Official Assignee v Cameron [2014] NZHC 2820 (11 November 2014)

Last Updated: 18 November 2014

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2009-470-603 [2014] NZHC 2820

UNDER	the Insolvency Act 2006
IN THE MATTER OF	the bankruptcy of BRUCE JOHN CAMERON
BETWEEN	OFFICIAL ASSIGNEE Applicant
AND	BRUCE JOHN CAMERON Respondent

Hearing:	11 November 2014
Appearances:	P V Cornegé for Official Assignee N King for Respondent
Judgment:	11 November 2014

_{ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL}

Solicitors:

Almao Douch, Hamilton, for Applicant

Bell & Graham, Matamata, for Respondent

Counsel:

_{Noel C King, Barrister, Manukau, for Respondent}

OFFICIAL ASSIGNEE v BRUCE JOHN CAMERON [2014] NZHC 2820 [11 November 2014]

[1] Five years ago Mr Cameron was adjudicated bankrupt. The question in this application for directions by the Official Assignee is whether he has been discharged under s 290 of the Insolvency Act 2006, or whether he should be discharged now. The particular issue is when Mr Cameron filed a statement of affairs under s 67 of the Insolvency Act.

[2] Under s 290 of the Insolvency Act, the three years until an automatic discharge runs from when a bankrupt files a statement of affairs under s 46 or s 67. As Mr Cameron did not apply for his own adjudication, s 46 does not apply.

[3] Mr Cameron filed three statements of affairs with the Official Assignee: on

3 March 2010, 23 August 2012 and 23 October 2012. The Official Assignee says that only the last statement of affairs complies with the Insolvency Act and the Insolvency (Personal Insolvency) Regulations 2007. There is no question as to the delivery of the statements of affairs. The Official Assignee’s complaint goes to the quality of the statements supplied by Mr Cameron.

[4] The focus is on the first statement of affairs, filed on 3 March 2010. If that statement is accepted, Mr Cameron was discharged with effect from 3 March 2013. On the other hand, if that does not comply and only the later statements of affairs count, it is common ground that he should be discharged today under s 294. Even though the full three years following the statement of affairs will not have run, he will have been bankrupt for five years and that is more than long enough for him to endure that status.

[5] Section 67 of the Insolvency Act 2006 says:

67 Bankrupt must file statement of affairs with Assignee

After adjudication, the bankrupt must file with the Assignee a statement of the bankrupt’s affairs in the prescribed form, unless the bankrupt has already filed a statement under section 46.

[6] Under s 68, following adjudication the Official Assignee is required to notify the bankrupt of the adjudication and to require a statement of affairs. Under s 69, the bankrupt must file a statement of affairs in the prescribed form within 10 working days of receiving the Official Assignee’s notice.

[7] The Insolvency (Personal Insolvency) Regulations 2007 prescribe the form for a statement of affairs. Regulation 6 applies to a statement of affairs to be provided by a debtor under s 46 of the Insolvency Act. Under reg 8 the same requirements apply to a statement of affairs under s 67. Regulation 6 says:

6 Debtor's statement of affairs

(1) For the purposes of section 46(1), a statement of affairs must be—

(a) signed by the debtor; and

(b) dated.

(2) The statement of affairs must contain the following information: (a) the debtor's full name:

(b) the debtor's current address, telephone number, and any other contact detail (such as a mobile telephone number or an email address):

(c) if the debtor has used any other name, including any alias in the last 7 years, those other names and aliases:

(d) the debtor's date of birth:

(e) whether the debtor is male or female:

(f) the debtor's tax file number (IRD number):

(g) if the debtor has a current passport, the nationality and number of the passport:

(h) if the debtor is employed—

(i) the employer's name and address: (ii) the debtor's occupation:

(i) a statement of the debtor's income:

(j) an itemised statement of the debtor's expenses:

(k) if the debtor has included his or her partner's expenses under paragraph (j), a statement of the partner's income:

(l) a statement of the debtor's current assets, including the description, value, and location of those assets:

(m) a statement of any assets that the debtor has disposed of in the previous 36 months:

(n) a statement of the debtor's liabilities, including any contingent liabilities, with the following details for each liability:

(i) the amount:

(ii) whether it includes goods and services tax: (iii) how it was incurred:

(iv) whether it is secured:

(v) if it is secured, a description of the security: (vi) whether it is a preferential debt:

(o) a statement of all financial transactions by the debtor during the previous 36 months

[8] The regulation does not specify any particular format for a statement of affairs. Instead, the requirements are that the statement be dated, signed by the debtor, and contain 15 particular items of information. While a bankrupt may not have much difficulty with some of the items of information, it is clear that other matters may be more difficult. I expect any person, not necessarily a bankrupt, would find it hard to give a statement of all assets they have disposed of in the last three years. Similarly, I would expect any person, not just a bankrupt, would have difficulty giving a complete statement of all their financial transactions for the last three years. For my part I would struggle to address those matters fully. It seems to me that it is inherent in the nature of the task required that there must be some give and take in the information that a debtor might give. Literal compliance with each and every subclause in reg 6(2) may not be practicable.

[9] Before I turn to the statements of affairs which Mr Cameron provided, I need to deal with the Official Assignee’s forms.

[10] In 2010 the Official Assignee’s office in Hamilton sent to Mr Cameron a document called a “Statement of Affairs”. That was said to be “For use in relation to Bankruptcy/No Asset Procedure/Summary Instalment Orders.” The document runs to 30 pages. It provides 89 questions. Not all questions need to be answered in every case. Where some subjects are not applicable to the particular debtor or bankrupt, further questions do not always require an answer. But within those

89 questions there are sub-questions. For example, at question 52 on motor vehicles/transport, the sub-questions run from (b) to (u).

[11] In many areas the matters on which the Official Assignee seeks information in this statement of affairs go beyond those required under reg 6. For example, the debtor or bankrupt is required to specify his or her ethnicity, although that is irrelevant under the regulations. Similarly, the debtor is required to give details of past employment, even though the regulations only enquire as to current employment. As to accommodation, the debtor is required to give full details of any tenancy arrangements even though the regulations do not require it.

[12] In two respects the statement of affairs used by the Official Assignee does not seek information to the same extent as required by the regulations. The Official Assignee’s form requires the debtor/bankrupt to state assets that the debtor has disposed of over the last two years rather than the previous three years. And the Official Assignee’s statement does not require the bankrupt to give a statement of all financial transactions during the previous three years.

[13] The Official Assignee’s statement requires the bankrupt to set out the bankrupt’s beliefs as to the main cause of insolvency. That is an enquiry into beliefs, whereas the regulation is concerned only with facts.

[14] The form used by the Official Assignee makes no attempt to separate out the information required under reg 6 from other information. A bankrupt receiving a statement of affairs from the Official Assignee is likely to believe that to comply with s 67 they would be required to provide all the information set out in the statement of affairs before time can start running. In that respect I regard the statement of affairs used by the Official Assignee as unhelpful and potentially misleading.

[15] The Official Assignee changed to a new form in 2012. That is also a lengthy document which requires information that goes beyond what is required under reg 6. That change has not improved matters.

[16] It is apparent that the Official Assignee requires bankrupts to use the statement of affairs he has prepared and to give all the information required in his form. There is a consistent course of practice by the Official Assignee in using that

form under s 67 of the Insolvency Act. That is obviously a problem, because the Official Assignee does not require all the information under reg 6. On the other hand, he requires surplus information beyond reg 6. It would be helpful if the Official Assignee were to amend his statement of affairs so that debtors and bankrupts need give only the information required under reg 6.

[17] Now for Mr Cameron’s case.

[18] Mr Cameron obviously did not welcome his bankruptcy. He has, if anything, been a resentful bankrupt but his attitude towards the bankruptcy and his conduct later in his bankruptcy are irrelevant. I am required in his case only to consider whether he has filed complying statements of affairs under s 67.

[19] The Official Assignee had to chivvy Mr Cameron along to provide a statement of affairs. It got to the stage where a summons had to be issued to require his attendance at the Official Assignee’s office so that he could be examined and provide a statement. It was only after that was done that he did provide a statement of affairs in March 2010. He sent it under cover of a letter dated 2 March 2010, which said:

In response to you [sic] letter of 22 February 2010.

Attached is a copy of the completed information as requested.

Due to prior commitments, I shall be unavailable to ring on the 5 March

2010 as suggested.

I trust the information provided is sufficient for your purpose at this time. Should you require any further information from myself then please advise.

Thank you.

Mr Cameron signed that letter.

[20] The Official Assignee takes issue with the statement of affairs. Mr Cornegé identified three matters. The first is that Mr Cameron did not provide his IRD number. That is required under reg 6(2)(f). In response to that question, Mr Cameron simply put “N/A”. Later in the form he identified his last employer. Clearly because of his employment he would have an IRD number.

Mr Cornegé accepts that while that statement of affairs was not correct, Mr Cameron did supply his IRD number in a later statement of affairs and the Official Assignee was not misled.

[21] Second, in response to the question, “Do you personally owe money to anyone else?” Mr Cameron answered “No”. That was incorrect. Mr Cameron had been made bankrupt on an application by a judgment creditor. Notwithstanding that incorrect answer, Mr Cornegé accepts that the Official Assignee could not have been misled. The Official Assignee would know that Mr Cameron did have debts because he would not otherwise have been adjudicated bankrupt.

[22] The final point is that Mr Cameron did not sign the statement of affairs, that being a requirement of reg 6(1)(a). The requirement to sign the statement of affairs is in addition to the requirement for the bankrupt to provide his full name. On page 1 of the document the debtor is required to provide his first names and his last name. On page 30 the document has this text:

I hereby declare that the information provided in this Statement of Affairs, including any supporting documents provides a true and full representation of my financial affairs.

Below that there is space for the debtor to write his full name, then a space for his signature and, further below, space for the date to be inserted. At the bottom, there is a checklist which the bankrupt may tick off to show that he has addressed the various requirements. The last matter in the checklist, question 6, asks, “Is it signed and dated?” Mr Cameron has ticked that question 6.

[23] The point that the Official Assignee takes is that although Mr Cameron wrote his name on page 30 and on page 1, he has left the space for the signature on page 30 blank. He has dated the document, 1 March 2010. The Official Assignee says that Mr Cameron has not signed the statement of affairs.

[24] That requires consideration of the purpose of the signature and what constitutes a signature. The purpose of requiring a debtor/bankrupt to sign a statement of affairs seems plain. It is to ensure that the debtor does take

responsibility for the statement of affairs. Taking responsibility is demonstrated by the debtor signing the document.

[25] As to signature, I have found Miller J’s decision in Welsh v Gatchell of assistance.¹ That is not a bankruptcy case and it does not deal with statements of affairs under the Insolvency Act. It is a case on the requirement of a signature under the Contracts Enforcement Act 1956,² and signatures under the Electronic Transactions Act 2002.³ However, it contains a useful discussion as to the legal standard for a signature. Miller J said:⁴

In ordinary usage, a person signs a memorandum or note by writing his or her name or mark on it. That is what Tipping J described in T A Dellaca Ltd v PDL Industries Ltd [1992] 3 NZLR 88 at p 98 as the “ordinary connotation” of “signed”. The Oxford English Dictionary gives as appropriate meanings for “sign”: “to attest or confirm by adding one’s signature; to affix one’s name to (a document, etc)” and “to write or inscribe (one’s name) as a signature”. “Signature” is succinctly defined in Butterworths New Zealand Law Dictionary (6th ed, 2005) as:

“A person’s mark on a document which indicates his or her intention to be bound by its contents.”

[26] In dealing with cases under the Contracts Enforcement Act, Miller J also made the point that a signature “need not be handwritten; a stamped name has been held sufficient”.⁵

[27] In Welsh v Gatchell, a signature was held to indicate that the person signing had shown an intention to be bound by the contents of the document.⁶ In the context of a statement of affairs under the Insolvency Act 2006, a person signing the statement takes responsibility for its contents. It shows that, even if someone else has prepared the statement, the bankrupt is vouching for it himself.

[28] The question here is: has Mr Cameron signed in such a way as to show that he takes responsibility for the contents of the statement of affairs? In my judgment,

¹ _{Welsh v Gatchell [2009] 1 NZLR 241 (HC).}

² Contracts Enforcement Act 1956 s 2. See now Property Law Act 2007, ss 24(1)(b), 25(1),

_27(2)(b).

³ _{Electronic Transactions Act 2002, ss 18, 22 and 24.}

⁴ _{Welsh v Gatchell, above n 1, at [45].}

⁵ _{At [47].}

⁶ At [51].

he has. He has written his name in the space provided. The handwriting appears to be Mr Cameron’s handwriting. He has ticked the checklist that the statement is signed and dated to indicate that he intended to sign the statement. His covering letter, which he signed, showed that he was taking responsibility for the information with these words:

I trust the information provided is sufficient for your purpose at this time. Should you require any further information from myself then please advise.

[29] Has Mr Cameron complied with his obligations under s 67? He has undoubtedly delivered a statement of affairs to the Official Assignee, and he has dated and signed it. The question goes to the quality of the statement of affairs. In my view, if a bankrupt substantially complies with the duties under s 67 in terms of the quality of the information provided, that will be sufficient for time to start running under s 290 of the Insolvency Act. Requiring more than substantial compliance is excessive.

[30] In McKee v Official Assignee I described the significance of the statement of affairs:⁷

[8] The statement of affairs by the bankrupt is a key document in the administration of the bankruptcy. It provides the Official Assignee with important information for the administration of the bankruptcy. Of course it need not be the only information on which the Official Assignee may rely. Creditors may also supply the Official Assignee with other information, but the statement of affairs is still the starting point for the Official Assignee. It can provide the basis for the Official Assignee to make other enquiries, to start proceedings to get assets in for creditors, and to begin examinations of the bankrupt or of other persons under Part 3 of the Insolvency Act.

[9] When Parliament provided that the three years before automatic discharge should run from the date of filing the statement of affairs rather than from the date of bankruptcy, it intended to encourage bankrupts to comply with the requirement for the filing of the statement of affairs.

The Official Assignee adopted that part of my judgment as part of his submissions.

[31] As long as there is substantial compliance, that is sufficient for the time to start running. It may well be that the Official Assignee, on receiving the statement of

⁷ McKee v Official Assignee [2013] NZHC 340.

affairs, can see further items that may need attention or may have queries that need following up. That is what happened in this case. The Official Assignee was not satisfied with some aspects of Mr Cameron’s statement of affairs and sent a letter on

7 April 2010 asking for clarification on six points. That letter also asked Mr Cameron to forward the original statement of affairs as the version he had sent was a photocopy. But no point has been made of the fact that he supplied a photocopy and not an original. The letter of the Official Assignee of 7 April 2010 does not contend that the statement of affairs had not been signed.

[32] Effectively, the statement of affairs received by the Official Assignee on

3 March 2010 served its purpose. It provided the Official Assignee with the basic information to enable the administration of Mr Cameron’s bankruptcy to begin. In my judgment, Mr Cameron did comply with his duties under s 67 of the Insolvency Act, and the three years began to run from then.

[33] What I have said should be considered as a decision on substantial compliance for this case only. It will be a question of fact and degree in each case whether a particular statement of affairs does substantially comply. In my judgment, the flaws in the statement of affairs - the incorrect information as to the IRD number and the statement as to the “no liabilities” - were insubstantial. Those errors are not sufficient to say that Mr Cameron had not filed a compliant statement of affairs.

[34] That is enough to decide this case. Mr King also submitted that even if the statement of affairs of 3 March 2010 were non-compliant, he could rely on authorities as to legitimate expectations to say that it would now be objectionable for the Official Assignee to find fault with the statement of affairs, given the course of conduct between Mr Cameron and the Official Assignee. As I have already found that Mr Cameron did file a compliant statement of affairs, it is not necessary for me to consider that submission.

Result

[35] Because I have found that Mr Cameron filed a statement of affairs under s 67 on 3 March 2010, under s 290 he was discharged from bankruptcy on 3 March 2013.

It is unnecessary to make an order for his early discharge under s 294 of the

Insolvency Act.

Costs

[36] Mr King sought costs for Mr Cameron. Mr Cornegé opposes. He says that it would be unusual for the Official Assignee to have an award of costs made against him on an application for directions.

[37] In this case, the normal principle applies that costs follow the event. The Official Assignee took a strong view that Mr Cameron had not discharged his duties under s 67 when he filed his statement of affairs in March 2010. There was a clear contest on a matter that required determination. Mr Cameron’s position from October 2013 (if not earlier) was that he had been discharged earlier. The Official Assignee resisted that. The Official Assignee has not succeeded. It is appropriate that Mr Cameron have his costs as he had to have this matter determined in court. If the parties cannot agree on costs on a 2B basis, memoranda may be filed.

......................................

Associate Judge R M Bell