High Court affirms order for bankrupt couple to vacate property

Ruling rejects argument that issuance of possession order is against tikanga Māori

High Court affirms order for bankrupt couple to vacate property

In a recent case, the High Court recently found tikanga Māori irrelevant to the issuance of an order under s. 152 of the Insolvency Act, 2006 that vested a married couple’s property to the official assignee.

The lower courts found that the appellants in the case – a married couple – owed a significant sum to the Tahorakuri A 1 Section 33A2 Trust, had failed to satisfy the debt, and gave no realistic proposal for how they would pay the outstanding amount.

The trust successfully applied for a judgment that the appellants were bankrupt. The assignee alleged that he formally requested the appellants to vacate their property at Wingrove Road, Ōwhata, Rotorua within a specified period. They did not do so.

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After waiting for proceedings at the Māori Land Court to wrap up, the assignee set a meeting with the appellants so that they could talk about their options. The appellants did not attend the meeting. Attempts to resolve the matter over correspondence failed. The assignee applied to the District Court for a possession order.

The District Court granted the application and ordered the appellants to vacate the property. The court held that the case met the usual basis for a s. 152 order. That provision required bankrupt persons to vacate land or buildings when required.

The court rejected the argument that the possession order’s issuance was against tikanga Māori. The appellants had a chance to meet with the trust’s representatives and to work toward a resolution, the court said.

Possession order upheld

In Bamber v The Official Assignee, [2023] NZHC 260, the New Zealand High Court dismissed the appellants’ appeal.

The appellants could have avoided the present outcome and instead reached an orderly settlement if they had negotiated a solution with the trust’s representatives when they still had the option to do so, the court found. Instead, they seemed reluctant to engage, the court said.

The appellants’ debt to the trust and the small mortgage that they owed to a finance company, plus interest and costs, would likely not exceed the property’s current value, the court noted.

The appellants argued that the judge should have permitted the kaumātua or witnesses, including Charles Hohepa, to speak to their affidavit evidence at the hearing.

The court accepted that it might be preferable to allow the wife and Hohepa to speak during the hearing. But it held that the District Court could regulate its own procedures and that the judge could choose to rely on only the affidavit evidence.

Additional oral evidence on tikanga would not make a material difference to the outcome, the court added. The concepts of tikanga to which Hohepa’s evidence referred appeared to be irrelevant to the s. 152 order in this case, the court said.

The court explained that s. 152(2) provided a procedural mechanism for an assignee to secure the bankrupt person’s estate for the creditor’s benefit. The court found tikanga inapplicable to override s. 152, given the facts and the decisions in Ellis v R, [2022] NZSC 114 and Wairarapa Moana Ki Pouākani Incorporation v Mercury NZ Ltd, [2022] NZSC 142.

On the other hand, tikanga was relevant when the appellants had an opportunity to discuss their options during and after the proceedings at the land court, the court noted. Instead, they chose to move forward with the litigation, the court said.

The court acknowledged that the situation would be distressing to the appellants and their whānau. The court cited circumstances such as the wife’s age, lack of alternative means, and health status and the husband’s declining health.

The appellants’ situation prompted the court to appeal to the trustees’ and trust beneficiaries’ understanding of tikanga. The court suggested that they consider reaching an accord with the appellants despite the law’s strict rules on bankruptcy.

 

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