Walker and Others v Official Assignee
| Jurisdiction | New Zealand |
| Judge | Whata J |
| Judgment Date | 12 May 2014 |
| Neutral Citation | [2014] NZHC 975 |
| Docket Number | CIV-2013-409-001056 |
| Court | High Court |
| Date | 12 May 2014 |
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CIV-2013-409-001056
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
Opposition to application for admission of proof of debts in respect of bankrupt's estate — bankrupt opposed the admission on the basis that the documents filed with the Official Assignee were not “evidence” for the purposes of s233 Insolvency Act 2006 (IA) (Creditor must submit creditor's claim form) and r12(1)(c) Insolvency (Personal Insolvency) Regulations 2007 (IPIR) (Creditor's claim form: have attached to it evidence of the debt and any other evidence supporting the claim) — applicant had filed a copy of a statement of claim from proceedings involving the applicant as receiver for a company of which bankrupt was a director and which alleged breach of duties by bankrupt — whether the statement of claim was evidence as required by r16(1) IPIR — whether Subpart 9 IA (creditors claims) required that the claim lodged must be certain.
T G H Smith for Applicants
G Slevin for Respondent
D I Henderson appearing in Person
JUDGMENT OF Whata J
The applicants have filed an originating application for admission of proof of debts in respect of Mr Henderson's estate. Mr Henderson was formerly a director of a company, PVL, now in liquidation. He is said to be liable to that company for a significant sum of money for, among other things, breach of his duties as a director.
The application for admission of proof of debt under s 237 accords with the process identified in a judgment of this Court of 19 April 2013 1 and an earlier judgment of 6 March 2013. 2
But Mr Henderson opposes the application on the basis that no creditor's claim form, as defined under the Insolvency Act 2006 has been filed.
The essential issue is whether or not the proof of debt claim sent to the Official Assignee attaching a cover letter and a copy of the statement of claim filed in proceedings -2486 was “evidence” for the purposes of s 233 of the Act and regulation 12(1)(c) of the Insolvency (Personal Insolvency) Regulations 2007. If not, I must then decide whether a valid claim was filed at all.
The wider context to this application is recorded at [4] — [9] of my March 2013 judgment dealing with related proceedings, which I repeat here for ease of reference:
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[4] The first plaintiff, Mr Walker, is the liquidator of Property Ventures Limited (PVL) and many of its subsidiaries. These companies were placed into liquidation with estimated losses of at least $150 million. Mr Henderson was a managing director of PVL, (though he says not at all material times). He was adjudged bankrupt on 29 November 2010. The claim against Mr Henderson was commenced on 12 November 2012 and comprises seven causes of action against the directors of PVL for allegedly serious breaches of their duties.
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[5] The relief sought by the plaintiffs includes the following:
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(a) Declarations that the PVL directors have breached their duties under ss 131, 135, 136, 137 of the Companies Act 1993;
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(b) Orders pursuant to s 130(1) of the Companies Act 1993 that the PVL directors pay to the first plaintiffs the sum of $100 million by way of compensation or such other sum as the Court thinks fit;
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(c) An order banning the PVL directors from acting as directors of companies under s 383 of the Companies Act.
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[6] There are also related claims, including against PricewaterhouseCoopers for breach of an alleged duty of care to PVL and to the PVL Group. I am also advised that one of the directors will seek to join Vero Insurance Limited.
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[7] Mr Walker says that the PVL directors, including Mr Henderson, held liability insurance with Vero. This is not accepted by Mr Henderson in his notice of opposition. However, disclosure by Vero unveiled a document which purports on its face to be a “Directors and Officers Liability and Company Reimbursement Insurance Policy”. There is also correspondence from the then chairman of PVL putting their brokers on notice of potential claims in respect of the PVL companies. That correspondence and related correspondence assumes the existence of Vero liability insurance.
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[8] Mr Walker also avers that:
12. In … order to obtain access to the proceeds of Mr Henderson's insurance cover it is necessary that these proceedings continue and that a judgment be obtained against him and on the plaintiffs' behalf I ask that the Court allow this proceeding against him to continue in terms of section 76 of the Insolvency Act 2006.
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[9] Mr Walker also produces a letter from Grant Slevin, Senior Investigating Solicitor, Insolvency & Trustee Service, Ministry of Economic Development. That letter records the acceptance of the Official Assignee that the companies for which Mr Walker is a liquidator are secured creditors in respect of any liability Mr Henderson may have to them for breach of director's duties to the extent they hold a statutory charge over the proceeds of any insurance policies that might respond to such breaches. The letter states:
Accordingly the Official Assignee accepts that your client's rights of recovery, including his right to establish in court that Mr Henderson is liable to Property Ventures Limited and its subsidiaries for any breaches of duty, are not affected by Mr Henderson's bankruptcy. The Official Assignee's consent to the issue of proceedings against him is accordingly not required.
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The letter also records that a determination by the Court would be instructive in the event that the Official Assignee was required to either admit and quantify, or reject, any proof of debt Mr Walker might elect to lodge in Mr Henderson's bankruptcy.
In that judgment and the sister judgment of April 2013 I also indicated that I was disinclined to grant leave to continue proceedings against Mr Henderson for compensation, but rather granted leave to the applicant to make applications to the Official Assignee pursuant to s 237 within 10 working days.
For completeness, I also confirmed however that Mr Henderson could continue as a party to the substantive proceedings to the extent that the relief sought by the plaintiffs includes:
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(a) declarations that the PVL directors have breached their duties under ss 131, 135, 136 and 137 of the Companies Act 1993; and
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(b) orders banning the PVL directors from acting as directors of companies under s 383 of the Companies Act 1993.
The applicants say that it is not clear what Mr Henderson suggests should have been done. They say that the claim involves complex insolvency and trading loss. They say that the process of compiling the requisite evidence is well under way but there is much more to do. There are then, however, references to documents attached to the affidavit of Denise Helen File, all adding weight, they say, to the evidence of debt. The applicants are also engaged in a discovery process following judgments ordering provision of documents despite opposition from Mr Henderson.
The applicants also submit that s 233(6) of the Act makes Mr Henderson's position moot. That section states:
The creditor may amend or withdraw the claim form, but an amended claim form must comply with the formalities prescribed for the original claim form.
The applicant submits that even if the Court were to hold that the applicants had not sufficiently complied with the provisions to which Mr Henderson refers, there is nothing stopping them from amending or filing a new claim form.
Mr Henderson responds that the terms of s 233 must be strictly complied with. This accords with the underlying purpose of the insolvency forms, namely to bring efficiency to the insolvency process.
He says that s 233 is the process by which a creditor in a bankrupt's estate moves to have their debt proven. It is predicated on clear evidence that a debt existed between the creditor and the bankrupt at the time of adjudication. He specifically refers to s 233(3) which states:
The claim form must comply with the prescribed formalities.
and s 233(4):
A creditor must submit the claim form in accordance with the prescribed procedures.
He then refers to the prescribed formalities as set out in reg 12 of the Insolvency (Personal Insolvency) Regulations 2007.
Mr Henderson submits that pursuant to reg 12, the claim form must have attached to it evidence of the debt and any other evidence supporting the claim, and a description of how the debt was incurred. He submits that these obligations anticipate conclusiveness and certainty. I think he also submits that there can be no certainty given the complexity of the claim and associated proceedings in the order of $150m against multiple defendants, including Mr Henderson. He notes that the applicants appear to concede that there is much more to do in terms of preparing evidence and this in effect acknowledges that the claim form does not meet the obligations mandated by the Regulations. He further submits that the claim and the claim form are both frivolous and cynical — that is serving no useful purpose. There are then some references to the conduct of Mr Walker which I will not dwell upon because they have little bearing on the statutory interpretation exercise and the requirement to assess whether a claim has been properly lodged in terms of the Regulations and the Act. Mr Henderson also submits that s 251 provides the appropriate approach, namely to convince the Assignee as to the debt.
He submits that the proper process to follow is to wait until all the information is available that enables a properly compliant s 233 form to be lodged or await the conclusion...
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