Fawcett v Official Assignee [2016] NZHC 196 (17 February 2016)

Last Updated: 3 March 2016

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2010-419-000587 [2016] NZHC 196

BETWEEN	CHRISTOPHER LOUIS FAWCETT Applicant
AND	THE OFFICIAL ASSIGNEE First Respondent PETER MATTHEW GRANVILLE Second Respondent

Hearing:	10 December 2015
Appearances:	Mr Fawcett applicant in person Ms Cameron for the Official Assignee Ms R Scott for Second Respondent
Judgment:	17 February 2016

_{JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE}

This judgment was delivered by me on

17.02.16 at 4 pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

_{Date...............}

FAWCETT v THE OFFICIAL ASSIGNEE [2016] NZHC 196 [17 February 2016]

Introduction

[1] This is an application for discovery of certain documents. It is related to claims Mr Fawcett has made about the Official Assignee’s (“OA”) administration of his estate in bankruptcy. He alleges that the OA has made various errors which mean that the bankruptcy should be annulled. Specifically, Mr Fawcett alleges that various expenses and charges which the OA levied against his estate ought not to have been deducted out of the estate. If such an approach is given effect to, Mr Fawcett claims that there would not be an overall deficiency when liabilities are deducted from the assets available to meet them, that the estate has a positive balance of assets to meet debtor’s claims, and that therefore his bankruptcy was unjustified.

Background

[2] Mr Fawcett was adjudicated bankrupt on 14 September 2010 following his involvement in failed property development transactions. The adjudication followed the entry of summary judgment against him for approximately $1.25 million, plus costs, on 17 March 2010.

[3] Considerable litigation has resulted, including an application to set aside legal transactions pursuant to which properties were transferred to trustee companies incorporated by Mr Fawcett, JEC No. 2 Ltd and JEC No. 3 Ltd. Orders setting aside transactions were made by Associate Judge Faire on 5 November 2012 in regard to those matters. Those transactions involved two Court proceedings in which the OA was the applicant.¹

[4] There was a further set of proceedings between the parties in which the OA was the plaintiff which came about in circumstances which I will now briefly describe. Mr Fawcett and Mr Granville were sued as the trustees of a trust which the OA alleged had become indebted to Mr Fawcett. Mr Fawcett had allegedly transferred properties to the trustees and taken a debt back. Mr Fawcett’s position was that that debt had been forgiven. In any event, those proceedings, which the

_{parties referred to as CIV-2011-419-0028, were eventually discontinued. While no}

¹ JEC No 2 Ltd v Official Assignee at Hamilton [2013] NZHC 1352 - CIV-2012-419-907 and CIV-

2007-419-904.

judgment was entered, it was common ground that a settlement took place which involved the trustees transferring to the OA certain properties which then became available as assets in the bankrupt estate. Peters J made freezing orders in respect of two further properties on 31 May 2013.

[5] The circumstances of Mr Fawcett’s bankruptcy have been before the Court on numerous occasions. He has made two attempts to be discharged from bankruptcy, the first unsuccessful and the second unopposed. He has now been discharged from bankruptcy. Notwithstanding that, in these, he seeks an order for the annulment of his bankruptcy.

The present claim

[6] This matter came before the Court because Mr Fawcett filed an application on 15 June 2015 seeking the following orders:

[1.] An annulment of the bankruptcy of [the Applicant];

[2.] Setting aside of the settlement agreement dated 10 June 2014;

[3.] Setting aside of the power of attorney and deed of delegation agreements dated 3 June 2014;

[4.] Cancellation of the claim of P G Granville as a creditor;

[5.] Disclosure of all documentation held by the Assignee under the

bankrupt’s estate.

[6.] Costs.

[7] On 4 September, a further application was filed, this time seeking:

[1.] An order for discovery of all invoices under Rule 5.21 of the High

Court Rules;

[2.] An order apportioning all the Assignee costs in the administration of

the bankrupt’s estate on a 50:50 basis to the two matters CIV-2011-

419-0028 and CIV-2012-419-904/907.

...

[5] Full discovery of invoices of charges made to the bankrupt’s estate

..Amended to itemise each invoice to the two matters civ 028 or 907

[8] On 2 November 2015, Mr Fawcett filed what was described as an “amended application in the matter of C L Fawcett versus the Official Assignee and Peter Matthew Granville”. The orders sought are described within the application as these:

(a) That the court dismisses the claim [an amount of $48,951.92] of Peter Matthew Granville as a creditor of the bankrupt estate of [the applicant];

(b) That the court orders the amount paid to Peter Matthew Granville of $32,047 plus interest [calculated at 5.5%] to be paid back to the bankrupt estate [the applicant];

(c) That all costs charged to the bankrupt’s estate by the assignee and assignee contractors in the Granville matter be credited back to the bankrupt estate. An amount of $16,402.23 – refer Appendix 1 to affidavit doc “A”;

(d) Order a credit of costs charged to the bankrupt estate that were incurred by the Assignee, their lawyers and their agents in persuing the now discontinued matter of CIV-2011-419-0028;

[9] Some additional reference to this payment to Mr Granville will be helpful. Mr Granville is a chartered accountant as well as a trustee in the C L Fawcett Family Trust. As a result of various occurrences which need not be described in detail, the Thames Coromandel District Council took steps against Mr Fawcett in regard to a bridge which had been erected at Tairua as part of a property development venture. The Council sought orders in the Environment Court requiring Mr Fawcett to take down the structure. It was alleged that the structure was unsafe. The upshot of the matter was that the District Court Judge who heard the application for demolition and removal of the structure concluded that Mr Fawcett, when directing the construction of the offending structure, had done so as a trustee. This led the Judge to enquire into the question of who the other trustee or trustees of the trust were. The conclusion about the involvement of the trust seems to have been based upon the fact that the trust had, as part of a property development, obtained building consent to construct a pedestrian footbridge over Graham’s Creek at Tairua. The structure was not completed to the required standard or in accordance with the terms of the consent. After considering the history of the trust and the identity of the trustees, which involved enquiring into an attempt by Mr Granville to retire as

trustee, the Judge apparently added Mr Granville as a defendant in the proceeding in his capacity as trustee pursuant to r 103(1) of the District Court Rules 1992.

[10] Mr Granville did not appeal or seek to have that decision set aside and in due course he was served with a bankruptcy notice for costs awarded as part of the judgment ($42,038.59) and additional expenses relating to the issue of the bankruptcy notice. Mr Granville then claimed to recover these amounts from Mr Fawcett’s bankrupt estate. Mr Fawcett now seeks to have the OA’s acceptance of that claim as a debt in the bankruptcy reversed, and a credit applied in recognition of it.

[11] Mr Fawcett also takes issue with the sums the OA charged to the estate to retain security guards for the preservation of properties which were in dispute, and seeks a credit in regards to those sums.

[12] A further complaint relates to the CIV-2011-419-0028 proceedings. Mr Fawcett is of the view that the legal costs attributable to those proceedings ought not to have been charged to his estate and there should be again a credit issued. He alleges that he was the successful party in those proceedings. This, he says, is supported by the fact that an order for costs had been made against the OA; and since the OA discontinued those proceedings, uncontested. He says that the entire solicitor-client costs in those proceedings ought to be disallowed. He seeks access to documents which would establish what the amount in question is.

[13] The OA claims that the legal costs he incurred were charged on a global basis, and there was no appropriation of particular fees to particular legal matters in regard to which he instructed solicitors and counsel. It is for that reason that Mr Fawcett has sought an apportionment on a 50/50 basis of the legal costs. The OA also resists the contention that Mr Fawcett ought to be provided with copies of the lawyers’ invoices to determine how much of the overall legal costs expended in the estate relate to CIV-2011-419-0028. The OA says that information is subject to legal professional privilege which is not waived. But to meet the enquiries of Mr Fawcett, the OA has provided some information. The OA has filed an affidavit given by counsel who represented him at the hearing, Mr Cornege, as to the

approximate apportionment that should be made, if such becomes necessary. The OA contends, however, that deducting such charges from the expenses of the estate is wrong and ought not to be permitted.

[14] The dispute over the costs which the OA incurred in bringing the proceedings in CIV-2011-419-0028 has additional significance, according to Mr Fawcett. It is his contention that if those costs are reversed, then the effect, in combination with other matters, would be that the funds realised from the sale of properties he had owned would have been sufficient to completely pay off his debts. That would have led to a successful application to end the bankruptcy at an early stage.

[15] There is apparently a related argument which takes the following form. Mr Fawcett says that, had the OA properly applied the funds that he received from the realisation of properties, an early end to the bankruptcy would have occurred. Instead, he alleges, funds were expended on paying costs and administration expenses so that funds which would otherwise have been available to pay off the creditors were diverted, he alleges improperly, for other purposes. I interpolate that counsel for the OA, Ms Cameron, observed that the priorities which the OA is required to observe when applying available funds are set by statute and there is no evidence to suggest that the proper order of application was not followed in this case.

[16] Mr Fawcett contends that the result has been that the OA to this day retains properties which have yet to be disposed of. Because of the way in which the OA has brought to account his costs, the administration of the estate has been prolonged. Had that not occurred, the administration of the estate could have been completed without the need to retain the properties to which I have just made reference. Mr Fawcett is also critical of the overall result the OA has achieved in this case. As I understand it, he alleges that he originally had debts of approximately $1.3 million. A figure considerably in excess of that amount has been obtained by realisations and recoveries but the estate still has a net deficit. Mr Fawcett claims that costs and interest in expenses in the estate to this point amount to approximately $800,000. Of this, some $200,000 represents commissions or costs the OA claimed for administering the estate.

[17] Ms Cameron for the OA, I understand, was not in a position to give a detailed refutation of what Mr Fawcett said about the costs of the administration of the estate. Indeed, she was not required to, given that the hearing before the court on this occasion was concerned not with the ultimate substantive claim that Mr Fawcett wishes to bring against the OA but rather with what further disclosure Mr Fawcett might be entitled to, preparatory to him bringing those claims. She did however accept that costs of approximately $800,000 had been incurred in the overall management of the estate and interest. She pointed out that this had been a very difficult estate for the OA to administer, a task not made easier by what she described as the adversarial and intransigent approach that Mr Fawcett had taken, which had resulted in a need for numerous court proceedings. The scale of the work had meant that the costs of the OA’s staff as well as independent contractors had been unusually high. Further, the charging of interest to the bankrupt on account of unpaid debts was justified by statutory sanction.

[18] The proceedings in CIV-2011-419-0028 are related to another complaint from Mr Fawcett. The settlement which led to the OA discontinuing the proceedings was reached between Mr Fawcett, the OA, and the trustees of a trust Mr Fawcett had established. In terms of the settlement, the trustees agreed to transfer certain properties which they owned to the OA. One of the trustees was Mr Fawcett’s daughter. Mr Fawcett alleges that the only reason his daughter signed the agreement is that she was placed under duress by the OA. The exact details do not matter in the context of the present judgment but I understand that it is asserted that she needed funding to undertake an overseas educational trip and that the OA, for reasons which are not clear to me, was allegedly in a position of being able to control that funding and would not release it unless she signed the settlement deed.

Summary of the claim

[19] By way of overview, the following seems to be the position. Mr Fawcett seeks to demonstrate that, had the OA administered his estate improperly, he would have been entitled to an early discharge. I do not believe that he claims that the original adjudication was improper. It would in any case now be too late to take that position.

[20] It is apparently Mr Fawcett’s view that one of the consequences of the OA making payment to Mr Granville, as he alleges erroneously, is that the net indebtedness of the estate would have been less had this payment not been made.

[21] It is apparently his further view that the setting aside of the compromise arrangement which ended the proceedings in CIV-2011-419-0028 has some relevance as well to the question of the overall debt in the estate. Just how it could assist Mr Fawcett is not clear to me.

[22] The comments that I have made about the nature of the overall case Mr Fawcett brings against the OA are necessarily tentative because no detailed statement of claim has been filed setting out this claim and the justification for it (or indeed the other various claims which Mr Fawcett has brought). If these allegations had been raised in a procedurally appropriate form, Mr Fawcett would have commenced general proceedings or alternatively would have commenced them under Part 18 of the High Court Rules. That would have required a statement of

claim to be filed.² Mr Fawcett has instead commenced these proceedings by way of

an interlocutory application filed as part of the original 2010 bankruptcy proceedings.³ He is representing himself because he says that he cannot afford legal advice. While that is his entitlement, it does mean that, as a lay-person, he may confront real difficulties in being able to present his claim to the court in a coherent way. As well, now that he has been released from bankruptcy he is liable to have costs orders made against him if he is unsuccessful.

[23] Mr Fawcett appears to hope that the Court will embark upon a general enquiry into the administration of the estate. I consider that the Court should resist any expectation that that will occur and ought to confine itself to dealing with the exact issues which are presented for determination by way of appeals against specific

_{decisions which the OA made.}

² _{See High Court Rules, r 18.4.}

³ Fawcett v Southland Building Society HC Hamilton, 14 September 2010 CIV-2010-419-0587.

The present applications

[24] In aid of the various claims which Mr Fawcett has made, he is seeking provision of documentation. I observe that, based on the affidavit evidence already filed in regard to the current application, the OA has already gone to considerable lengths to provide documents to him. Mr Fawcett’s application for discovery must be confined to such entitlements as he has under the Insolvency Act 2006 and under the High Court Rules.

[25] The hearing on 10 December 2015 was restricted to dealing with the interlocutory aspects of applications made on 15 June 2015, 4 September 2015, and

2 November 2015 in which Mr Fawcett sought disclosure of additional documents, as set out at [6]-[8] above. Even though the last of these was described as an amended application and would conventionally be viewed as replacing the earlier applications, Ms Cameron was, properly in my view, prepared to argue the matter on the basis that each application was to be considered cumulatively with the others.

[26] Mr Fawcett relies on ss 226, 147(5)(c), 208(c), 214(2)(a) and (b), 214(3)(b),

227(2), 304 and 309 of the Insolvency Act; and on r 5.21 of the High Court Rules.

[27] The notice of opposition which the OA has filed in response to the interlocutory application reads as follows:

3. The grounds on which the respondent opposes the application for discovery of invoices and disclosure of costs are:

(a) There is no jurisdiction for this court to order disclosure of all documentation;

(b) Rule 5.21 does not assist the present application;

(c) The respondent has provided the applicant the accounting records that he is entitled to inspect pursuant to ss 153 and

227 of the Insolvency Act 2006;

(d) The only information withheld are the individual invoices which are privileged and confidential;

(e) The individual invoices do not contain the applicant’s personal information and accordingly he is not entitled to them under the Privacy Act;

(f) The applicant is not entitled to any further information;

(g) The applicant is not detrimentally affected by the inability to view the invoices as provision of further information would not materially assist his claims.

[28] It will be seen that the OA has responded to the grounds upon which the applicant has brought his applications by considering whether the statutory sections to which the applicant makes reference confer any entitlement upon him to seek disclosure of the various documents that he has sought. Exceptionally, the OA has mentioned a ground which was not relied upon in the application and that is the possibility of rights which the applicant might have under the Privacy Act 1993.

[29] There has been less than satisfactory argument concerning the extent of the entitlement of a bankrupt to view the accounts of the estate. This was due to the confusing nature of Mr Fawcett’s case, and the proliferation of documents which he has filed. As well, while I am sure Mr Fawcett did his best to assist, submissions of counsel would have provided the Court with a much better basis upon which to attempt to resolve the dispute about the documents. Subject to those caveats, I now set out my views about the extent of Mr Fawcett’s entitlement to access the documents.

The Official Assignee’s position

[30] The evidence and submission of the OA was that throughout the administration of the estate, Mr Fawcett has made numerous time-consuming requests for information relating to the administration of the estate, and that:

39. The following information has been provided to the applicant:

39.1 A summary of trust account records, receipts and payments report and a case claims report scheduling all creditors and dividends were provided on 26 May 2015;

39.2 The estate ledger and the register of assets were provided on 7 August

2015 – current as at 16 July 2015;

39.3 The Assignee’s remuneration rates were advised on 9 November 2015.

39.4 By way of affidavit dated 30 October 2015 Mr Cornegé estimated that the total costs of the 28 proceeding would amount to no more than

$20,000 - $30,000 plus GST.

40. The applicant has received all information he is entitled to receive by law and that can be disclosed to him.

[31] Counsel for the OA also submitted:

Withheld information and grounds for withholding

41. The cash book for all bankruptcy estates in New Zealand cannot be provided to the applicant as he is not entitled to information regarding other estates.

42. Invoices rendered against the estate often encompassed more than one matter. Costs associated with individual proceedings cannot be retrospectively itemised. Provision of invoices would not assist in identifying the proportion of costs which relate to a proceeding.

43. The invoices and underlying time records for legal advice and work attract litigation and solicitor-client privilege as well as being commercially confidential. Provision of which would unreasonably prejudice the commercial position of the parties.

44. Privilege is held by the Solicitor-General and is not waived.

45. The invoices for work undertaken by private contractors has not been provided because the information is commercially confidential and would unreasonably prejudice the commercial position of the parties. Provision of the invoices may also be a breach of personal privacy of the parties who have undertaken the work.

46. The applicant has been advised of his right to have decisions of the OA reviewed by the Ombudsman. To date the applicant has not sought such. He has laid a complaint with the office of the Auditor- General regarding the estate record-keeping.

How the matter comes before the court

[32] The OA has made determinations declining to provide further information of the kind which Mr Fawcett has sought. Mr Fawcett seeks to challenge the decisions which the OA has come to. In effect, but not in form, the proceeding he brings is by way of an appeal.

[33] Ms Cameron did not attach any significance to the fact that Mr Fawcett had not filed and served an appeal in the proper form. She made the following submissions on the question of appeals generally of this kind:

54. Decisions of the OA concerning provision of information may be appealed under s 226 of the Act, where the application for appeal

is made within 15 working days of the act or decision⁴ or within the additional time that the Court allows.⁵

55. The application as filed relies upon section 226 of the Act, although no notice of appeal has been filed. On an appeal under 226 of the Act the Court may confirm, reverse, or modify the act or decision.⁶

56. On appeal, the test adopted by the High Court depends upon whether a discretionary power of decision making is being reviewed or whether the legality of the OA’s statutory decision making is in

_{issue, giving rise to a general right of appeal.}⁷

57. In this case it is the legality of the OA’s statutory decision making that is challenged. Hence the proper approach is that for general appeals per Austin Nichols.⁸

58. Essentially, on a general appeal the appeal court has the responsibility of arriving at its own assessment of the merits of the case.⁹

59. To found an appeal it is incumbent upon the applicant to establish that his interests are detrimentally affected by an act or decision of the OA, as section 226(1) requires that:

(1) A person (including the bankrupt or a creditor) whose interests, monetary or otherwise, are detrimentally affected by an act or decision to which this section applies may apply to the court to reverse or modify the act or decision ( counse l’s emphas i s).

[34] It was the submission for the OA that Mr Fawcett was not a person who was detrimentally affected by a decision of the OA. As I understand it that submission was primarily made with reference to the claim that Mr Fawcett makes to the effect that the CIV-2011-419-0028 proceedings in which freezing orders were sought and obtained but which proceedings were discontinued, were wrongly ruled by the OA with the consequence that the costs which were charged to the estate in regard to those proceedings ought to be reversed and ought not to be the responsibility of the bankrupt estate. Therefore, in the view of the OA, because the billing information contained in the invoices would not actually break out the separate costs which were charged to the OA for the professional assistance he obtained in the CIV-2011-419-

_{0028 proceedings, Mr Fawcett would not obtain any advantage from citing that}

⁴ _{Insolvency Act 2006, s 226(3)(a).}

⁵ _{Insolvency Act, s 226(3)(b).}

⁶ _{Insolvency Act, s 226(4).}

⁷ _{Glynbrook 2001 Ltd v Official Assignee [2012] NZCA 289 at [82]–[90].}

⁸ _{Austin, Nichols & Co v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.}

⁹ Austin, Nichols & Co v Stichting Lodestar, above n 8, at [5].

material and therefore, it was argued, he was not a person who was detrimentally affected by the information being withheld.

[35] I note, however, that Mr Fawcett does not restrict his claim to review documentation in the bankrupt estate to the CIV-2011-419-0028 proceeding and that he seeks to generally review the propriety of other expenses which the OA incurred including costs of retaining security firms to provide security services in regard to assets falling into the estate.

Section 153 of the Insolvency Act 2006

[36] One of the statutory sources of entitlement for a bankrupt to obtain documents from the OA is to be found in s 153 of the Insolvency Act, which provides:

153 Bankrupt’s right to inspect documents

(1) The bankrupt may at any reasonable time inspect, and take extracts or copies of,—

(a) the bankrupt’s accounting records:

(b) the bankrupt’s answers to questions under s 87: (c) the bankrupt’s statement of affairs:

(d) all proofs of debt:

(e) the minutes of any creditors’ meeting:

(f) the record of any examination of the bankrupt.

(2) The bankrupt’s right of inspection under subsection (1) is in addition to any rights that the bankrupt has under the Privacy Act 1993.

[37] The reference to “bankrupt’s accounting records” seems to me to be concerned with the records that the bankrupt brought into existence and is not the records which the OA compiles as part of the administration of the bankruptcy. I do not consider that that section is of assistance to Mr Fawcett in the present case.

Section 227 of the Insolvency Act 2006

[38] Section 227 provides as follows:

227 Assignee must keep proper accounting records

(1) Every Assignee must—

(a) keep proper accounting records for each bankruptcy, in the prescribed form; and

(b) verify those records by statutory declaration, when required by the Court.

(2) A creditor or any person who has an interest may inspect the

Assignee's accounting records for a particular bankruptcy.

[39] The position the OA takes is that the records and accounts he is required to keep are those described in reg 14 of the Insolvency (Personal Insolvency) Regulations 2007:

14 Assignee's records and accounts

(1) The Assignee must keep accounting records in the following form:

(a) an estate ledger: (b) a cash book:

(c) a register of unrealised assets.

(2) The estate ledger must be balanced with the cash book at the end of each calendar month.

(3) Subject to any directions of the Auditor-General as to trading accounts, all receipts and payments made by the Assignee must be entered in the cash book.

[40] In ascertaining the meaning of legislation, the Court is bound by s 5 of the

Interpretation Act 1999. Subsection (1) provides:

(1) The meaning of an enactment must be ascertained from its text and in the light of its purpose.

[41] I consider that the objective of the section, to ensure that proper accounts were kept, is to be interpreted in the context of the requirements of reg 14. Section

227, when so understood, does not provide the bankrupt with access to all of the primary documents from which the accounts are constructed. “Accounting records” means something different from the primary documents and account entries which brought about individual debits and credits in the accounts. “Accounting records”

refers to documents which summarise the effect of all the transactions that took place in the estate, most, but not necessarily all of which, will be evidenced by some written document. I do not consider that the section was intended to place a bankrupt in a position where he or she could insist upon a right to audit the accounts the OA made up from those primary documents. I observe that whether or not the OA has kept proper records is a matter the Auditor-General is entitled to enquire

into.¹⁰

[42] To adopt an interpretation of the kind Mr Fawcett puts forward could potentially have the effect of impeding the orderly carrying out of the OA’s work. That effect would not just be brought about by the time and effort required to retrieve and copy documents. That such a process could even be contemplated would mean that the OA might be subjected to follow-up enquiries and a proliferation of attempts to challenge decisions on minor matters.

[43] I have considered the provisions of s 230 of the Act, and any possible effect that they might have upon the proper interpretation of s 227. Section 230 provides:

230 Assignee may return or destroy accounting records

After 1 year after the discharge of the bankrupt, the Assignee may dispose of the accounting records deposited with the Assignee for the purposes of the bankruptcy by—

(a) delivering them to the bankrupt or the bankrupt's personal representative, if requested; or

(b) destroying or otherwise disposing of them.

[44] One year after discharge of the bankrupt, the OA may “dispose of the accounting records deposited with the Assignee for the purposes of the bankruptcy”. One method of disposal is delivering them to the bankrupt. I do not consider that these are the same documents that are referred to in s 227. The documents in s 227 are those the OA compiles himself and not documents which are brought to him such as the financial records of the bankrupt’s business. In any event, the section is one related to considerations of freedom of information about the bankrupt’s estate. It is

_{concerned with assisting the OA in disposing of what must be very large volumes of}

¹⁰ Insolvency Act, s 229.

documents which come into his possession in the course of managing bankruptcies. The OA can, if he wishes, destroy the documents. That implicitly contradicts the contention that, at least in respect of those documents to which s 230 applies, the bankrupt has a continuous entitlement to access the documents even after discharge.

[45] My conclusion is that s 227 does not confer upon the bankrupt an entitlement to inspect and copy all primary charging records such as invoices. He is entitled to see the accounting records only. It follows that the decision of the OA not to provide copies of particular invoices to the bankrupt cannot be challenged pursuant to s 226, the section which confers rights of appeal against decisions of the OA. In the light of that conclusion it is not necessary to examine the contention that Mr Fawcett was not a person who was “detrimentally affected” in terms of s 226.

[46] The next issue to be considered under this head is the question of whether the OA was correct in declining to provide to Mr Fawcett the cash book he is required to maintain pursuant to reg 14. That would appear to be the only document in regard to which there can be a dispute with the disclosure that has been made by the OA.

[47] The OA gave the following sworn deposition concerning the cashbook that was required in terms of the regulations:

3.5 The cashbook kept is for the trust account for the Insolvency and Trustee Service of New Zealand, comprising all bankruptcy estates for New Zealand and for certain company liquidations as administered by the Service as liquidator. One of those estates is for the bankrupt estate of C L Fawcett.

[48] Counsel for the OA submitted that the cashbook, being for all bankruptcy estates in New Zealand, cannot be provided to Mr Fawcett because he is not entitled to information regarding other estates.

[49] My conclusions are that a bankrupt can only have a legitimate interest in those parts of the financial records which affect his own estate.

[50] The OA deposed that he maintained a register of assets which was disclosed to Mr Fawcett by way of letter dated 7 August 2015. He further stated in his affidavit:

3.8 A summary of trust account records, receipts and payments report and a case claims report scheduling all creditors and dividends had previously been disclosed to Mr Fawcett by way of letter dated 26

May 2015.

[51] That position does not deal directly with the question of whether the cashbook entries have been provided to Mr Fawcett. I consider that there are good reasons to suppose that it ought to be disclosed. I will not however make an order to that effect at this point. I return to this issue below.

[52] If a person, including the bankrupt himself, has a statutory entitlement to view documents such as the cashbook, I do not consider that it would be a sufficient objection for the OA to state that the cashbook cannot be disclosed because it is constituted in such a way that disclosure would involve the OA handing over information that related to unrelated bankrupt estates of other persons. The OA must have an obligation to maintain the statutory records that he is required to keep in such a way that they are amenable to the disclosure provisions of the Act. If necessary, in order to meet the statutory obligation to provide documents that he is required to disclose, the OA could provide selected sections of the document in question so that disclosure can be completed without any unauthorised revelation of documents relating to other estates. I should make it clear, as well, that Mr Fawcett is not in the least interested in other bankrupt estates.

[53] It is not clear to me whether the OA has made disclosure of selected parts of the cashbook to Mr Fawcett. Rather than make an order it will be necessary for me to hear further from the parties on this aspect of the case. To be clear about the matter, my conclusion is that Mr Fawcett ought to be shown copies of the entries in the cashbook relating to his estate. It may be that the parties are able, following consideration of this judgment, to agree that he has already been provided with that material. If not, it will be necessary to schedule a further time for hearing argument on this aspect of the matter and to consider any additional evidence that the parties wish to provide.

[54] With the exception of the cashbook entries, I am satisfied that the information the OA has already provided satisfies his obligations under s 227.

[55] I come to that conclusion notwithstanding the fact that Mr Fawcett made submissions which were based upon a negative view of the reliability of the OA. However, it is to be borne in mind that the OA is an officer of the court and that he has given sworn evidence which has not been contradicted. He was not cross- examined on his evidence. In those circumstances, I consider that the assurances he has provided to the Court are able to be accepted.

[56] Subject to the exception of the cashbook entries, it is my view that there has been no error on the part of the OA which would justify this court intervening to reverse or modify the decision that he has come to. The remaining point that I reserve will be disposed of after I have heard further from the parties.

Other remedies other than appeal under section 226

[57] That leaves for discussion other remedies which might be available to Mr Fawcett. I note in passing that it may be that persons in his position have the more expensive entitlement to obtain information (including information in documents) pursuant to either the Official Information Act 1982 or the Privacy Act

1993.

[58] However, the extent of any rights that Mr Fawcett may have under those Acts to a review of decision of the OA is beyond the purview of the present judgment.

Discovery

[59] A further possible basis upon which Mr Fawcett could obtain access to documents which the OA holds is by means of an entitlement to discovery under the High Court Rules (Rules).

[60] The possibility that Mr Fawcett might be able to obtain a discovery order was not addressed in argument at the hearing before me. This again was due to the lack of clarity about what exactly it was that Mr Fawcett was seeking.

[61] Because there is no detailed statement of claim before the court which sets out exactly what it is that Mr Fawcett is attempting to obtain, it would not seem to be procedurally or practically possible to make an order for discovery. The issues in

regard to which discovery might be sought are just not clear enough and therefore I will make no further comment on that aspect of the case other than to note that any claim for discovery relating to the provision of legal services might well have to confront an argument that information in the documents sought is the subject of professional legal privilege and therefore not subject to disclosure on discovery.

Discussion

[62] So far as disclosure is concerned, I am not satisfied that there is any ground to reverse the decision of the OA except with regard to possibly the cashbook entries.

[63] I do not consider that Mr Fawcett has an entitlement to review all of the documentation which has been generated during the administration of this estate. He has certain statutory entitlements to review documents such as pursuant to section

226. I consider that, on the basis of the evidence before the Court, the documents that Mr Fawcett is seeking go beyond the extent of that section or alternatively, they have already been provided.

[64] I consider that Mr Fawcett has an entitlement to review the cashbook entries if these have not already been provided to him. The parties should consider the position with respect to those entries and, if Mr Fawcett wishes to continue with that part of the application because he considers that the documents to which he has a right of inspection have not been provided, I shall hear the parties on the question of whether any further order ought to be made.

[65] Mr Fawcett does not have an entitlement to individual invoices which the legal advisors to the OA have rendered to him in regard to CIV-2011-419-0028.

[66] I do not consider that he has an entitlement to receive copies of the detailed invoices that have been rendered by specific contractors during the course of the administration of the estate, such as security firms. I have not been referred to any statutory or common law basis upon which Mr Fawcett relies which would empower the Court to reverse the decision of the OA and direct that such material be provided to Mr Fawcett.

[67] The foregoing comments are of course concerned with statutory entitlements on the part of Mr Fawcett and they do not concern any rights that he might have under the Privacy Act 1993 or other legislation. This Court does not have jurisdiction to review whether the OA has properly complied with the relevant statutory requirements governing the entitlement of Mr Fawcett to personal information held about him.

Conclusion

[68] Ms Cameron, in her submissions, referred to the fact that there must be real doubt that the objective that Mr Fawcett wants to achieve in this case is actually a feasible one.

[69] As I have mentioned, Mr Fawcett seeks an order annulling his bankruptcy. The OA, through counsel, did not dispute that such an order can be obtained even after discharge. However, what needs to be noted is the terms of the section under which an adjudication can be annulled and, in particular, the grounds which the bankrupt person must establish.

[70] Section 309 of the Insolvency Act provides as follows:

309 Court may annul adjudication

(1) The Court may, on the application of the Assignee or any person interested, annul the adjudication if—

(a) the Court considers that the bankrupt should not have been adjudicated bankrupt; or

(b) the Court is satisfied that the bankrupt's debts have been fully paid or satisfied and that the Assignee's fees and costs incurred in the bankruptcy have been paid; or

(c) the Court considers that the liability of the bankrupt to pay his or her debts should be revived because there has been a substantial change in the bankrupt's financial circumstances since the date of adjudication; or

(d) the Court has approved a composition under subpart 1 of

Part 5.

(2) In the case of an application on one of the grounds specified in subsection (1)(a) to (c) by an applicant who is not the Assignee,—

(a) a copy of the application must be served on the Assignee in the manner and within the time that the Court directs; and

(b) the Assignee may appear on the hearing of the application as if the Assignee were a party to the proceeding.

(3) The adjudication is annulled—

(a) from the date of adjudication, in the case of an application on the ground specified in subsection (1)(a):

(b) from the date of the Court's order of annulment, in the case of an application on one of the grounds specified in subsection (1)(b) to (d).

(4) In the case of an application for annulment on the ground that the adjudication should not have been made because of a defect in form or procedure, the Court may, in addition to annulling the adjudication, exercise its powers under section 418 to correct the defect and order that the application for adjudication be reheard as if no adjudication had been made.

(5) If the Court annuls the adjudication on one of the grounds specified in subsection (1)(a) to (c),—

(a) the Court may, on the Assignee's application, fix an amount as reasonable remuneration for the Assignee's services and order that it be paid, in addition to any costs that may be awarded:

(b) that amount must be paid into a Crown Bank Account:

(c) the Assignee is not entitled to remuneration under section

406 for those services.

[71] It is not strictly necessary for this Court to come to any firm view about whether or not Mr Fawcett has a realistic prospect of obtaining an annulment. That is because this judgment is restricted to the subject of what, if any, rights Mr Fawcett has to obtain additional disclosure before the substantive application for annulment is dealt with.

[72] It may be helpful, though, to know that it would appear that Mr Fawcett may be proceeding under a misunderstanding about what powers the court has under s 309. A court cannot review the determination of the court which originally made the order adjudicating Mr Fawcett bankrupt, that order being predicated upon the

fact that he was insolvent. Nor, apparently does Mr Fawcett seek to establish that he was solvent at the time of adjudication. He is attempting to show that, at some point during the course of the administration of his bankruptcy, there were sufficient properties or funds in the hands of the OA to enable him to meet all the debts of the estate. That is not a ground for annulment. On the basis of the evidence currently before the Court, there does not seem to be any ground upon which a court would grant an annulment under s 309(1)(b). These issues must be regarded as unresolved until the point where discovery has been completed, any additional evidence filed and any final argument has been heard from the parties. These remarks are intended to provide some guidance to Mr Fawcett as to his current legal position in light of the evidence that is before the Court.

[73] In order to progress matters from this stage, timetable orders are required. I

give the following directions:

[74] The proceeding is listed for mention in the Chambers List on 14 March

2016. If any prolonged discussion is required concerning the present judgment or in particular, implementation of it, hearing time may need to be allocated. I assume that the next matter that will need to be discussed will be the substantive hearing of the Granville matter. Subject to the parties’ submissions, a hearing date will need to be scheduled for that matter and any timetabling directions that are required to that end will need to be given.

_{[75] The costs on the present application are reserved.}

J.P. Doogue

Associate Judge