Lr v Jr (A Bankrupt)
| Jurisdiction | New Zealand |
| Judge | D A BURNS |
| Judgment Date | 13 December 2010 |
| Court | Family Court |
| Docket Number | FAM-2008-004-000715 |
| Date | 13 December 2010 |
UNDER “Property (Relationships) Act 1976”
D A Burns
FAM-2008-004-000715
FAM-2008-004-001059
IN THE FAMILY COURT AT AUCKLAND
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.
R Knight and A Morrison for the Applicant
A Fisher for the Respondent
G Neil and K Kuang for Official Assignee
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] |
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).
The husband and wife separated in January 2007 shortly before their youngest daughter was born. They have remained apart since that time.
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).
An affidavit of financial means and their sources was filed in support of the application for maintenance on 28 March.
On 2 April 2008 an application was filed in support of an application that notices of claim not lapse.
The husband filed a narrative affidavit on 1 April 2008 in response to both applications.
Urgency was given to the applications.
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.
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.
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 referred to a petition in bankruptcy which had been filed by N Finance to be heard in October 2009 in relation to a judgment sum of approximately $2m. She referred to the fact that a previous bankruptcy petition had been withdrawn and she assumed therefore that the husband had found funds in which to meet that claim and it had only been a month or so prior to her affidavit.
"She referred to the fact that her Mercedes-Benz had been recently repossessed with arrears of $49,266.42 owing.
"She referred to several trips out of New Zealand made by the husband and that she had understood he had sold a luxury yacht and had acquired another one in its place in Florida. She set out that she was concerned that he was going to leave the jurisdiction of New Zealand and obtain employment outside.
"She referred to the fact that following her vehicle being repossessed in August 2009 a promise had been made by the husband to provide her with a second-hand vehicle and $10,000.00 had been paid into her account from the husband's solicitors.
"She referred to the fact that there had been no change in her perception of the husband's lifestyle despite his apparent impecunious circumstances.
"She referred to the fact that in March 2009 the husband had been a director of SU Limited. He had resigned as a director and a Mr MAS was appointed instead on 15th July 2009. She said that Mr S was a former used car salesman and close associate and former employee of the husband. That as far as she was concerned Mr S would do anything requested by the husband of him.
"She referred to four companies to be the subject of the injunction and the fact that in each of those cases Mr S appeared as a sole director. That he holds some shares and that he was appointed effectively as an agent or conduit for the husband.
"She pointed to a contradiction in a letter signed in August 2009 from a financial controller to information that was listed from the Companies Office. She questioned whether the husband's employment had in fact been terminated as suggested.
The husband filed an affidavit in reply on 23 December 2009. In summary in that affidavit he said as follows:
"That he considered the wife had misled the Court by stating that he was intending to go overseas to evade creditors.
"That he had not left...
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