KA CHOPRA V OFFICIAL ASSIGNEE FOR NEW ZEALAND AT NAPIER HC NAP CIV-2009-441-432

KA CHOPRA V OFFICIAL ASSIGNEE FOR NEW ZEALAND AT NAPIER HC NAP CIV-2009-441-432 13 July 2009IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY CIV-2009-441-432UNDER Insolvency Act 2006 IN THE MATTER OF an appeal of the Official Assignee's decision terminating participation in the No Asset Procedure BETWEEN KERRE ANN CHOPRA Plaintiff AND OFFICIAL ASSIGNEE FOR NEW ZEALAND AT NAPIER Defendant Hearing: On the papers Counsel: M J Wenley for the plaintiff Judgment: 13 July 2009JUDGMENT OF GENDALL AJ[1] Before the Court is a without notice application under the Insolvency Act 2006 seeking an order reversing a decision of the Official Assignee made on 1 April 2009 terminating the admittance of Kerre Ann Chopra ("the plaintiff") to the No Asset Procedure pursuant s 372 Insolvency Act 2006. [2] In addition the present application seeks orders permitting this proceeding to be commenced by originating application, granting an extension of time on the filing of the application and dispensing with service. [3] With the application a supporting affidavit of the plaintiff sworn 6 July 2009 has been filed together with a Memorandum from counsel for the plaintiff dated 7 July 2009.[4] At the outset I note that s 26 I(2)(ha) Judicature Act 1908 confers jurisdiction on Associate Judges to deal with applications of this type. [5] Turning first to deal with the procedural applications before the Court, I am satisfied under the circumstances here that leave should be granted for this proceeding to be commenced by way of originating application. An order to this effect is now made. [6] Next, an extension of time to permit bringing the present application (outside the 15 working day period) is sought. The Official Assignee has consented to such an order being made and under the circumstances here, I am satisfied it is appropriate. An order is now made granting an extension of time to permit the filing of the present applications. [7] As I have already noted the application has been made without notice. The Official Assignee as defendant however, has consented to the application in its entirety. Although the plaintiff's creditors will be affected by the making of the orders sought, it is clear this would in any event have the same effect as the original decision which was made by the Official Assignee to admit the plaintiff to the No Asset Procedure. [8] I am satisfied therefore that it is appropriate for this matter to proceed without notice. I say this particularly given the consent of the Official Assignee to both the application and the orders sought. An order to this effect is now made. [9] I now turn to the substantive application itself. [10] On 9 January 2009 the plaintiff applied for admission to the No Asset Procedure on the basis that her liabilities recorded in her Statement of Affairs were under $40,000. This qualified her for admission to the No Asset Procedure. [11] On 27 January 2009 she was admitted to the No Asset Procedure. [12] On 4 March 2009 the Official Assignee wrote to the plaintiff advising her that an objection had been received from a creditor, Wine Country Credit Union, tothe decision admitting her to the No Asset Procedure. The Official Assignee concluded however that the plaintiff correctly met the criteria for entry into the procedure with a result that this objection was dismissed. [13] Subsequently, on 1 April 2009 the Official Assignee wrote to the plaintiff advising that her admittance to the No Asset Procedure had been terminated with effect from that date pursuant to s 372 Insolvency Act 2006. This was on the basis that the plaintiff had a debt to the Commissioner of Inland Revenue for family support of $2,368.23 with the result that this debt had taken her over the $40,000 threshold as at 27 January 2009. Accordingly, the Official Assignee concluded that she did not qualify for entry to the procedure. [14] The plaintiff in her affidavit sworn 6 July 2009 in support of the present application deposes that she had not declared this debt for family support of $2,368.23 for the reason that she understood around 5 July 2008 the debt had been written off. It appears that some administrative oversight was made within the Inland Revenue Department in about July 2008 and the debt had not been written off. The Commissioner of Inland Revenue however confirmed on 9 April 2009 that the plaintiff had been granted financial relief from payment of this family support debt and he confirmed that the $2,368.23 debt had effectively been written off. [15] Notwithstanding the fact that this debt which had disqualified the plaintiff from entry to the No Asset Procedure had been written off, the Official Assignee advised that as he did not have jurisdiction to readmit the plaintiff to the procedure thus it would be necessary for her to make the present application to the High Court. [16] And, in her affidavit of 6 July 2009 the plaintiff confirms that she has not incurred any further debt since 27 January 2009. [17] The plaintiff here effectively brings an appeal pursuant to s 226 Insolvency Act 2006 against a decision of the Official Assignee made under s 373 Insolvency Act 2006.[18] As I have noted the Official Assignee has consented to the appeal and the orders sought here by the plaintiff. [19] In Re Tracy Lee Gifkins HC AK CIV-2009-404-281 20 and 25 May 2009 Allan J, in a similar application to the present, sets out in some detail the background to the No Asset Procedure under the Act at paragraphs 4-12. [20] Section 373 Insolvency Act 2006 deals with the situation presently before the Court and states:373 When Assignee may terminate(1) The Assignee may terminate a debtor's participation in the no asset procedure if – (a) The debtor was wrongly admitted to the no asset procedure, for example, because the debtor concealed assets or misled the Assignee; or (b) The Assignee is satisfied that the debtor's financial circumstances have changed, enabling the debtor to repay an amount towards his or her debts. [21] In Re Tracy Lee Gifkins Allan J considered this provision and stated at paragraph [35]:[35] Although the opening words of s 373(1) are permissive in character – "The Assignee may " – the Assignee is plainly under a duty to terminate where a debtor is wrongly admitted because debts were understated. The scheme of the Act would be subverted if the Assignee exercised his discretion in favour of the debtor in such circumstances.[22] In the present case the decision of the Official Assignee to terminate the plaintiff's participation in the procedure was made on 1 April 2009 on the best information then available. [23] As I have noted above, subsequently it transpired that the claim that the plaintiff had an additional undisclosed Family Support debt of $2,369.23 to the Commissioner of Inland Revenue was wrong. The Commissioner of Inland Revenue has now confirmed this and he notes that the debt has been written off.[24] That said, there can be no doubt on the evidence before the Court that the plaintiff was not wrongly admitted to the No Asset Procedure in January 2009. Further, the plaintiff has confirmed in her recent 6 July 2009 affidavit that she has not incurred any further debt since that January 2009 date. [25] It must follow therefore that the order sought reversing the decision of the Official Assignee to terminate her admittance to the No Asset Procedure should be granted. [26] In addition as I have mentioned earlier on several occasions, it needs to be noted that the Official Assignee has consented to an order being made to this effect. [27] For these reasons the substantive application before me succeeds. [28] An order is now made reversing the decision of the Official Assignee made on 1 April 2009 terminating the admittance of the plaintiff Kerre Ann Chopra to the No Asset Procedure pursuant to s 372 Insolvency Act 2006. AJ GendallSolicitors: M J Wenley, Willis Toomey Robinson, PO Box 6018, Napier