Alarming incompetence at the Insolvency Service

Rodney Hide relates a case of dreadful incompetence at the Insolvency Service:

My mate Dave Henderson (“Hendo”), nonetheless, decided to have a crack and took the Official Assignee to court. Hendo has a shocking catalogue of failings to choose from but was determined to chew off just a small corner. It was very wise of him. He had to take the case himself. And he’s no lawyer, having failed every paper at stage one law.

The Official Assignee flew down from Hamilton a hot-shot barrister well-versed in insolvency law and another to observe from the Hamilton Crown Solicitor’s office. It was David and Goliath.

I covered the case from the media bench. And also served as paparazzi.

Hendo’s case was simply the wrongness of the Waikato Region Official Assignee, Les Currie, in refusing his application to travel overseas.

Hendo lost. But in his June 12 judgment, Associate Judge Osbourne found the following:

First, that the Insolvency Service’s Guidelines reflect the 1967 Insolvency Act, not the 2006 Act, and ignore the 1990 New Zealand Bill of Rights Act. Think about that. That’s the guidelines for staff. The Official Assignee’s own guidelines don’t follow statute. It should not be surprising that Official Assignees don’t.

Second, “Mr Currie clearly proceeded upon an understanding of the law that requires a travel decision to be based on the proposition that a bankrupt should not in the normal course of events go out of New Zealand during bankruptcy in the absence of a ‘good reason’.”    

That is, he followed the 1967 statute, not the 2006 one, which is permissive of travel and predicated on the Bill of Rights.

Mr Currie is no rookie.  He has been an official assignee for 30 years.

Third, “It is clearly established that Mr Currie failed to have regard to the personal interests of Mr Henderson. He therefore failed to have regard to a relevant consideration. To the extent he applied the principles laid down in Murray v The Official Assignee and Rao v The Official Assignee, Mr Currie reached his decision in part by reference to irrelevant or invalid considerations.”

The good judge didn’t overturn Mr Currie’s decision to refuse Hendo’s travel application. But nonetheless, in a small corner, he established that the Official Assignee is not administering all bankruptcies pursuant to the Insolvency Act 2006.

In fact, it’s as if the 2006 act never happened. Parliament may as well not have bothered. I don’t know how it happened that the Insolvency Act 2006 and the New Zealand Bill of Rights Act 1990 passed the Official Assignee by. Both were a big deal at the time.

One thing I admire about Rodney Hide, is that he sticks by his mates. But this story highlights some dreadful incompetence at the Insolvency Service. This is not an isolated case. I am sitting on files of equally alarming incompetence in the Auckland office of the Official Assignee. It is so bad in some instances it might well be considered corruption, such is the inaction on several bankruptcies and the carry-on of the bankrupts.

It’s not that one officer with one decision screwed up. The very guidelines for their staff are based on the wrong law.

The minister should by rights have an independent inquiry into the Insolvency Service’s failure to stick within its own statute. I could help him. Indeed, I have enough in my own file to make his eyes water. I stand ready to serve.

As will I.



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