ASB Bank Limited v Robinson

[2013] NZHC 2353

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-419-000081 [2013] NZHC 2353

BETWEEN  ASB BANK LIMITED Judgment Creditor

ANDCHRISTOPHER JOHN ROBINSON Judgment Debtor

CIV 2013-419-000082

BETWEEN  ASB BANK LIMITED Judgment Creditor

ANDALISON CHRISTINA ROBINSON Judgment Debtor

Hearing:                   10 September 2013

Appearances:           M A Powell for the Judgment Creditor

C J Robinson in person for the Judgment Debtors

Judgment:                10 September 2013

ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

ASB BANK LIMITED v C J and A C ROBINSON [2013] NZHC 2353 [10 September 2013]

[1]      The judgment debtors were served with bankruptcy notices.   On 4 March

2013 they applied to set those aside.  They claimed they had a counterclaim, set-off, or cross demand which exceeded the amount of the judgment creditor’s judgment debt.  On 26 November 2012 ASB Bank (the Bank) obtained judgment against the judgment debtor’s in the sum of $467,207.30.  The judgment debtors consented at that time to judgment being entered against them.

[2]      This matter was first called before me on 27 May 2013.  As my minute of 27

May  2013  briefly  described,  the  Bank’s  claim  concerns  a  mortgage  shortfall following the mortgagee sale of the judgment debtors’ property.  The dwelling on the property had burned down.  Mr Robinson was on 17 April 2012 arrested and charged with arson.  The insurers refused to indemnify the Robinson’s for the fire damage caused. At that time I adjourned the matter for call on 6 August 2013 for the purpose of scheduling a fixture.   On the morning of that call Mr Robinson filed a memorandum  in  which  he  set  out  in  detail  the  judgment  debtors’ counterclaim against the Bank.

[3]      When this matter was called before me on 6 August 2013 I adjourned the matter to today to enable the judgment debtors to engage the services of a Hamilton barrister whom they had consulted.  The matter was adjourned until today for the purpose of hearing argument upon the setting aside application.

[4]      Yesterday the judgment debtors filed a submission.  They are self-represented

at today’s call.

[5]      The judgment debtors claim they have a genuine counterclaim, set-off or cross demand that they could not have set up in opposition to the Bank’s claim for judgment.  They also argue that the Court should exercise its inherent jurisdiction to set aside the bankruptcy notice.

[6]      In the Bank’s opposition to the setting aside application the issue of a lack of mutuality between the judgment debtors’ claim against its insurers, and the Bank was raised.

[7]      It would appear in response to that the judgment debtors’ discontinued their proceeding against their insurer and reissued a proceeding naming the insurer, two insurer investigators, and the Bank as defendants.  That proceeding was filed on 23

April 2013.

[8]      In short, and as concerns the Bank, it is alleged the Bank was complicit in a fraud perpetrated for the purpose of supporting the insurers claim refusing indemnity. It is said that had the Bank not cleared the property, albeit for the purpose of a mortgagee sale, there would have remained the evidence to prove that Mr Robinson did not light the fire that destroyed the residence on the property.

[9]      The claim against the Bank totals $7M.

[10]     Mr Robinson says he was arrested for arson just the day after the Bank did work to clear the property.

[11]     There was a hearing on 26 November 2012 upon the Bank’s application for judgment in relation to the mortgagee shortfall.  For that hearing Mr Robinson had spoken to a barrister who the Court heard from on behalf of the judgment debtors. Mr Robinson said that “under significant pressure, I agreed to the judgment being entered for a reduced sum of a fixed, low interest rate.  I understood that when we reach settlement with IAG over the insurance claim the debt would be cleared”.

[12]     Mr Robinson now believes that “the original judgment should not have been made without a full hearing for which I have properly prepared and for which [I] should have been allowed to speak and present the evidence relating to the disposal of evidence and the manipulation of evidence by ASB in respect to quantum which I was not allowed to do in the hearing.  I also then could have been made fully aware of the possible consequences of bankruptcy”.

[13]     No application was made to set aside the judgment.

[14]     Mr Robinson says that the house fire occurred in Kerikeri when he and his wife were in Hamilton, some 370 kilometres away.   He said he had no part in

causing that fire.  He said the house and other property were insured by IAG and that with his arrest for arson IAG declined insurance cover.

[15]     Mr  Robinson  says  that  a  pre  trial  hearing  has  been  sought  in  his  new proceeding concerning the admissibility of the insurer’s investigator and upon an application under the New Zealand Bill of Rights Act.

[16]     In his rejection of the forensic evidence he explains how he could not have been responsible for the damage that occurred.  Mr Robinson believes the evidence disclosed a forced entry of the premises during his and his wife’s absence from it for the purpose of committing burglary.   Mr Robinson explains in length why in his opinion clear evidence excludes him from any involvement.

[17]    He believes the photographs of the fire damage contradict the insurer’s investigator’s conclusions about how the damage was caused.

[18]     Concerning  the  judgment  debtors  own  claim  against  their  insurers  Mr Robinson deposes that it was only after they had agreed to judgment being entered against them in favour of the Bank that they received the key photographic evidence which to their mind proves the fire occurred as a result of a random burglary.

[19]     The  judgment  debtors’ claim  is  that  the  insurers  and  its  agents  falsified evidence of damage for the purpose of avoiding meeting its responsibilities to the judgment debtors.  Mr Robinson believes that the insurer “with the cooperation and assistance of their investigators” has created “a false scenario incriminating me, purely to justify not meeting the substantial insurance claim due to the fire which was actually caused by the intruders”.

[20]     Mr  Robinson  believes  that  the  Bank  has  assisted  IAG  by  disposing  of evidence which could have disproved the judgment debtor’s connection to the fire damage.  Therefore they say they have a claim against the Bank who permitted the remains of the property to be removed when Mr Robinson had denied them permission to do so.  Mr Robinson says that it is unlikely the insurers could have

pursued their actions (which resulted in their rejection of any indemnity liability),

had the “remains of the property been left in place”.

[21]     He believes the Bank is pursuing bankruptcy “purely to remove our control

of the legal case” against the insurer.

[22]     When I directed the call of this matter today the judgment debtors responded by requesting the setting aside application be adjourned because of the progress being made with respect to their new proceeding against the Bank.  The Court has scheduled a telephone conference in connection with that proceeding on 9 October

2013.

[23]     Mr  Robinson  reports  also  that  there  is  a  pre  trial  hearing  due  soon  in connection with the criminal charge of arson against him.  In that connection he has also  filed  a  NZBOR  claim  relating  to  the  alleged  disposal  of  evidence  which occurred he says when the Bank cleared the property for mortgagee sale.

[24]     The  Court  responded  to  Mr  Robinson’s  request  for  an  adjournment  by

advising him that the matter would be called today as scheduled.

[25]     Mr Robinson’s written submissions recount again his explanation of his claim that the fire had been caused by a burglar(s).  They repeat claims of collusion, fraud, and falsification of evidence and he believes that the Police are also culpable.

Decision

[26]     The issue concerns whether there are grounds to set aside the bankruptcy notice because of the status of that other proceeding.  The Court considers that the mere existence of that other claim does not automatically demonstrate that there is a valid set off.

[27]     Section 17(7) of the Insolvency Act 2006 says the availability of a ‘cross claim’ means:

A counterclaim, set off or cross claim demand that -...

...

The judgment debtor could not use as a defence in the action or proceedings in which the judgment or the order, as the case may be, was obtained.

[28]     If a judgment debtor’s cross claim is to be considered then it must show that

there is a real aspect of mutuality with the judgment debt.

[29]     In this case there appears no reason why those matters which are now raised in opposition could not have been raised in the summary judgment hearing which resulted in the judgment being entered against the judgment debtors – to which they offered  no  opposition.   Mr Robinson was  arrested  and  charged  well  before the judgment debtors consented to the Bank’s judgment being entered against them.

[30]     The allegations in the new proceeding concern the alleged actions of the Bank after the fire destroyed the secured property and which were known at the time the judgment was entered by consent.  The events in question allegedly took place prior to the time the judgment was entered.  Therefore there were matters that the judgment debtors could have raised, and indeed it seems they were given consideration by the judgment debtors before they consented to judgment.   The allegations that the Bank together with others conspired to defeat their insurance claim  arose  after  the  bankruptcy  process  commenced.     It  was  not  until  the bankruptcy notice issued that the judgment debtors commenced new proceedings which added the Bank as a defendant which, concerning the Bank’s involvement suggested nothing more than it would have been in the Bank’s interests if the insurer did not pay out on the insurance claim.

[31]     Regardless, claims against the Bank in connection with the judgment debtors’ proceedings against the insurer, lack the required mutuality to support an application to set aside the bankruptcy notices.  Also it is open to an Official Assignee to carry on the litigation against the insurer should the circumstances warrant.

[32]     It is the Court’s view that the claims raised against the Bank are lacking in merit and appear self evidently to have been raised in an attempt to try and stave off bankruptcy.  Otherwise, had there been merit then it would have been raised prior to the entry of judgment by consent.

Conclusion

[33]     For these reasons, the applications to set aside the bankruptcy notices are dismissed.

[34]     Costs are reserved.

Associate Judge Christiansen