Christchurch property developer David Ian Henderson loses appeal

David Henderson has lost an appeal arguing against restrictions placed on him after his second bankrupty. Photo/file

A Christchurch property developer who was bankrupted twice has failed in his appeal against a judge's decision to restrict his ability to manage a business and accrue debt.

David Ian Henderson, who has numerous convictions for tax offences, was bankrupted for the second time in 2010 owing between $100-150 million, but the High Court discharged the bankruptcy early this year.

The discharge came with restrictions, including that Henderson could not control or manage a business for the next six years, personally guarantee the debts of any person or entity, or be employed by a business controlled by his relatives.

The ruling, published last year, said Henderson's 2010 bankruptcy had been caused by personal guarantees given to cover company and associates' debts, and his inability to pay tax.

Henderson took the matter to the Court of Appeal to argue the judge's process for deciding on restrictions.

He claimed the judge erred in imposing the conditions without taking his post-bankruptcy conduct into account, and by making this error, the judge breached Henderson's rights to natural justice and displayed a bias against him.

Henderson's lawyer pointed to a section of the discharge judgment, which said "none of the particular aspects of post-bankruptcy conduct alleged against Mr Henderson would, if established, either individually or collectively justify the extending of his bankruptcy beyond six years".

Lester said the judge considered any finding against Henderson's post-bankruptcy behaviour would not affect the restrictions, but he had not taken into account how a finding in Henderson's favour would affect it.

In the Court of Appeal's decision, released today, Justice Rhys Harrison said Henderson had an "unusually active history in both ... criminal and civil litigation".

He has 25 convictions for PAYE offences from four different occasions, as well as 12 convictions for other taxation offences on seven separate occasions.

Justice Harrison said Henderson consistently failed to meet his personal taxation liabilities to the IRD, and would file returns recording nil income and nil expenses. His companies also diverted PAYE and GST payments.

When it came to the discharge judgment, Justice Harrison said allegations Henderson had breached certain prohibitions and received undisclosed income after his bankruptcy were "inconsequential" and "did not go towards the core risk which Mr Henderson presented to the commercial community or the wider public interest".

Lester could not do any more than assert that further detailed evidence on the allegations may have changed the nature and duration of Henderson's discharge conditions.

Justice Harrison said a finding on the allegations could not have affected the permanent prohibition on Henderson giving any personal guarantees, and it could not have affected the six-year ban on managing or controlling a company or acting as a business director.

"In our judgment a finding on Mr Henderson's post-adjudication conduct could not possibly have affected the material conditions imposed upon his discharge."

As for the claim the judge had shown bias towards Henderson, Justice Harrison said the submission "could not possibly succeed", and that if anything, the judge's decision not to look at the allegations was likely favourable to Henderson.

The appeal was dismissed and Henderson was ordered to pay costs.