Within Maoridom, giving of koha invites reciprocal obligations. But for insolvency law, koha can amount to a gift, automatically repayable like all gifts if made within two years of bankruptcy. Maria Honey’s purchase of land at Coromandel from a relative, at below market price just over a month before his bankruptcy, saw her liable to front up with the balance, over top of legal argument this reduced price amounted to koha and was not recoverable as a gift.
Richard Anderson was bankrupted in 2014. Before bankruptcy, he struck a deal with niece Maria Honey intended to ensure he remained in occupation of his family home at Matatoki, near Thames.
He told the High Court that the intent was to have Ms Honey buy the property, allowing him and his family to remain, while removing the home from assets likely to be seized on bankruptcy.
Agreed price was the then rateable value: $308,000. Ms Honey was having to borrow money for the purchase. The best deal she could get was a $175,000 bank loan.
It was agreed Ms Honey would pay $175,000 with her uncle leaving $133,000 in as vendor finance. On settlement date in October 2014, legal documents were signed with the debt due on the vendor loan immediately forgiven, turning the loan into a gift.
Then everything unravelled.
The High Court was told Ms Honey subsequently trespassed Mr Anderson and family from the Matatoki property, giving possession to members of her wider whanau.
Learning of the $133,000 gift, Insolvency Service gave notice under the Insolvency Act cancelling the deed of gift as being the gifting of an asset within two years of bankruptcy; the asset being Mr Anderson’s right to collect $133,000.
Ms Honey challenged notice of cancellation.
A gift carries connotations of getting something, while giving nothing in return.
Forgiveness of the $133,000 balance owed on the purchase price was koha, she said. In terms of tikanga Maori, koha carries with it reciprocal obligations. She was providing something in return, she said.
The Matatoki property is Maori freehold land. It has been in the same family for over a century.
Ms Honey said a $133,000 reduction in price triggered a personal obligation to maintain family ownership. This was unstated, but it is understood within Maoridom that Maori land is not to be sold outside family connections, she said.
Ms Honey said she has honoured these obligations by having extended family assume occupation of Matatoki.
Context is everything when applying tikanga Maori to legal issues, Associate Judge Skelton said.
The transaction related to Maori land, but the narrow legal issue was forgiveness of a promise to pay $133,000 of the purchase price. Forgiving this debt was a ‘gift,’ he ruled.
He cancelled the 2014 deed.
Cancellation has the effect of now requiring Ms Honey to pay the balance due, with $133,000 then becoming available to pay Mr Anderson’s bankruptcy creditors.
Official Assignee v. Honey – High Court (8.08.24)
24.186