The Invercargill High Court has upheld the official assignee’s decision to sell a bankrupt man’s house to pay creditors.
An Invercargill man fears he will be left homeless after losing the house he bought while unknowingly bankrupt.
Darryl Robert Hewitson bought the house in the Heidelberg suburb of Invercargill in 2014 after receiving a $250,000 donation from his father.
At the time, he thought he would be released from an orderly bankruptcy in November 2009. However, he remained bankrupt and the house automatically passed to the official assignee.
A person is normally discharged from bankruptcy after three years.
* ‘They drained my mana’: Extraordinary bankruptcy stories call for overhaul of insolvency law
* Hundreds of people caught in a cycle of shame and perpetual bankruptcy
* Liquidator to pay Christchurch property developer $5,000 for breaching trust
The Invercargill High Court upheld the official transferee’s decision to sell the house to pay creditors.
Hewitson said Things he was still struggling to understand the decision and had not yet spoken to his attorney.
“It’s totally unfair. I am 62 years old and on sickness benefit. Looks like I’m going to be thrown out on the street.
As Hewitson was told when he filed for bankruptcy, the three-year wait for the release to take effect only began to run when the official assignee received a condition report from him. .
The statement was not received, although he claimed to have sent it in May 2010.
The High Court ruled that the transferee was entitled to the house because officials had considered all relevant factors and did not have to consider Hewitson’s mistaken belief that he had been released. Hewitson should have checked her status, the court heard.
Hewitson argued that the assignee was taking advantage of a misunderstanding and had the discretion to leave the property to a bankrupt for his support.
The evidence before Judge Rachel Dunningham was that Hewitson sold the house to her mother in 2010 to pay creditors.
He then bought the house back from his mother Beverley in 2014 and spent the rest of the $250,000 gift on a trip to Australia and other items.
Hewitson started an accounting business in 1997, but due to an immune response affecting his lungs, in 2009 he had trouble concentrating and went straight to bed after work.
Some of his clients won court orders that he owed them more than $400,000 for losses incurred when Hewitson failed to file tax returns on time.
In November 2009, when he was declared bankrupt, he was told he had to file an inventory immediately, but by April the following year he had failed to do so.
He claimed to have sent the statement in May 2010, but it did not arrive.
He found out he was still bankrupt in 2018 when the official assignee filed a caveat (a charge preventing him from selling) against the property. He then sent in a balance sheet and was released from bankruptcy in 2021.
Judge Dunningham said Hewitson could still establish he had an unmet need after the property was sold.