Gifting of $973,700 to a family trust during a contested Family Court hearing should be investigated said Associate judge Smith when adjudicating bankrupt Havelock North fruiterer Richard Hodgkinson over unpaid maintenance.
After a protracted series of court hearings with an initial June 2014 Family Court hearing, an appeal and a rehearing Mr Hodgkinson was ordered to pay $78,500 maintenance to his former wife Michelle Judd. No payments have been made. Ms Judd applied to bankrupt her former husband to force payment. He asked the High Court to exercise its discretion under the Insolvency Act not to bankrupt him. He had no assets, he said. Bankruptcy was pointless. The court was told Mr Hodgkinson is a discretionary beneficiary of the Richard Hodgkinson Trust. The Trust has a net worth of some $1.52 million as at March 2017, including $406,000 in liquid investments and $916,000 in land.
During the initial June 2014 Family Court hearing, Mr Hodgkinson forgave a $973,700 debt owed him by the Trust. This was an attempt to make himself ‘judgment proof’, said Ms Judd. He was giving away his assets.
It is probable Mr Hodgkinson made the gift to avoid making maintenance payments to Ms Judd, Judge Smith ruled. Bankruptcy triggers Insolvency Act powers to grab back gifts made up to five years prior to adjudication where a gift left the donor insolvent. To keep the $973,700 benefit, it will be for the Trust to prove Mr Hodgkinson could still otherwise meet his debts.
Judd v. Hodgkinson – High Court (21.03.18)
18.061