OFFICIAL ASSIGNEE in the bankruptcy of CHAIRAT SANTIPONGCHAI (AKA HENRY HARRISON) v CHAIRAT SANTIPONGCHAI (AKA HENRY HARRISON) [2017] NZHC 2162

OFFICIAL ASSIGNEE in the bankruptcy of CHAIRAT SANTIPONGCHAI (AKA HENRY HARRISON) vCHAIRAT SANTIPONGCHAI (AKA HENRY HARRISON) [2017] NZHC 2162 [7 September 2017]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV 2013-404-001457[2017] NZHC 2162BETWEEN OFFICIAL ASSIGNEE in the bankruptcyof CHAIRAT SANTIPONGCHAI (AKAHENRY HARRISON)ApplicantAND CHAIRAT SANTIPONGCHAI (AKAHENRY HARRISON)RespondentHearing: 4 and 5 September 2017Appearances: G Neil/C Juneja for the ApplicantMr Santipongchai in personJudgment: 7 September 2017JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSENThis judgment was delivered by me on07.09.17 at 3:30pm, pursuant toRule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate[1] Mr Santipongchai was adjudicated bankrupt on the petition of theCommissioner of Inland Revenue (the Commissioner) on 15 August 2013. MrSantipongchai's statement of affairs was received by the Official Assignee (Assignee)on 25 November 2013 and his three year term of bankruptcy began on that date.[2] Mr Santipongchai was eligible for automatic discharge from bankruptcy on 25November 2016. On 14 November 2016 the Assignee objected to Mr Santipongchai'sautomatic discharge. Accordingly Mr Santipongchai remains undischarged frombankruptcy.Public examination[3] Having objected to Mr Santipongchai's automatic discharge, the OfficialAssignee was required to call him for public examination as soon as practicable.[4] The Assignee has filed and served a report in advance of today's hearing,reporting on:(a) Mr Santipongchai's affairs;(b) The causes of the bankruptcy;(c) Mr Santipongchai's performance of his duties under the Insolvency Act2006 (the Act);(d) The manner in which Mr Santipongchai has obeyed orders of the court;(e) Mr Santipongchai's conduct before and after adjudication;(f) Any other matter that would assist the court in making a decision as toMr Santipongchai's discharge.[5] The Assignee served the report upon Mr Santipongchai on 21 August 2017.An emailed copy has been sent to every creditor in the bankruptcy. No creditors haveobjected to Mr Santipongchai's discharge from bankruptcy.The Assignee's position[6] The Assignee considers Mr Santipongchai:(a) To have engaged in pre-adjudication and post-adjudication conduct thatwarrants severe censure;(b) Poses a significant risk to the community if he was to be dischargedfrom bankruptcy and allowed to freely engage with the public and thebusiness community in an unsupervised capacity.[7] The Assignee seeks an extension of the term of bankruptcy for a period of atleast three years and says this is appropriate having regard to Mr Santipongchai's:(a) Consistent failure to abide by his obligations as a bankrupt;(b) Evasive and uncooperative manner in which he has dealt with theAssignee;(c) Commercial impropriety;(d) Dishonest and misleading manner in which he has dealt with membersof the public, lenders, and the general business community with whomhe has engaged;(e) Having caused loss to those who dealt with him both pre-bankruptcyand post-bankruptcy;(f) Having caused loss to the public including Inland Revenue;(g) Exposing the public and the business community to possible financialharm if he was to be discharged from bankruptcy and released from theAssignee's supervision and associated restrictions.Hearing considerations and outcome[8] Section 298 of the Act sets out the court's powers following the publicexamination. Available options include:(a) An immediate discharge of bankruptcy; or(b) A discharge on conditions which may include that Mr Santipongchaiconsents to any judgment or order for the payment of any sum ofmoney; or(c) Discharge from bankruptcy but for that order to be suspended for aperiod; or(d) A discharge, with or without conditions, at a specified future date; or(e) A refusal to order discharge and when the court may specify the earliestday thereafter that the bankrupt may again apply for a discharge.[9] In these hearings, when the Assignee opposes an immediate discharge, the onusis on the Assignee to satisfy the court it is in the public interest that Mr Santipongchai'sbankruptcy should continue for a further period. Normally a bankrupt will obtain adischarge and in the absence of good reasons, that will occur. However, issues ofpublic interest may compel the court to refuse or delay the issue of an order fordischarge. Courts routinely consider the interests of the bankrupt, of creditors, thepublic interest, commercial morality, and frequently, the conduct of the bankrupt.[10] It is a view of this court that the proper approach is to focus upon protectingthe public and avoiding the risk of further conduct to the detriment of the community.1[11] The focus of the Assignee's concerns is stated to be the protection of thecommunity and holding Mr Santipongchai to account for his misconduct. TheAssignee says the administration of Mr Santipongchai's bankruptcy has been hinderedby a lack of cooperation and failure to disclose accurate and full information in respectof property, conduct and dealings. The Assignee says he was misled as to Mr1 Bryers v Official Assignee [2015] NZHC 384, at [16].Santipongchai's affairs at the outset of his bankruptcy, predominantly by the statementof affairs he then completed, and by subsequent representations in respect of income,employment status and current activities.[12] The Assignee alleges Mr Santipongchai:(a) Failed to disclose his involvement in an incorporated company;(b) Actively concealed his property from the Assignee including variousfunds in bank accounts;(c) Dishonestly obtained credit;(d) Travelled overseas without first obtaining the Assignee's consent; and(e) Failed to advise the Assignee he had changed his name and obtained anew passport.[13] As to the latter point it is noted Mr Santipongchai changed his name to HenryHarrison in 2011 and this prevented the Assignee obtaining details of MrSantipongchai's assets through independent enquiries made of Customs, InlandRevenue Department, and mainstream banks.[14] Fourteen criminal charges have been laid in the District Court against MrSantipongchai in consequence of his alleged post-adjudication conduct and breachesof the Act. These include:(a) Taking part in the management or control of a business (ss 149 and436(1)(b));(b) Eight charges of obtaining credit as an undischarged bankrupt over$1,000 (s 433A);(c) Four charges of concealing property from the Assignee to the value of$500 or more (s 420(2)(a)); and(d) Leaving New Zealand temporarily without having first obtained theAssignee's consent (s 433(1)(f)).[15] The Assignee reports that creditor claims received in Mr Santipongchai'sbankruptcy estate totalled $512,782.10; that no assets were realised and there were norecoveries. The Assignee says Mr Santipongchai continued to earn income during hisbankruptcy which he has not declared or disclosed for the benefit of his creditors.[16] The Assignee places considerable focus upon claims of pre-adjudicationconduct, in particular by reference to Mr Santipongchai's commercial dealings as areal estate salesperson. On 28 January 2015 his licence was cancelled by the RealEstate Agents Disciplinary Tribunal (READT). The Assignee says Mr Santipongchaiwas found guilty of three charges of disgraceful conduct for misleading clients intopaying him money which he misapplied for his own benefit. He was also chargedwith practising as a real estate salesperson without a licence. When found guilty onthree of those four charges he offered for his reasons the fact that he had beenbankrupted due to being unable to satisfy a debt because of the Christchurchearthquake. He was ordered to pay compensation but an amount of $20,499.00remains unpaid of that.[17] The Assignee claims Mr Santipongchai retains a "cavalier attitude", continueswith "dishonest dealings", and still shows "flagrant disregard of the consequences".His pre-adjudication behaviour included failing to pay GST for various periodsbetween November 2007 and May 2012 while self employed as a real estate agent.[18] The Assignee claims there is also significant evidence of post-adjudicationconduct to justify an extension of Mr Santipongchai's bankruptcy.[19] In his statement of affairs Mr Santipongchai stated that he had not beenemployed for eight months and did not intend to gain employment in the next 12months. Despite this it is said Mr Santipongchai entered into and took over control ofa dwelling construction company called M D Global Developments Ltd (M D Global);he failed to disclose his involvement in that business and income earned from it. It issubmitted by the Assignee that even if Mr Santipongchai did not take part in themanagement or control of M D Global he was at the very least "employed". His sonwas at the time sole director and shareholder of M D Global and s 149 of the Actprohibits an undishcarged bankrupt, without the Assignee's consent, being directly orindirectly employed by a company that is owned, managed or controlled by a relative.[20] The Assignee says Mr Santipongchai caused loss to several members of thepublic who contracted for work to be done that was not completed, work for whichdeposits were paid but which were not returned despite requests.[21] The Assignee says Mr Santipongchai failed to disclose the existence of bankaccounts he held in the name of Henry Harrison at the ASB and BNZ banks, post-adjudication. Enquiries of the banks disclosed they had no knowledge of hisbankruptcy. From the ANZ he obtained a credit card with a limit of $10,000 andthereby breached his obligation not to obtain credit over $1,000. The ANZ bankadvised they have suffered the loss due to Mr Santipongchai's credit card paymentdefaults.[22] It is claimed he took out personal loans from members of the public post-adjudication, without revealing he was a bankrupt and that he has failed to repay those.[23] The Assignee says Mr Santipongchai failed to advise he had a current passportin the name of Henry Harrison, this having issued on 18 April 2011. Further that hechanged his name to Henry Harrison without informing the Assignee that he had doneso, and following that name change, applied to Inland Revenue Department for a newIRD number.[24] Mr Santipongchai travelled overseas to Thailand on three occasions during hisbankruptcy using the passport in the name of Henry Harrison. It is not known howthe trips were funded.[25] Mr Santipongchai obtained a job as a sales director at Conrad PropertiesLimited on 14 December 2015 but did not inform the Assignee of this nor of theincome that he was deriving from any employment. When the employer learned thatMr Santipongchai was bankrupt, it did not terminate his employment.[26] On 2 February 2017 Mr Santipongchai was charged with 14 offences under theAct – largely in connection with those matters already referred to herein. MrSantipongchai has pleaded not guilty to these. A hearing of those is yet to bescheduled.The public examination[27] Mr Santipongchai was self represented. He filed an opposition to theapplication opposing his automatic discharge. He submitted a lengthy memorandumwhen making his closing submissions. Those will be referred to following anexamination of the Assignee's case.[28] The examination took one and a half days. Its purpose was to look at, interalia, the Assignee's reasons for opposing procedural discharge. Routinely this invitesthe court to examine aspects of pre-adjudication conduct, and as well and moreroutinely post-adjudication conduct.Pre-adjudication conduct[29] Evidence of pre-adjudication conduct focused primarily upon MrSantipongchai's practices as a real estate agent in Christchurch and on the remainingdebts still owing to his former real estate clients. To READT he expressed remorsefor his conduct and said that he intended to "turn to religion", undertake "religiousmissionary work" and "straighten himself out" going forward.[30] The Assignee submits that READT's findings and penalty did not deter MrSantipongchai from engaging in similar conduct post-adjudication.[31] Mr Santipongchai completed his mandatory statement of affairs on11 November 2013.[32] Evidence of the Assignee's concerns with that statement is extensive. Itincluded Mr Santipongchai failing to disclose by his statement of affairs:(a) His legal change of name from Chairat Santipongchai to HenryHarrison in 2011.(b) That he had obtained a passport issued in the name of Henry Harrison.(c) Him having made regular support payments to his three sons.(d) The gifting of property within the previous two years whereby hetransferred registered ownership of two motor vehicles to his sonswithin days of the bankruptcy notice being served on him.(e) That he spent approximately $20 per week on lotto.(f) That he held bank accounts in his name.(g) Details of all of his assets including his part ownership with his wife inhousehold furniture.(h) His use of a motor vehicle owned by his wife.(i) His directorship of a limited liability company within two years priorto his adjudication.[33] The other concerns of the Assignee are about claims of breaches of s 145 ofthe Act by which Mr Santipongchai was bound to notify the Assignee of changes inhis personal information. In that regard the following paragraphs contain relevantdetails.[34] Mr Santipongchai and his wife, and it appears, also his sons, made a numberof changes of address of residence which were not notified.[35] He was engaged in employment, first with Ray White Real Estate in a salesagent consultancy position.[36] He was employed and indeed controlled the affairs of M D Global which wasowned by his son.[37] He was employed as a sales director of a company called Conrad PropertyGroup in December 2015.[38] He received undeclared income from home stay guests because his bankaccounts disclose regular payments of $1,200 per month for one year from that source.[39] That income was received by his wife and sons and was then paid into anaccount within his control.[40] Mr Santipongchai loaned monies from a Mr Chan and a Mr Orrell andborrowed from the ANZ Bank when he did not disclose his bankruptcy to thoseentities.[41] He received a gift of $5,000 from a friend for the purposes of funding awedding but which was not applied for that purpose.[42] He benefitted from income from the operation in his wife's name of arestaurant and it was he who completed the financial application in the name of thatrestaurant.[43] Mr Santipongchai arranged credit facilities exceeding $1,000 withoutdisclosing his bankruptcy in amounts owing to:$• Mr Chan for approximately 70,000.00• Mr Orrell (in connection with MrSantipongchai's operation of a businessnominally owned and operated by his son,following his son's departure from NewZealand) 3,500.00• OneCard Visa 2,546.78• GEN Visa 3,181.73• ANZ Visa 11,523.44• ANZ Personal Loan (obtained on 19/2/2016) 25,250.00[44] There appears to be no resource from which these can be repaid.[45] There is clear evidence available that he assisted his son in the establishmentof a building management business owned by M D Global. Shortly after the companywas established his son departed New Zealand and Mr Santipongchai assumedresponsibility for the control of the business.[46] This control included access to the company's bank account and the conductand management of the business including receipts of deposits and payment offinancial commitments.[47] Mr Santipongchai borrowed funds from associates and/or via credit facilitiesand promising to pay from funds he expected would be available from his father'sestate in Thailand. It appears there was no issue with claims his father's estatecontained significant value. It provided Mr Santipongchai with claims, perhapshonestly believed by him, that his expected share of his late father's estate wouldenable commitments for repayment of debt. However and lately he learned that hisfather's entire estate went to his mother who is now 96 years of age.[48] The restrictions that bankruptcy places upon an ability to leave New Zealandare well understood. Despite that understanding Mr Santipongchai clearly ignored hispost-adjudication obligations. He left New Zealand on three occasions without theconsent of the Assignee. He acknowledges doing so. Those trips were to Thailand –he says in connection with issues arising affecting his father's estate. While he andhis wife have now separated and she has returned to Thailand, one of his sons remainswith him while the others have also returned to Thailand.[49] Mr Santipongchai appears firm that he wishes to retain his right of residencein New Zealand.[50] It is clear that regardless of which identity he uses for future travel purposes,his ability to leave New Zealand would henceforth be restrained.Mr Santipongchai's position[51] Mr Santipongchai was examined for a day and a half. He appeared freely toanswer all questions and did not deny his connection to credit facilities raised, bankaccounts held, his assistance provided to the business of M D Global owned by hisson, of his loans from associates or his creation of credit facilities. His position is thatthere were marriage difficulties. He said his focus was upon assisting his son'sbusiness establishment.[52] Mr Santipongchai says he wishes to develop his Christian communitycommitments. He claims he has acknowledged full details of that income he receivedbut having not declared it. He admits transferring two vehicles owned by he and hiswife after being served with the bankruptcy notice. He does not dispute that hisbankruptcy debts exceed $500,000. He has continued his real estate interest becausethat is where his experience lies. Shortly after his son's business M D Global wasestablished, his son returned to Thailand and Mr Santipongchai has effectivelycontrolled that business since – albeit without any reward to him, and despite the debtsthat business has since incurred. Those debts appear to be relatively modest.[53] By his submissions, Mr Santipongchai acknowledges:The gravity, magnitude and seriousness of what I have done and I amremorseful and I have learnt my lesson. I will never go into debt again. Sincebeing on WINZ it made me realize that we can all do things through Christ tostrengthen us, this verse teaches us that no matter how little money we havewe can get through the with Christ. Some days my wallet is empty butsomehow, I do not go hungry.[54] Mr Santipongchai says he is too old and does not intend to repeat his mistakes.He claims he did not intentionally set out to cheat those from whom he borrowedmoney because he truly believed he could repay those from his inheritance but thatthose plans came to an end with the revelation of his father's will.[55] Those persons who dealt with M D Global and who incurred losses were, hesaid, aware it was his son's business and that Mr Santipongchai was assisting in thatbusiness – for which he says he received no payment.[56] Mr Santipongchai says that he has suffered in the last few years, and has asense of guilt, and he acknowledges a loss of reputation and credibility and is awareof the disappointment and shame he has brought on himself and his family. His hopeis to restore his marriage with his wife, who returned to Thailand in March 2017. Hewants to be with his mother now 96 years old, in her last years and wants to save toearn a ticket to return to Thailand as soon as he can. He promises to repay the debtshe has incurred.[57] He says if still bankrupted he cannot gain employment and cannot supporthimself in New Zealand and does not wish to be a burden on the social welfare system.He remains adamant however that he wishes to retain his New Zealand citizenship.Conclusions[58] There is sufficient, in the evidence, to require the bankruptcy to continuebeyond the standard three year term. His practises as a real estate agent fell far shortof acceptable conduct and standards.[59] The Official Assignee encourages the court to consider issues arising pre-adjudication ought also to persuade the court in its usual consideration of outcome, byreference to post-adjudication conduct.[60] In all the circumstances, the court considers that assertion to bear weight in itsdecision. Persons dealing with Mr Santipongchai's wife, through her restaurantbusiness, and his sons have confided in and entrusted him to respect his lawfulcommitments when he has, for himself or others, borrowed funds and conducted thebusiness affairs. Too often, debt was incurred and Mr Santipongchai's claims ofhonesty and good faith have fallen far short of his commitment.[61] This is not a proper case to permit Mr Santipongchai's automatic dischargefrom bankruptcy due on 25 November 2016.[62] Mr Santipongchai has not been honest and forthcoming in his financial affairs,his residency, travel restrictions and his obligations for full disclosure to the Assignee.[63] In regard to those and to issues raised on behalf of the Assignee in itsopposition to Mr Santipongchai's automatic discharge, he now also faces criminalprosecution.[64] For present purposes, and noting that Mr Santipongchai's automatic dischargeis due on 25 November 2016, the court considers there is very good reason to extendthe date of the automatic discharge.[65] Mr Santipongchai wishes to remain a resident of New Zealand. That aspirationcomes with obligations, and will prevent his departure from New Zealand meanwhile.His conduct has been reckless. His commercial dealings have lacked integrity,accountability and transparency. He has not complied with his obligations as abankrupt.[66] In the Court's view and while most of Mr Santipongchai's short failings relateto his efforts in maintaining his family's wellbeing, it is clear that Mr Santipongchai'sfull discharge ought to be delayed and should not take place before 25 November2019.Judgment[67] The Court directs pursuant to s 298(1)(d) of the Act, that Mr Santipongchaiwill not be discharged from bankruptcy until 25 November 2019. Until then, MrSantipongchai shall remain a bankrupt.[68] Costs are reserved for consideration upon application.Associate Judge Christiansen