Discharged from bankruptcy, Mark Richard Hadfield recovered ownership of
his home against claims of unpaid creditors who argued they should get cash out
of his Auckland home which had increased in value dramatically in the three
years of his bankruptcy.
Mr Hadfield
lives with his wife in Cameron Place, Ranui, west Auckland. He was bankrupted in 2013 following
liquidation of his failed tropical fish business: The Fish Man Ltd. Mr Hadfield owed The Fish Man some $133,400
for funds the District Court ruled had been taken from his company. On bankruptcy, the Insolvency Service took
control of all Mr Hadfield’s assets, including his home. It disclaimed any interest in his Cameron
Place home. There was no equity in the
property. The legal effect of Insolvency
Service disclaiming land is that the bankrupt is no longer the owner; ownership
passes to the Crown. In fact, little
happens. As long as bankrupts keep up
mortgage payments and pay rates, they stay living on the property as if they
were still the owner. The Insolvency Act
requires court applications to sort out future ownership.
Mr Hadfield
was discharged from bankruptcy in 2016.
One year prior, Fish Man liquidators applied to have the property sold,
saying increases in Auckland property values meant there was now sufficient
equity in Cameron Place to generate cash for repayment of Mr Hadfield’s debts. Mr Hadfield applied to have Cameron Place
re-vested in his name. His wife claimed
an interest in the property as relationship property; it was their family home,
she had kept up mortgage payments both before and after her husband’s
bankruptcy.
The Court
of Appeal ruled it was too late for Fish Man liquidators to reverse the disclaimer
and have Cameron Place sold. Creditor
objections to a disclaimer must be made within fifteen days. They must also prove loss was suffered
because of the disclaimer. Objections
cannot be raised years after the event, following an upsurge in property prices
and with the benefit of hindsight, the Court said.
The Court
of Appeal ruled Cameron Place was to be reregistered in the names of Mr and Mrs
Hadfield. Fish Man’s right to recover its
$133,400 expired when Mr Hadfield was discharged from bankruptcy.
The Fish Man Ltd v. Hadfield – Court of Appeal (14.12.17)
18.022