North Shore real estate agent David Greig has been granted early discharge from bankruptcy despite racking up an additional debt of nearly $1 million to IRD.
An Auckland real estate agent racked up nearly $1 million in debt to Inland Revenue despite already being bankrupt.
David Robert Greig spent 14 years under bankruptcy restrictions and was only released last month after taking legal action.
He told the Herald he didn’t realise he was still bankrupt, mistakenly believing he had been automatically discharged more than a decade ago.
“We didn’t know the compliance policy. I got caught in the web and got stuck in that web for so long.”
Greig, a Precision Real Estate agent on Auckland’s North Shore, has sold $850m in property in a career spanning more than 30 years.
He said the insolvency case stemmed from events 14 years ago linked to the Global Financial Crisis and he had an otherwise unblemished record.
And though he has now been discharged from bankruptcy, his reprieve comes with court-imposed conditions.
They include only running his business “on a cash basis”, making all necessary deductions for his tax obligations and having an accountant supervise his financial affairs.
Greig was adjudicated bankrupt in 2011 owing $222,000 to creditors, including $152,000 to IRD.
He also owed money to several finance firms, $27,000 to American Express and $25,000 to BMW.
Under insolvency rules, a bankrupt is automatically discharged three years after they file a completed statement of affairs acceptable to the Official Assignee.
However, Greig failed to file a statement until December 2023, more than 12 years after he was declared bankrupt by the High Court. It meant he wasn’t eligible for automatic discharge until December 2026.
Greig subsequently applied for an early release, claiming he assumed he would be automatically discharged in June 2014 and that he wasn’t told of the requirement to file a statement until January 2023.
A judgment last month from Associate Judge Paul Cogswell said Greig had travelled to Australia six times while bankrupt without obtaining the Assignee’s consent.
The Assignee confirmed there was no “realisable assets” identified and no contact from Greig since his adjudication.
In 2022, IRD informed the Assignee that Greig was trading as a real estate agent and had incurred “significant” PAYE and GST debt while an undischarged bankrupt.
IRD said Greig was “very difficult to contact” and not replying to messages.
The judge said Greig’s failure to file a statement of affairs was perhaps understandable because of a “misunderstanding” on his part. However, incurring further substantial tax debts while an undischarged bankrupt was not.
“The applicant shows a clear disregard for his obligations as a taxpayer, reflected in the fact that he was adjudicated bankrupt on the petition of the commissioner of Inland Revenue in 2011 and since that time has incurred further tax debts of close to $1m,” the judge wrote.
“Taking into account the applicant’s failure to file his statement of affairs, his failure to obtain permission to be self-employed, his failure to obtain consent to travel overseas and his incurring of further substantial tax debt, I would ordinarily have refused to grant the application for early discharge from bankruptcy.”
However, the judge said Greig and the Assignee had agreed on a set of conditions that could allow him to earn income and resolve his outstanding tax debt.
The Assignee said Greig shouldn’t be permitted to carry on business “without being under the supervision of an accountant who ensures that he complies with his financial duties moving forward”.
Other conditions sought included:
That Greig could continue working as a real estate agent provided all withholding tax was deducted at source and all GST and income tax obligations were met in full and were not in arrears.
That Greig not employ staff and that his business was “to be operated on a cash basis” so far as possible.
That all money was banked into a business account and funds set aside for tax.
That a specified accountant be given access to Greig’s business accounts and supervise Greig’s financial affairs.
The judge also ordered the accountant provide six-monthly reports to the court confirming Greig’s compliance with the conditions, which would remain in force until December next year.
Judge Cogswell granted the application subject to the conditions.
Greig told the Herald his bankruptcy had been “mishandled” by the Official Assignee, which never informed him of his reporting obligations until 2023.
The original debt related to a property development that had been hit by the GFC. The latest IRD arrears stemmed from a “core debt” of about $200,000, with the rest interest and penalties.
Greig said he had been operating successfully as an agent throughout his bankruptcy without issue in the belief he had already been discharged.
After being made aware of the discrepancy by the Assignee, Greig said he took court action to rectify the situation at considerable personal cost.
The matter stemmed from events during a tough economic environment in which many others had also been caught out, he said.
“I never filled the forms in and it went for 14 bloody years.”
Real Estate Authority chief executive Belinda Moffat said information about licensees’ insolvency status was collected through the licensing process.
Being an undischarged bankrupt did not expressly disqualify someone from holding a real estate licence.
However, agents were required to inform the watchdog of any change of circumstance, such as insolvency, which could be a relevant factor as to whether someone was a “fit and proper” person.
“We are aware of the insolvency status of Mr Greig. We note that the High Court has granted permission to Mr Greig to carry on business as a real estate salesperson with a named agency.”
The REA would not answer further questions because of privacy obligations.
Lane Nichols is Auckland desk editor for the New Zealand Herald with more than 20 years’ experience in the industry.
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