Councillor made bankrupt over defamation suit debt
Invercargill City Councillor Karen Arnold has been made bankrupt after failing to sue Invercargill mayor Sir Tim Shadbolt and media company Stuff.
In a decision, released by Associate Judge Dale Lester on Friday, Lester refused to allow Arnold to extend time to file an opposition to the adjudication process.
Arnold sued both Shadbolt and the company for defamation in a three-week trial in the High Court at Invercargill in March, last year, and was ordered to pay both parties about $186,000 each after she lost.
The case arose over comments made by Shadbolt in four columns published in the Southland Times in 2014 and 2015.
Arnold would now have to step down as a director on the boards of Electricity Invercargill Ltd (EIL) and PowerNet.
In his decision, the judge said ‘‘while Ms Arnold may wish to avoid the consequences of bankruptcy, such is true of many debtors in her position. An order is not refused on grounds of expediency or convenience.
‘‘At its most basic, Ms Arnold’s argument is that she will be unable to continue to hold directorships and that bankruptcy will mean she cannot pay off some of her unsecured creditors. Such does not make bankruptcy unjust or inequitable.’’
The decision says in an affidavit in the security for costs application before the defamation trial, sworn on May 3, 2017, Arnold had said ‘‘I am able to meet my debts as they fall due, and I will be able to meet any costs award made against me in this proceeding.’’
In a statement, Arnold said she was relieved to have been adjudicated bankrupt.
‘‘While I argued vigorously not to be made bankrupt so I could continue to pay my other unsecured creditors and act as a company director, the reality is it would have been very difficult to pay off the debt I incurred defending my reputation.’’
Arnold, who can continue to serve as a city councillor, said she was disappointed she would not be able to continue as a director on the boards.
‘‘The reality is it would have been very difficult to pay off the debt.’’ Karen Arnold