After buying into a newly constructed apartment block plagued with building defects, Andrew Philip Watson was forced into bankruptcy in 2014. Ownership passed to Insolvency Service. High Court has now passed title to the apartment back to him as a ‘disclaimed’ asset.
On bankruptcy, ownership of Mr Watson’s apartment in Mountain Road, Mt Wellington, passed to Insolvency Service as an asset in his bankruptcy. Insolvency Service ‘disclaimed’ the asset, taking the view bankruptcy creditors would not benefit from a forced sale given owners of flats in Mountain View apartments faced substantial costs in remediating the building. As a legal consequence of the apartment being disclaimed, ownership passed by default to Treasury.
The Insolvency Act allows any person affected by a disclaimer to have title to the property vested in them. Justice Jagose ruled it is only fair that title be returned to Mr Watson. He was discharged from bankruptcy in 2019. Whilst bankrupt, he continued in employment and kept up payments due on the property, including mortgage payments. The court was told that with ownership returned, Mr Watson plans to sell the apartment, now free of any claim by pre-bankruptcy unsecured creditors.
Watson v. Attorney-General – High Court (30.06.21)
21.110