Havenleigh Global Services Ltd v Henderson

• Jurisdiction: New Zealand
• Judge: Osborne
• Judgment Date: 18 March 2014
• Neutral Citation: [2014] NZHC 499
• Docket Number: CIV-2010-409-000559
• Court: High Court
• Date: 18 March 2014

IN THE MATTER OF the Insolvency Act 2006

And

IN THE MATTER OF the Bankruptcy of David Ian Henderson of Christchurch

BETWEEN

Havenleigh Global Services Limited and FM Custodians Limited

Judgment Creditors (Substituted Creditors)

and

David Ian Henderson

Judgment Debtor

[2014] NZHC 499

CIV-2010-409-000559

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

Application for directions by the Official Assignee (OA) who sought documents from liquidator of a number of entities previously related to the judgment debtor — OA suspected that debtor had entered into, carried on, or taken part in the management or control of businesses during his bankruptcy - sought a copy of a hard drive of a laptop taken from the judgment debtor's home — laptop was used for personal and business purposes — OA proposed it be subject to quarantine orders to protect the judgment debtor's privacy — documents had in past been reviewed by National Enforcement Unit of the Ministry of Economic Development which decided not to proceed against H — whether the documents had to relate to the bankrupt's property — whether the orders should be refused because the files sought would encompass material of a purely personal nature — whether the orders would be oppressive and unfair as they amounted to a fishing expedition.

Appearances:

D I Henderson (Bankrupt) in person

C R Vinnell for Official Assignee

JUDGMENT OF ASSOCIATE JUDGE Osborne

as to documents applications

1 The Official Assignee applies for directions in relation to the bankruptcy of David Ian Henderson.

2 The directions which the Assignee seeks are identified in two applications. The directions relate to:

• (a) documents now in possession of Robert Walker, the liquidator of Property Ventures Ltd (in receivership and in liquidation) and a number of other entities previously related to Mr Henderson, which documents were recovered from Mr Henderson's laptop in the central business district after the Christchurch earthquakes — the documents would be provided in the form of an external hard-drive and/or flash drives in which electronic documents are held;

• (b) emails in Mr Henderson's possession which were sent to or received by him from named addressees/correspondents during his bankruptcy.

Background

3 Mr Henderson was adjudicated bankrupt on 29 November 2010.

4 He was to have been automatically discharged from bankruptcy in January 2014.

5 The Assignee on 28 November 2013 filed a notice of objection to Mr Henderson's discharge, pursuant to s 292 Insolvency Act 2006.

6 Additionally, two creditors have given notice of their opposition to the discharge and the Court has made a ruling as to their standing as creditors. 1

7 By reason of the objection to discharge, the Assignee is required 2 to summon Mr Henderson to be publicly examined by the Court as soon as practicable after the expiry of the three-year period referred to in s 290 Insolvency Act 2006.

8 An issue arose as to the appropriateness of a decision by the Assignee to defer issuing a summons to Mr Henderson after the three year period expired in January 2014. That issue was the subject of an application which I heard at the same time as hearing these two applications. It is the subject of a separate judgment which

I have earlier issued. 3 Pursuant to that judgment, the Assignee will now summon Mr Henderson to an examination in the High Court commencing 9 June 2014

9 Before that examination, the Assignee is required to prepare a report and file it. 4 The prescribed subject matter of the Assignee's report is extensive and includes generally the performance of the bankrupt's duties under the Insolvency Act.

10 It is that pending examination and report which provides the context in which the Assignee has pursued the documents which are the subject matter of these applications.

The hard drive application

The application itself

11 What I will refer to as the “hard drive application” focuses on an external hard drive and flash drives held by Robert Walker as liquidator of Property Ventures Ltd and other liquidated companies.

12 Specifically, the Assignee applies for an order that:

Robert Bruce Walker (“the Liquidator”) as liquidator of Property Ventures Limited (in receivership and in liquidation) and of companies associated with Property Ventures Ltd, is to deliver to the Official Assignee a copy of the external hard drive or, alternatively, the flash drives on which is stored electronic data extracted from a laptop obtained by Police pursuant to a search warrant executed on 8 April 2011 at premises at 96 and 110 Lichfield St, Christchurch.

13 The Assignee proposes that the order be subject to a quarantine condition to protect Mr Henderson's privacy. It would read:

Documents that are not related to the bankrupt's property, conduct or dealings and are located on the said external drive and flash drives are to be quarantined by the Official Assignee and not disclosed in the absence of further order of the Court (the term quarantine meaning to hold safe and inaccessible by any person other than the Official Assignee, the Official Assignee's employees engaged in the conduct of the bankruptcy and the Official Assignee's legal advisers).

14 The grounds of the Assignee's application are that:

• (a) Mr Walker is known to possess documents relating to Mr Henderson's property, conduct or dealings (as that term is used in s 165 Insolvency Act);

• (b) The information contained on the external hard drives and flash drives includes documents relating to Mr Henderson's property, conduct or dealings;

• (c) Mr Walker is prevented from providing the external hard drives and flash drives to the Assignee by virtue of orders made by the High Court. 5

Mr Henderson's opposition

15 Mr Henderson opposes the hard drive application.

16 Mr Henderson opposes any order that Mr Walker deliver to the Assignee a copy of the hard drive and the flash drives on the grounds that –

• (a) the Assignee previously received and viewed that information, provided it to the National Enforcement Unit of the Ministry of Economic Development, and the information has been acknowledged not to disclose a breach of the Insolvency Act; and

• (b) such an order would be unfair, oppressive and an abuse of the Assignee's power as it would be a fishing exercise.

17 Mr Henderson opposes any order whereby the Assignee would quarantine irrelevant documents. Mr Henderson submits that the relevant documents should not be retained by the Assignee should be delivered to Mr Henderson.

The liquidator consents

18 The Assignee's applications were served on Mr Walker.

19 Mr Walker has filed a consent to the orders sought by the Assignee and more generally has agreed to abide by the Court's decision as to the final terms of any orders to be made.

A brief history of Mr Henderson's laptop

20 Mr Henderson's laptop was in his office in the Christchurch central business district at the time of the February 2011 earthquakes. Mr Walker obtained it following the issue of a search warrant. He had flash drives made containing copies of emails and made those available to the Assignee. The Insolvency and Trustee Service inspected the electronic documents. Some material was referred to the National Enforcement Unit of the Ministry of Economic Development (a step to which I will return). Mr Henderson raised issues as to the validity of the search and seizure of equipment and as to the copying of electronic information. The Police requested the Assignee to deliver flash drives to the Police which he did. The Police also asked the then Assignee to delete all information held by him which he did. The laptop was subsequently returned to Mr Henderson. The flash drives were returned by the Police to Mr Walker on terms set out in the judgments of this Court. 6

The Assignee pursues further information and documents

21 Grant Slevin, a Senior Investigating Solicitor employed by the Insolvency and Trustee Service, has provided the evidence in support of the Assignee's application.

22 Mr Slevin has deposed that the Assignee strongly suspects that Mr Henderson has entered into, carried on, or taken part in the management or control of businesses during his bankruptcy, contrary to s 149 of the Act. Mr Henderson strongly refutes the Assignee's suspicions, but the contest on those issues is for another day.

23 On 9 December 2013, the Assignee requested from Mr Henderson copies of correspondence which he had had with a number of people including companies previously associated with Mr Henderson, an accountant and a lawyer.

24 On 13 January 2014, the Assignee summoned Mr Henderson to attend the Christchurch District Court on 21 January 2014 for an examination at which he was required to produce the requested documents. The examination was stated to be in relation to Mr Henderson's “property, conduct or dealings”. The summons was issued pursuant to s 165 of the Act, which empowers the Assignee to summon the bankrupt and other specified people to be examined by a District Court. The documents which may be required to be produced are those relating to the bankrupt's “property, conduct, or dealings”, an expression which is duplicated in s 171 of the Act which deals with the Assignee's rights to require a bankrupt to produce documents within their possession or control.

25 Mr Henderson was examined before Judge C P Somerville in the District Court on 21 January 2014. The examination was conducted by Mr Vinnell on behalf of the Assignee. A dispute emerged between Mr Henderson and the Assignee over the extent of the documentation which Mr Henderson should produce as relating to his “property, conduct or dealings”. Mr Henderson appears to have taken the view, based on prior discussions he had had, that all he was required to produce was documentation in some way relating to his property. His position is best illustrated...