Gibson v Official Assignee - [2018] NZHC 3129

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2014-404-003355

[2018] NZHC 3129

UNDER the Receiverships Act 1993, s 34(1) and Companies Act 1993, s 284(1)

IN THE MATTER OF

Capital + Merchant Finance Limited (in receivership and liquidation)

BETWEEN

BRENDON JAMES GIBSON and GRANT ROBERT GRAHAM

Applicants

AND

OFFICIAL ASSIGNEE

First Respondent

FORTRESS CREDIT CORPORATION (AUSTRALIA) II PTY LIMITED

Second Respondent (discontinued)

PERPETUAL TRUST LIMITED

Third Respondent (discontinued)

Hearing: On the papers

Judgment:

30 November 2018

JUDGMENT OF COURTNEY

[Costs]

This judgment was delivered by Justice Courtney on 30 November 2018 at 11.00 am
pursuant to R 11.5 of the High Court Rules Registrar / Deputy Registrar Date……………………….

GIBSON & OR v OFFICIAL ASSIGNEE & ORS [2018] NZHC 3129 [29 November 2018]

[1] The Official Assignee is required by consent orders to pay the balance of settlement monies held by him to the receivers of Capital + Merchant Finance Ltd (in receivership and in liquidation). There is uncertainty over whether GST is payable on the settlement sum and, if so, whether the Official Assignee can draw on the settlement sum to meet that liability. That question is being determined through a NOPA procedure with the Inland Revenue Department. In the meantime, the Official Assignee applied to vary the consent orders to relieve him of the obligation to pay the money until after the GST issue has been determined. The application was allocated a hearing date. The Official Assignee applied to adjourn the hearing date or, alternatively, to stay the proceedings or, alternatively, to stay enforcement of the consent orders pending determination of the GST issue. In my decision of 16 August 2018, I declined to adjourn the hearing date or to stay the proceedings or to stay enforcement of the consent orders pending determination of the GST question.1 However, I made an order staying enforcement of the consent orders pending determination of the substantive application to vary those orders, considering it to be in the interests of justice to avoid the risk of irreversible prejudice to the Official Assignee that could result from the payment of money.

[2] Both the Official Assignee and the receivers seek costs. The receivers say that they successfully resisted the application entirely and that the limited order to stay enforcement of the consent orders had not been sought by the Official Assignee and that, had it been sought, the receivers would have consented to it. They say, further, that one of the major grounds relied on by the Official Assignee’s concern (the overlap with the IRD proceedings and potential for inconsistent decisions) was unfounded because the receivers had made it clear previously that determination of the application to vary the consent orders did not require determination of the GST issue. Had the Official Assignee wanted confirmation of that position he could simply have written to the receivers, who would have confirmed it. The receivers also say that, in any event, the Official Assignee would have…

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.

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Details

Case: [2018] NZHC 3129
Decision Date: 30 November 2018

CaseChat Overview and Summary

The High Court of New Zealand was presented with an application from the Official Assignee, seeking to vary or stay consent orders that required him to pay settlement monies to the receivers of Capital + Merchant Finance Limited (in receivership and liquidation). The applicants, Brendon James Gibson and Grant Robert Graham, opposed the application. The court was required to decide whether the Official Assignee could be relieved from the obligation to pay the settlement sum until the issue of whether Goods and Services Tax (GST) was payable on the sum had been determined. The court had to consider whether the Official Assignee's application to stay enforcement of the consent orders pending the determination of the substantive application to vary those orders should be granted. Additionally, the court had to determine the appropriate allocation of costs between the parties.

The court declined to adjourn the hearing date or to stay the proceedings or to stay enforcement of the consent orders pending the determination of the GST issue. However, the court did make an order staying enforcement of the consent orders pending the determination of the substantive application to vary those orders. The court considered it to be in the interests of justice to avoid the risk of irreversible prejudice to the Official Assignee that could result from the payment of money. The court also noted that the order ultimately made was not one that had been sought by the Official Assignee, but was of the same nature and the ambit was simply less than what had been sought. The court further held that there had been a lack of constructive communication between the parties and that both parties had achieved something out of the application. Therefore, the best course was for costs to lie where they fell, and both applications for costs were accordingly refused.

This case highlights the importance of communication between parties in litigation and the court's role in balancing the interests of all parties involved. The court's decision to stay enforcement of the consent orders pending the determination of the substantive application to vary those orders was an obvious solution to the problem that both parties faced. The court's refusal to award costs to either party reflects the lack of constructive communication between them and the fact that both parties achieved something out of the application.

Orders