Fava v Official Assignee - [2012] NZHC 2980

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-4669 [2012] NZHC 2980

UNDER the Insolvency Act 2006

IN THE MATTER OF the bankruptcy of PHILIP JOSEPH FAVA BETWEEN PHILIP JOSEPH FAVA
Applicant

ANDOFFICIAL ASSIGNEE Respondent

Hearing: 7 November 2012

Counsel: G J Judd QC for the Applicant, Mr Fava
J D McBride for Aral Property Holdings Limited

Judgment: 7 November 2012

ORAL JUDGMENT OF ASSOCIATE JUDGE BELL

Solicitors:
Murdoch Price, P O Box 217-006 Botany Junction, Auckland 2164, for P J Fava
Email: christine@murdochprice.co.nz

Bell Gully, P O Box 4199 Auckland 1140, for Aral Property Holdings Limited.
Email: Ralph.simpson@bellgully.com

Copy for:
Gary Judd QC, P O Box 137-273 Parnell, Auckland 1151, for P J Fava
Email: garyjjudd@gmail.com

Josh D McBride, P O Box 1008 Auckland 1140, for Aral Property Holdings Limited
Email: josh@joshmcbride.co.nz

FAVA V OFFICIAL ASSIGNEE HC AK CIV-2011-404-4669 [7 November 2012]

[1] Aral Property Holdings Ltd has applied for security for costs against Mr Fava, the applicant. Mr Fava opposes, but on confined grounds. He says that the application is misconceived for two reasons:

(a) This is the second application for security for costs in this matter and leave has not been granted to allow a second application.

(b)The application is unlawful and incompetent because it involves a breach of r 13.5.3 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008. The alleged breach of that rule is said to lie in the conduct of Mr Simpson, a partner in Bell Gully, the solicitors acting for Aral Property Holdings Ltd in this proceeding.

Background

[2] Mr Fava was adjudicated bankrupt on 11 May 2010. Aral was the creditor. It claimed a debt of $1,584,637.59 being the unpaid balance of a $2,000,000 order for costs under a judgment of Hugh Williams J given on 22 December 2009 in Churchill Group Holdings Ltd & Ors v Aral Property Holdings Ltd.1 Although Mr Fava was not a party to that litigation, Hugh Williams J ordered that Mr Fava personally should pay costs, in addition to the orders for costs made against the plaintiffs. Aral Property Holdings Ltd has claimed as a creditor for the judgment debt in Mr Fava’s bankruptcy.

[3] In the original litigation (CIV-2001-404-2302) Churchill Group Holdings Ltd and other companies associated with Mr Fava had sued Aral and its manager, Mr Leung, for $25 million in deceit and for breach of the Fair Trading Act. In addition, they claimed punitive damages of $25 million. The claims arose out of a
falling-out in a joint venture for a shopping centre at Whangaparaoa.

1 Churchill Group Holdings Ltd & Ors v Aral Property Holdings Ltd and Leung HC Auckland
CIV-2001-404-2302, 22 December 2012.

[4] The case went to a hearing in 2006, but came to an end after 31 days when Mr Fava was adjudicated bankrupt on the application of another creditor. Mr Fava became disqualified from holding office as director of the plaintiffs in the proceeding. On his adjudication in bankruptcy…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Fava v Official Assignee

Details

AGLC: Fava v Official Assignee [2012] NZHC 2980
Case: [2012] NZHC 2980
Decision Date: 7 November 2012

CaseChat Overview and Summary

The case of Fava v Official Assignee concerns an application for security for costs made by Aral Property Holdings Ltd against Philip Joseph Fava, the applicant, in the High Court of New Zealand. The dispute arises out of a previous litigation in which Aral Property Holdings Ltd obtained a final judgment for costs against Mr Fava. Aral Property Holdings Ltd claimed a debt of $1,584,637.59 as a creditor in Mr Fava’s bankruptcy. The legal issues in the case revolve around the merits of the security for costs application and whether the application is competent and lawful under the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008. The court found that Aral Property Holdings Ltd had established a reason to believe that Mr Fava would be unable to pay an order for costs if unsuccessful in his proceeding under s 238 of the Insolvency Act. The court exercised its discretion under r 5.45(2) and concluded that the balance favoured requiring security for costs from Mr Fava. The court fixed security for costs at $20,000 and ordered a stay if Mr Fava fails to pay that sum into court by 26 November 2012. The court also rejected Mr Fava’s contention that Aral Property Holdings Ltd’s application was incompetent and unlawful. The court found that issue estoppel applied, and Mr Fava was not entitled to raise the same matter again. The court granted leave to bring the application, if leave is required, and extended the time for Mr Fava to seek a review of the decision. Aral Property Holdings Ltd is awarded costs against Mr Fava on this application under category 2 band B, plus reasonable disbursements as fixed by the Registrar.

Orders