Confusion of bankruptcy leads to loss of home

A piece of paper cost an Invercargill accountant who was declared bankrupt at home.

Darryl Robert Hewitson started his accounting business in Invercargill in 1997.

He later fell ill with pulmonary sarcoidosis, a respiratory condition, which impaired his ability to work.

In a judgment delivered yesterday by Judge Rachel Dunningham, it is stated that in 2009 Mr Hewitson was served with proceedings by some of his clients.

Mr. Hewitson owed a total of $412,038.53 to six plaintiffs, including fees and disbursements.

The unpaid amount still owed to creditors is $337,123.28 plus the assignee’s unrecovered time costs of $15,987.42 and unpaid disbursements of $19,413.12.

On November 18, 2009, Mr. Hewitson was declared bankrupt by the High Court of Invercargill.

An insolvency officer wrote to him the next day advising him of his obligations, including the need to file an inventory within 10 working days.

Despite repeated requests and the agent reminding Mr Hewitson that his three-year bankruptcy period would not begin until the return was received, he did not file it.

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

Mr Hewitson received $250,000 from his father in 2014 and he used $165,000 of it to buy his old house, believing he was already out of bankruptcy.

In March 2018, Land Information New Zealand informed Mr Hewitson that a caveat had been filed against his property by the assignee.

“When he contacted the assignee’s office, he was told they had not received his statement of affairs and he remained an undischarged bankrupt.”

It was not until April 2021, three years after filing another declaration, that he was automatically released from bankruptcy.

The High Court appeal heard by Invercargill District Court on December 13 was
for Mr. Hewitson to seek judicial review to stop the sale of his property citing the transferee did not
account of all the relevant circumstances, including the conditions under which he redeemed the property and the change in the circumstances of the creditors.

Mr Hewitson’s review of his creditors showed some did not appear to trade or were being evicted, a 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 the monies.

Judge Dunningham said he had taken into account Mr Hewitson’s interest in staying at home due to his poor health and the misunderstanding that he was already released.

“Despite this, he is in possession of substantial post-acquisition assets while his creditors have only received 25 cents in payment of their claims.

“In all honesty, I think we should start selling the property again.”

Judge Dunningham dismissed Mr. Hewitson’s claim.

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