Maureen
Pye’s $81,000 inheritance from her mother was claimed by the Insolvency Service
as being a gift made prior to bankruptcy after she diverted the bequest to a family
trust when facing an unpaid tax demand.
Struck-off Christchurch lawyer Murray Withers had taken control, lending
some of it on favourable terms to his own family trust.
Mrs Pye was bankrupted
in August 2016 by Inland Revenue on tax debts totalling $46,800. The High Court was told Mr Withers had been
negotiating with Inland Revenue on her behalf trying to reduce the amount. Prior to her bankruptcy, he recommended Mrs
Pye remove from her control a pending bequest from her late mother’s
estate. She then transferred the $81,046
bequest to a trust management company he controlled. Four months later she was bankrupted. Evidence was given of this money being passed
on to other companies Mr Withers controlled and to a family trust he set up for
the benefit of Mrs Pye’s family. He
enabled Mrs Pye to make cash withdrawals for household and business expenses. Other payments went to her partner. Mr Withers deducted a little over $8000 as
fees. He also set up a $30,000 loan to
his own family trust. Mrs Pye was told
this was a one year investment yielding ten per cent. She told the court she was not aware this was
an unsecured loan to Mr Wither’s family trust.
Repayment was overdue at the time of the High Court hearing.
Insolvency law allows the
Insolvency Service to recover gifts made up to two years prior to bankruptcy. Recoveries go into the pool to pay creditors. Justice Nation ordered Mr Wither’s trust
management company repay the $81,406 received.
Mr Withers argued the payment received was not a gift; Mrs Pye
surrendered potential rights under the Family Protection Act and the Law Reform
(Testamentary Promises) Act in return.
Justice Nation said Mrs Pye’s evidence indicated no knowledge of or
understanding of the two Acts.
Official Assignee v. MWA Consultants Ltd – High Court (15.11.17)
Official Assignee v. MWA Consultants Ltd – High Court (15.11.17)
18.002