Havenleigh Global Services Limited v Henderson [2015] NZHC 2262 (18 September 2015)

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IN THE MATTER OF	the Insolvency Act 2006
and
IN THE MATTER OF	the bankruptcy of DAVID IAN HENDERSON
BETWEEN	HAVENLEIGH GLOBAL SERVICES LIMITED AND FM CUSTODIANS LIMITED Judgment Creditors (Substituted Creditors)
AND	DAVID IAN HENDERSON Judgment Debtor

Written submissions received:	3 September 2015 (D I Henderson); 15 September 2015 (Counsel Assisting); 16 September 2015 (C R Vinnell)
Appearances:	J Foster and C R Vinnell for Official Assignee D I Henderson (Bankrupt) in Person T Cooley as counsel assisting the Court (excused from the hearing)
_Ruling:	_{18 September 2015}

HAVENLEIGH GLOBAL SERVICES LIMITED v HENDERSON [2015] NZHC 2262 [18 September 2015]

[1] To what extent may the record of the public examination of a bankrupt be corrected? This is the question raised by the bankrupt (David Henderson) and dealt with in this ruling.

[2] A public examination of Mr Henderson under the Insolvency Act 2006 has partly occurred and is now adjourned to 27 October 2015.

[3] In this case, a draft written record has been prepared in accordance with the Court’s current practice by the National Transcription Service of the Ministry of Justice (NTS) utilising the For The Record (FTR) digital audio system to record the examination.

[4] Mr Henderson submits that the bankrupt is entitled to correct typographical and grammatical errors and errors of fact in the record provided by the NTS.

[5] Mr Henderson seeks a ruling in particular that he is permitted to correct errors of fact in the record of examination before he signs the record.

[6] Mr Henderson submits that it is particularly important to him that the record be correct and complete because it may be used at some time and in some manner in the future against Mr Henderson’s interest.

counsel assisting the Court, to provide written submissions on the issue raised.

[8] I have now had the benefit of submissions of Mr Cooley as counsel assisting and of Mr Vinnell for the Assignee. They are taken into account in this ruling.

[9] The context of the record of examination is the bankrupt’s attendance in Court for the purposes of an examination under s 177 of the Act. Section 177 provides:

(2) The bankrupt must be examined on oath and must answer all questions that the court asks the bankrupt, or allows the bankrupt to be asked.

(3) The following persons may examine the bankrupt: (a) the Assignee, or counsel for the Assignee:

(4) The bankrupt is not entitled to notice beforehand of who will ask the questions or what the questions will be

[10] The examination is required by s 173(1) to be a public examination. In other words, members of the public may attend and will hear the statements of the bankrupt, including those which may be against the bankrupt’s interests.

[11] Section 178 Insolvency Act 2006 provides for the record of a public examination of a bankrupt conducted pursuant to s 173 of the Act. It provides:

(1) The examination must be recorded in writing as the court directs. (2) The record of the examination must be—

[12] There is a parallel provision in the Insolvency Act, s 182(3), as to the recording of the examination of officers of companies associated with the bankrupt.

[13] The Act does not expressly provide for the correction of any errors in the record.

[14] The starting point for consideration of any entitlement to correct the record is the requirement under s 178(1) that the examination must be recorded in writing as the Court directs.¹

[15] The provision for an examination to be recorded in writing has been in the insolvency statutes preceding the Insolvency Act 2006 since at least 1908.²

[16] The requirement of a written record of examinations has also been a common feature in a wider range of court settings. Examples include:

• Summary Proceedings Act 1957 (repealed) s 161(2): preliminary proceedings in the criminal jurisdiction – “evidence shall be put into writing”.

• Family Proceedings Act 1980, s 147(5): evidence in relation to provisional maintenance orders – “evidence ... shall be put into writing”.

• High Court Rules, r 9.20(4): witnesses ordered to be examined – “the examiner must ensure that evidence given at the examination is recorded.”

• District Court Rules 2009, r 3.25.5: witnesses ordered to be examined – “the deposition must be taken down in writing”.

²See, for instance, Bankruptcy Act 1908, s 124(6); Insolvency Act 1967, s 69(6). See also

[17] The process of taking evidence in these various situations is, as in the District Court Rules example, frequently referred to as a “deposition”. The recurring legislative formula of “putting evidence into writing” is inherent in the term “deposition”, as reflected in the New Zealand Law Dictionary definition:³

Deposition - A statement or declaration made by a witness under oath or affirmation which is reduced to writing for subsequent use in Court proceedings.

Insolvency Act, is the recording of what is said. In recording what is said, the transcriber listens to what is said and puts it down in writing or reduces it to writing. In so doing, he or she produces an accurate record of what was said.

[19] The introduction of FTR recording (in this Court progressively from 2008) has made the aspiration of an accurate record more achievable than previously. When statutory provisions and rules originally provided for the recording in writing of examinations before digital audio recording was introduced, the expectation cannot have been for a perfect record. To some extent the same continues to apply in that any recording system may have its mechanical failures or may not pick up clearly all that is said (as, for instance, when two people speak at the same time). The parliamentary intention must be that the examining Court or officer procures the most accurate record which is practicable.

[20] The appropriateness nowadays of a verbatim transcript through the use of technological and other developments to ensure accuracy was referred to by the Vice Chancellor, Sir John Pennycuick, in Lloyds Bank v Marcan, when his Lordship recorded:⁴

I have been asked to make a comment on a statement contained in the notes in the Supreme Court Practice under RSC Ord 39, r 11. That is the order which is concerned with evidence by deposition. In the present case an order was made for the examination of Mrs Marcan, and her deposition was in fact available to the Court. The record of Mr Marcan’s deposition, as, so

³_{Peter Spiller, New Zealand Law Dictionary (8th ed,
Lexis Nexis, Wellington, 2015) at 84:}

⁴Lloyds Bank v Marcan [1973] 2 All ER 359 (ChD) at 371 (citations omitted). See now United Kingdom Civil Procedure Rules (Sweet & Maxwell, London, 2015) vol 1 at [34.9.4], citing Lloyds Bank Ltd v Marcan for the proposition – “Ordinarily the deposition will take the form of a verbatim transcript of question and answer this being the more accurate and convenient way of recording the evidence”.

far as my own experience goes (and I think that also applies to the experience of counsel), is the usual practice, took the form of a verbatim transcript of question and answer. That appears to be by far the most convenient way of recording evidence so taken. The note in the Supreme Court Practice says:

‘The general practice is for the deposition of witnesses to be taken down by the examiner, not ordinarily by question and answer, but rather in narrative form so as to represent as nearly as may be the evidence of the witness, though if any particular question or answer appears to the examiner to have a special importance he may direct that the exact words be set out or himself set them out in the deposition.’

That may have been the practice once, but I should have thought that it was a much less accurate method of recording what was said by the witness, and that with modern methods of shorthand transcription and so forth, there was no relative advantage in it. On the contrary, I should have thought it imposed on the examiner a most embarrassing task. It seems to me that the author of the notes to the Supreme Court Practice might well reconsider what is said in that particular passage.

[21] I adopt as applicable to the examination record the underlying rationale of the Vice Chancellor’s approach, namely that where legislation provides for the recording in writing of an examination there is an expectation of a method which accurately records the exchanges in an examination.

[22] There are three categories of “errors” which, on Mr Henderson’s submission,

[23] Section 178 of the Act does not, in its terms, provide for correction of errors in the record.

[24] Section 178(1) of the Act vests in the Court supervisory powers as to how the record is prepared, providing as it does:

[25] My direction pursuant to s 178(1) was that the draft record be the subject of amendment through the identification of errors by the Court and the parties and through the transcriber’s then listening again to the transcript so as to produce a more accurate record.

[26] While it is common ground between Mr Henderson and counsel that the correction of typographical errors must be permitted, I briefly examine that proposition.

[27] The written record is intended to be an accurate record of the examination. The legislature must have envisaged a procedure whereby, both before and at the reading-over stage, the Court may have the record corrected to accurately reflect the examination. This approach ascertains the meaning of s 178 Insolvency Act in the light of its purpose, in accordance with s 5(1) Interpretation Act 1999. It also reflects the drafting needs involved in a transcriber’s task in understanding and putting down what is said in the course of an examination.

[28] In this case, the draft record has already been amended to improve its accuracy – the transcriber has listened again to parts of the audio record in the light of possible errors detected by counsel for the Assignee and by the Court. The transcriber has, in some cases, found the draft record needed amendment to make it accurate.

[29] I will maintain the approach taken to date to have any typographical errors corrected.

[30] I am satisfied that there is no basis in the legislation for correction of what a bankrupt considers to have been errors of fact in what the bankrupt said in the course of the examination. I reach that conclusion for three reasons:

(a) Fundamentally, the “correction of facts” would alter the substance of the bankrupt’s answers as first given in the examination. Such a procedure of correction would provide to the bankrupt a licence to undo evidence already given. At the conclusion of the examination, the Court is required by s 298 of the Act to make substantive orders concerning the bankrupt’s discharge or otherwise from bankruptcy. The Court does so in the light of what it has heard in the course of the examination of the bankrupt. It would be inappropriate and impracticable to require a Judge to disregard parts of what was said and to treat the examination as having included something not said by the bankrupt at that point of the examination but rather inserted in substitution at a later point and upon further reflection.

(b) Secondly, the peculiar importance attached by Parliament to obtaining the bankrupt’s spontaneous answers in a public examination is evident in the provision, in s 177(4) of the Act, whereby the bankrupt is not entitled to notice beforehand of who will ask questions and what the questions will be. To allow later “correction” of the initial answer would be contrary to a scheme which requires spontaneity of answer.

(c) Thirdly, before the end of the examination the bankrupt has the ability to re-address an earlier answer which the bankrupt now considers to have been poor or incorrect. Section 186(2) of the Act provides, through questioning by the bankrupt’s own lawyer, for further answers which then form part of the examination. In the case of unrepresented bankrupts, they will equally have the right of their own initiative to add further to the record. Mr Henderson has been permitted in the

course of this examination to do precisely that. He will have a further opportunity on the examination resumption.

[31] There is, therefore, no basis upon which Mr Henderson may ask to “correct the record” in relation to matters of factual error. But he may add to his evidence (including by way of explanation or correction).

[32] I do not anticipate that any particular issue will arise for a party in relation to a perceived grammatical error in the draft record. My expectation is that correction of a perceived grammatical error may make the written record flow more satisfactorily without altering the substance of what was said. The Court may take no issue as to such a correction. The Court’s power under s 178(1) of the Act authorises such a direction. But, for my own part, I would not encourage such a practice, given my conclusion that the record of the examination is intended to accurately record what was said.

[33] There is a further consideration which weighs against what I view as the generally unnecessary correction of grammatical errors. In the present case, the record of Mr Henderson’s examination to date runs to 1186 pages. To invite the correction of grammatical errors (which would only be corrected in any event if they did not alter the substance of what was said) would involve a potentially time- consuming scrutiny and “correction” of the record of no significant value.

(a) Mr Henderson and any persons taking part in his public examination are entitled to request the Court to arrange for correction of the draft record of examination in relation to perceived typographical errors whereupon the Court, if satisfied that such errors are established, may have the record of examination corrected before Mr Henderson signs it.

(b) Neither the bankrupt nor any other person taking part in the public examination is entitled to request the correction of errors other than typographical errors.

High Court of New Zealand Decisions

Havenleigh Global Services Limited v Henderson [2015] NZHC 2262 (18 September 2015)