HARE v HARE (A DECLARED BANKRUPT) [2019] NZHC 2801

HARE v HARE (A DECLARED BANKRUPT) [2019] NZHC 2801

A charging order registered under s184 of the Child Support Act constitutes a secured debt that survives bankruptcy and therefore must be treated as an encumbrance when calculating the "equity" of the family home for the purposes of s20B(3)(a)(ii); "equity" means market/agreed value less all encumbrances (including the child support charging order), and the protected interest equals the lesser of the prescribed specified sum and one-half of that net equity.

Citation
[2019] NZHC 2801
Parties
Applicant (spouse/partner Seeking Declaration): Kelly-Ann Hare; Respondent (declared Bankrupt Spouse): Jonathan Keith Hare (A Declared Bankrupt); Interested Party (child Support Creditor): Commissioner of Inland Revenue; Interested Party (trustee in Bankruptcy): Official Assignee
Court
High Court
Jurisdiction
New Zealand
Judgment Date
31 October 2019
Procedural Posture
Property (relationships) Act Application Intersecting With Bankruptcy and Child Support Charging Order / High Court Determination on Legal Issue of Valuation of Protected Interest Following Transfer From Family Court (interlocutory/declaratory Stage)
Outcome
Application determined: charging order under Child Support Act is a secured debt that survives bankruptcy and must be included in the calculation of equity for s20B(3)(a)(ii); protected interest calculated accordingly
Legal Topics
Protected Interest in Family Home (s20 B), Charging Orders (child Support Act S184), Priority of Secured Creditors in Bankruptcy, Calculation of Equity, Interaction of PRA and Insolvency/child Support Statutes
Family Law Insolvency Law Tax/revenue (child Support) Property Law Protected Interest in Family Home (s20 B) Charging Orders (child Support Act S184) Priority of Secured Creditors in Bankruptcy Calculation of Equity +1 more

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Parties

Kelly-Ann Hare

Applicant (spouse/partner Seeking Declaration)

Jonathan Keith Hare (A Declared Bankrupt)

Respondent (declared Bankrupt Spouse)

Commissioner of Inland Revenue

Interested Party (child Support Creditor)

Official Assignee

Interested Party (trustee in Bankruptcy)

Procedural Posture

Property (relationships) Act Application Intersecting With Bankruptcy and Child Support Charging Order / High Court Determination on Legal Issue of Valuation of Protected Interest Following Transfer From Family Court (interlocutory/declaratory Stage)

Legal Issues

  1. 1 Whether a charging order registered under s184 Child Support Act constitutes a secured debt that survives bankruptcy
  2. 2 Whether a charging order registered prior to the commencement of the de facto relationship is to be included in the calculation of "equity" for s20B(3)(a)(ii) of the Property (Relationships) Act 1976
  3. 3 What is the proper meaning of "equity" in s20B(3)(a)(ii) and whether personal child support debt should be excluded when calculating the protected interest

Ratio Decidendi

A charging order registered under s184 of the Child Support Act constitutes a secured debt that survives bankruptcy and therefore must be treated as an encumbrance when calculating the "equity" of the family home for the purposes of s20B(3)(a)(ii); "equity" means market/agreed value less all encumbrances (including the child support charging order), and the protected interest equals the lesser of the prescribed specified sum and one-half of that net equity.

Court Disposition

Application determined: charging order under Child Support Act is a secured debt that survives bankruptcy and must be included in the calculation of equity for s20B(3)(a)(ii); protected interest calculated accordingly

Orders

  • Charging order under s184 Child Support Act 1991 is a secured debt and is to be taken into account when determining equity in the family home
  • Equity in the Olivia Crescent property to be calculated as market/agreed value less the outstanding mortgage and the child support debt secured by the charging order