Leslie
Willis was said by the High Court to have bankrupted his former wife over a
comparative pittance seemingly for no good reason except to exacerbate her
stress, to complicate her legitimate claim in relationship property proceedings
and to prolong its final resolution. Her
bankruptcy was annulled as being an abuse of the court process.
The High Court was told
Leslie and Anne Willis agreed to a division of their property interests at a
2013 judicial settlement conference.
Their assets were spread across two trusts: a family trust and an investment
trust. Ms Willis and her former husband
were trustees of both trusts. She stood
to receive a significant slice of assets valued in total at over $600,000. Trust assets included two properties in
Auckland and one on Great Barrier Island. One stumbling block emerged. Operation of the agreed property division was
conditional on a satisfactory builder’s report on one of the trust properties
which was to be transferred to Mr Willis.
The report found it was a leaky building, reducing its value from that
represented in the agreed property division.
Their property division stalled.
Subsequent failed court proceedings by Ms Willis to have the agreement
enforced resulted in her being liable to pay court costs to her former husband. Four years later, she was back at square one
with their joint property interests still tied up in the two trusts, no other
assets and bankrupted by her former husband for non-payment of some $12,200 court
costs. Since trust deeds for the two
trusts disqualified from office any bankrupt trustee, Mr Willis was left in effective
control of trust operations. He asked the
High Court to have Ms Willis taken off the land registry titles since she was
no longer eligible as a trustee of the property-owning trusts. She countered by asking the court to annul
her bankruptcy.
Associate judge
Sargisson said Mr Willis had deliberately chosen bankruptcy as a weapon of
oppression. It was in Mr Willis’ power
to make a distribution to his former wife as a discretionary beneficiary of
their family trust in order to meet his claimed debt. His callous approach to injecting bankruptcy
into a relationship property context cried out for the court’s intervention
under the Insolvency Act, she said. Ms
Willis’ bankruptcy was annulled with effect from the date of her adjudication
on the grounds she should not have been bankrupted. Annulment means it is as if she was never
bankrupt.
Willis
v. Willis – High Court (24.10.17)
17.143