Lr v Jr (A Bankrupt)

 
FREE EXCERPT

IN THE FAMILY COURT AT AUCKLAND

judges

D A Burns

FAM-2008-004-000715

FAM-2008-004-001059

BETWEEN

UNDER “Property (Relationships) Act 1976”

LR
Applicant
and
JR (A BANKRUPT)
Respondent
Appearances:

R Knight and A Morrison for the Applicant

A Fisher for the Respondent

G Neil and K Kuang for Official Assignee

NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION PLEASE SEE

WWW2.JUSTICE.GOVT.NZ/FAMILY/LEGISLATION/RESTRICTIONS.

Application by Official Assignee to strike out proceedings — parties were together for 12 years and had four children — wife applied for spousal maintenance orders asserting husband had assets of $28M with an income of $1M per annum — interim order freezing disposition of certain assets — husband had been adjudicated bankrupt with net liabilities of $181M — proceedings under Property (Relationships) Act 1976 (“PRA”) were filed well before husband's bankruptcy — whether application to strike out proceedings under the PRA should be granted or not.

RESERVED JUDGMENT OF JUDGE D A BURNS
[IN RELATION TO APPLICATION TO STRIKE OUT PROCEEDINGS FILED UNDER THE PROPERTY (RELATIONSHIPS) ACT 1976 AND THE INTER-RELATIONSHIP BETWEEN THE PROPERTY (RELATIONSHIPS) ACT AND INSOLVENCY ACT 2006]

INDEX

Paragraph Nos.

Background

[1]

Procedural history

[3]

Issues for determination

[24]

Application to strike out

[26]

Submissions

[34]

Submissions in reply

[38]

What does Mr Knight submit in reply?

[38]

Nature of the wife's claim

[39]

Application to strike out

[40]

Claim by applicant against property personally owned by the wife

[42]

Claim against trusts:

Section 44 PRA

[53]

Section 44C

[55]

Section 44F

[56]

Possible constructive trust claim against one or more of the trusts

[57]

Bundle of Rights

[58]

What is the basis of a Bundle of Rights? — What is it actually

[59]

Section 104 exception to the general principle in s 101 Insolvency Act 2006

[61]

Summary

[63]

Application for discovery

[65]

Application to transfer

[66]

Does the bankruptcy end the Property (Relationships) Act proceedings?

[69]

Section 52 District Courts Act 1947

[74]

Whether s 76 Insolvency Act 2006 (formerly s 32 of the Insolvency Act 1967) applies and whether the applicant wife requires the consen of the High Court to bring her present applications

[76]

Has the Official Assignee abandoned any interest he might have in assets owned by any third parties (trust and companies) and has the Official Assignee concluded that there are no funds or assets of any value?

[81]

Orders/directions

[83]

Background
1

The applicant (“wife”) and respondent (“husband”) met in late 1994. They were married on 19 May 1995. They are the parents of four children, namely:

  • (a) S born in 1996 (15);

  • (b) M born in 1998 (13);

  • (c) R born in 1998 (12); and

  • (d) A born in 2007 (4).

2

The husband and wife separated in January 2007 shortly before their youngest daughter was born. They have remained apart since that time.

Procedural history
3

In March 2008 the wife applied for interim and final spousal maintenance orders. She said in her affidavit in support of her application in summary as follows:

"That she had been living in the former family home of the parties since separation in St Mary' Bay.

"That she had received notices under s 119 of the Property Law Act 2007 giving her notice of an intended mortgagee sale of the property.

"That maintenance payments that had been previously made had been unilaterally reduced.

"That at the time of their marriage the husband had a half share in a house in Devonport.

"That they had built up a portfolio of properties following their marriage and that the enterprise had grown very quickly.

"That a very complex property portfolio had been built up by the husband which involved in excess of 135 companies and a large number of trusts.

"She attached to her affidavit a document which was headed “Personal Portfolio”. She said that the document had been created by the husband personally in November 2006 for the purposes of obtaining bank finance. It asserted that the husband had assets of approximately $28M with income of $1M per annum. She set out further details of the complex interrelationship between various companies and trusts and the husband in a diagrammatic form — Exhibit E runs to 33 pages (the husband has not challenged the information in this affidavit. The wife says that it is accurate because it is based on information provided by the husband. The information has not been tested as yet).

4

An affidavit of financial means and their sources was filed in support of the application for maintenance on 28 March.

5

On 2 April 2008 an application was filed in support of an application that notices of claim not lapse.

6

The husband filed a narrative affidavit on 1 April 2008 in response to both applications.

7

Urgency was given to the applications.

8

The applications were set down for hearing. The parties resolved their issues by agreement and a joint memorandum was filed dated 16 April 2008. Agreement was reached with respect to the notices of claim lapsing, the sale of the former family home, payment of an amount for maintenance, purchase of a home in substitution and payment for resolution of issues relating to the Property Law Act notices. Consent orders were duly sealed by the Court.

9

On 1 October 2009 the wife applied for an interim injunction on a without notice basis. The application was considered by the Court in Chambers and an interim injunction was issued on 2 October 2009. Leave was given to the husband to apply to set aside the injunction on 3 days' notice. The freezing injunction restrained disposition from a number of bank accounts, disposition of shares in 11 companies and the husband in his capacity as trustee in dealing with five nominated trusts.

10

I summarise the affidavit in support of the application for an injunction from the wife sworn 1 October 2009 as follows:

"She had occupied up until sale the former family home of the parties in St Marys Bay which was owned by the trustees of the L Family Trust of which she was a trustee and beneficiary together with the children.

"That post-separation she had endeavoured to reach a settlement of relationship property issues with the husband but that had not occurred.

"She annexed to her affidavit a comprehensive report from a firm of chartered accountants specialising in business valuation and advisory services — Appleby Cotter and Associates Limited. That report was dated the 8th of September 2008 and was a comprehensive analysis of the husband's property interests to provide expert evidence to assist the wife's lawyers in determining the nature and quantum of the claim. On page 14 it set out a number of unresolved issues but nevertheless concluded that at that time the husband did have assets to which a claim could be lodged. There was an extensive schedule of assets analysing the situation as of different dates.

"She attached a printout from the New Zealand Companies Office database listing some 14 pages of companies over which the husband was a director but acknowledge that some of them had been struck off. She also attached a further printout from the New Zealand Companies Office database listing 15 pages of companies in which the husband was a shareholder but acknowledge that some of them had been struck off or may no longer be trading.

"She...

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