mrs Gollan's mother, Mrs Luders, died on 28 July 2008. Mr Gollan advised of a potential claim that he and his wife had under the Law Reform (Testamentary Promises) Act 1949 against Mrs Luder's estate. He advised that he understood that his wife's rights had vested in the Official Assignee. He said he would forward a copy of the claim to the Official Assignee for consideration. He, in fact, did not do that. There was further contact between Mr Gollan and a lawyer acting for him, which I will not set out further. The next significant development occurred when Mr Currie was advised on 8 February 2010 that both Mr and Mrs Gollan had commenced a Law Reform (Testamentary Promises) claim in the Family Court. The defendants were the executors and trustees of Mrs Luder's estate. In addition, Mrs Gollan had commenced a claim under the Family Protection Act 1955. Mr Currie expresses concern in his affidavit, that Mr Gollan had filed the applications without advising the Official Assignee, particularly having regard to the fact that he was aware of his wife's adjudication in bankruptcy.

18 Mr Currie said that he was aware of the criticism of the Official Assignee in Callis v Pardington and Edmonds Judd v Official Assignee. 10 The criticism, he noted, was for allowing unmeritorious proceedings to be taken by a bankrupt....