Banruptcy confusion leads to home loss

Invercargill District Court.

A PIECE of paperwork has cost an Invercargill accountant who was adjudged bankrupt his home.

Darryl Robert Hewitson started his accountancy business in Invercargill in 1997. He later became ill with pulmonary sarcoidosis, a respiratory complaint, which adversely affected his ability to work.

In a judgement released by Justice Rachel Dunningham on Friday, it says in 2009 Mr Hewitson was served with proceedings by some of his clients.

Mr Hewitson owed a total of $412,038.53 to six claimants including costs and disbursements. The outstanding amount still owed to creditors is $337,123.28 plus the assignee’s unrecovered time costs of $15,987.42 disbursements of $19,413.12.

On November 18, 2009, Mr Hewitson was adjudicated bankrupt in the High Court at Invercargill. An insolvency officer wrote to him the following day advising him of his obligations including the need to file a Statement of Affairs within 10 working days. Despite repeated requests and the officer reminding Mr Hewitson his three-year bankruptcy period would not commence until the statement was received, he failed to file it.

In April 2010, Mr Hewitson’s mother bought his Regent St property for $180,000 and in May of the same year he said he sent the Statement of Affairs to the assignee. However, it was never received by the assignee’s office.

Mr Hewitson was gifted $250,000 from his father in 2014 and he used $165,000 of it to buy his former home, believing he was already discharged from bankruptcy.

In March 2018, Land Information New Zealand notified Mr Hewitson a caveat had been lodged against his property by the assignee. “When he contacted the office of the assignee, he was told that they had not received his Statement of Affairs and he remained an undischarged bankrupt.”

In April 2021, three years after he completed another statement, he was automatically discharged from bankruptcy.

The High Court appeal heard in the Invercargill District Court on December 13, was for Mr Hewitson to seek judicial review to stop the sale of his property citing the assignee failed to have regard for all relevant circumstances including the conditions under which he reacquired the property and the changed circumstances of the creditors.

Mr Hewitson’s review of his creditors showed some appeared not to be trading, or were in the process of being removed, one business owner had died, and after a conversation he had with one in September 2021, he did not believe the man had any interest in recovering monies.

Justice Dunningham said he had considered Mr Hewitson’s interest in remaining in his home due to his ill health and the misunderstanding he believed he was already discharged.

“Notwithstanding this he is in possession of a substantial after-acquired asset while his creditors have only received 25c in the dollar in payment of their claims.

“In all fairness I believe we should be proceeding to sell the property again.”

Justice Dunningham dismissed Mr Hewitson’s application.