TAO v OFFICIAL ASSIGNEE & ORS [2020] NZHC 1260

TAO v OFFICIAL ASSIGNEE & ORS [2020] NZHC 1260 [8 June 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2017-404-002177[2020] NZHC 1260UNDER the Insolvency Act 2006IN THE MATTER OF an application for a discharge frombankruptcyBETWEEN AN LI TAOApplicantAND OFFICIAL ASSIGNEEFirst RespondentSTRATA TITLE ADMINISTRATIONLIMITEDSecond RespondentBODY CORPORATE 198693Third RespondentJIGAR PANDYAFourth RespondentXIAOMEI JANGFifth RespondentINLAND REVENUE DEPARTMENTSixth RespondentHearing: 8 June 2020Appearances: Applicant in PersonC Baker for Third RespondentJudgment: 8 June 2020ORAL JUDGMENT OF ASSOCIATE JUDGE P J ANDREWIntroduction[1] The judgment debtor, Ms Tao, was adjudicated bankrupt on 29 January 2019.She now makes application for early discharge from her bankruptcy pursuant to ss 294and 298 of the Insolvency Act 2006. The principal ground of the application is thatthe applicant has been previously appointed as the attorney of her parents to deal withtheir financial affairs.1 They are said to be elderly, disabled in the case of her mother(cognitively impaired), who suffers from a chronic illness. Both parents are Chineseand non-English speakers. The applicant wishes to be discharged so that she can careproperly for her parents. She has mentioned particular difficulties with banking, withobtaining changes in relation to the parents' mortgage and the like. Ms Tao tells meshe is the only person who can carry out these necessary functions. She is an onlychild and the only other surviving family member, a sister of the father, lives inBeijing.[2] The application is opposed by the original judgment creditor, the BodyCorporate 198693. I note that Ms Tao's parents still reside in one of the units withinthe Body Corporate apartment block.[3] The Official Assignee, who has filed a report under the legislation, will abidethe Court's decision.Factual background[4] The circumstances leading to the applicant's bankruptcy are set out in thedecision of Sargisson AJ in her judgment of 29 Jan 2019.[5] Prior to the adjudication orders being made there was an attempt by Ms Tao toset aside the bankruptcy notice but that was unsuccessful.[6] Sargisson AJ also noted that the creditors of Ms Tao were the Body Corporate,together with its corporate secretary and chairperson of the unit title development in1 On 27 January 2017, the applicant was granted enduring powers of attorney for each parent, overboth their property and their personal care and welfare.New Lynn where Ms Tao's parents own a unit. Until 25 October 2016, Ms Tao wasalso registered as a proprietor on the title.[7] Disgruntled by the creditors' actions, Ms Tao brought claims against them intwo sets of proceedings. She variously alleged mismanagement, fraud and conspiracyon the part of the creditors, primarily in relation to building maintenance carried outon the New Lynn property.[8] Sargisson AJ further noted that in a comprehensive decision issued on 27 April2016, Thomas J granted defendant summary judgment in favour of the creditors,dismissing both proceedings. Thomas J held that the creditors were entitled to costsof $60,210, which included a 25 per cent uplift applied on the basis of Ms Tao'sbehaviour prolonging the trial and adding to its expense. It was of course that costsaward of $60,200 plus interest which was the outstanding debt upon which thecreditors applied for adjudication. Subsequent to that judgment Ms Tao appears tohave take some steps to appeal to the Court of Appeal but ultimately she wasunsuccessful.[9] Sargisson AJ further noted in her judgment2 that the litigation she had justrecorded was not the only litigation arising from the same events and involving MsTao. There was an affidavit before her Honour from the creditors' solicitor setting outsix separate proceedings involving the creditors. They included a judicial review ofan unsuccessful defamation claim, an appeal of an unfavourable Tenancy Tribunalorder and two claims to the Human Rights Review Tribunal.[10] Ms Tao made the application for discharge under s 294 on 12 August 2019. Inote as of today's date there is approximately another 18 months to run on thebankruptcy before the three-year period expires.[11] In his report filed in this Court on 5 February 2020, the Official Assignee hasnoted the creditors have filed claims totalling $217,330.94 but the judgment debtorhas no assets worth realising.2 Strata Title Administration v Tao [2018] NZHC 3381, at [13].[12] I turn now to consider the relevant legal principles.Relevant legal principles[13] As Mr Baker has submitted, the leading authority on an application for earlydischarge of a bankruptcy was an earlier decision of the Court of Appeal in ASB vHogg case:3In conferring a discretion expressed in the broadest terms, the legislationrecognises that each case will be different, that the relevant factors may varyfrom case to case and that the exercise of the discretion must be governed bythe circumstances of the particular case having regard to the guidanceprovided by a consideration of the scheme and purpose of the legislation. Inproviding for automatic discharge after three years the legislation recognisesthat it is not in the public interest that the bankruptcy should endureindefinitely and providing for earlier discharge s 108 [the old section]recognises that continuing the bankruptcy to the end of the three years maynot be in the public interest. Whether or not it is will be a matter of decisionon the particular facts. In that regard guidance is provided by s 109(2) whichlists matters in which the assignee is to report to the High Court in such a case.The Court has to consider the assignee's report as to the affairs of the bankrupt,the causes of the bankruptcy, the manner in which the bankrupt has performedthe duties imposed on him or her under the Act and his or her conduct bothbefore and after the bankruptcy and also as to any other facts, matter orcircumstances that would assist the Court in making its decision. Clearly theCourt apprised of the matter will consider the legitimate interests of thebankrupt, the creditors and wider public concerns, but it neither required norentitled to impose threshold requirements in the exercise of the discretion soas to derogate from the breadth of the powers conferred under s 110. Theapplicant has the onus in the sense of adducing evidence to show good causefor ordering an early discharge but his obligation goes no further than that.[14] So the key points to take from the ASB decision are that the applicant has theonus of adducing evidence to show good cause for an early discharge and that theCourt has a very broad discretion. In the absence of good reasons, a bankrupt shouldnormally obtain a discharge. However, public interest factors may mean that an orderfor early discharge should be refused.43 ASB v Hogg [1993] 3 NZLR, p156. Although that case was decided under the earlier legislation,the principles apply equally to the current, 2006 Act.4 Re Whitelaw HC Hamilton CIV-2004-419-1947, 10 September 2010.[15] As I have said, the relevant factors include the interests of the bankrupt, theinterests of the creditors, the public interest, commercial morality and the conduct ofthe bankrupt.5[16] So I now turn to my decision and to apply the various factors in this case.Analysis and decision[17] I have some sympathy for the position of the applicant. I am sure that as thesole carer for her elderly parents, that life is difficult. However, as Mr Bakersubmitted, the difficulties that the applicant is experiencing were in fact expressly dealtwith by Sargisson AJ in her decision to adjudicate Ms Tao bankrupt.[18] In relation to those concerns, Sargisson AJ made three points:(a) Whatever weight is to be afforded to that factor – concerns aboutlooking after the parents – it remains only one consideration in theoverall analysis;(b) It is no light matter to handle the financial affairs of another and givenher recent track record it is not inappropriate that Ms Tao's ability to doso is curtailed as a consequence of her adjudication;(c) Finally, her parents are not left without options. Health providers canstill take steps in the best interests of a customer who is not competentto give informed consent where no other person is entitled to consenton their behalf. Ms Tao also has the right as a relative to seek ordersunder Part 1 of the Protection of Personal and Property Rights Act,including what Sargisson AJ described as generously wide ordersavailable under s 10.[19] Despite the concerns that Ms Tao is experiencing, I am not persuaded that it isthe public interest or in the interests of the creditors to grant the application for an5 Re Whitelaw, above n 4.early discharge. I am particularly concerned, and I have no doubt that the BodyCorporate is equally, that there does appear to be unresolved litigation between theapplicant's parents and the Body Corporate and inevitably that the applicant isinvolved with that to some extent. There appears to be outstanding proceedings inrelation to costs and body corporate levies. There is a decision, as I understand it, ofthe Tenancy Tribunal which Ms Tao's parents are appealing to the District Court, andit appears that the Human Rights Tribunal proceedings, which Sargisson AJ referredto, are not resolved.[20] As I see it, if I were to accede to the applicant's application there is a real riskof her becoming further involved in the outstanding litigation and I do not see that asin the interests of either the public or the judgment creditor, the Body Corporate.[21] I also note that the remedies that Sargisson AJ suggested in her decision of the29 January 2019, are still available to Ms Tao. I also find it difficult to accept thatthere are not some practical solutions that Ms Tao might be able to avail herself of todeal with the obviously difficult and practical issues she has in assisting her parents todischarge their financial affairs. It is not a matter for me, but I do wonder if theAuckland Community Law Centre might be able to provide some assistance to Ms Taoand possibly also the Citizens Advice Bureau.[22] As to this application, however, I find that the applicant has failed to dischargethe onus to persuade me that there are good reasons for an early discharge of herbankruptcy and accordingly I find that the application should be dismissed.[23] Before I conclude this judgment there is one further matter that I want toaddress which out of fairness to Ms Tao I have overlooked, and that is the challengeshe makes to the authority of the Body Corporate to defend this proceeding. Ms Taoclaims that the Body Corporate has not acted properly – in substance what she says isthat the Body Corporate has not made a valid and proper decision to oppose herapplication. However, I find that that submission is in the circumstances heremisguided. There is no evidence before me that the Body Corporate has actedimproperly or that Mr Baker somehow lacks proper and valid instructions to opposethe application as he has. That is quite a serious allegation to make and were that tosucceed, the Court expects to be provided with the necessary probative evidence. Ihave not received any such evidence and I find that there is no merit to that ground aswell.Result[24] The application by Ms Tao for a discharge from her bankruptcy pursuant toss 294 and 298 of the Insolvency Act 2006 is dismissed. I award costs to the judgmentcreditor, the Body Corporate, the third respondent, on a 1A basis, plus disbursements.__________________________Associate Judge P J Andrew