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 proceeded with the application to stay because of the other grounds that were advanced in support of that application that were unrelated to the overlap issue.

1      Gibson & Or v Official Assignee & Ors [2018] NZHC 2107.

[3]    The Official Assignee says that, had the receivers retracted the grounds of opposition and evidence that gave rise to his concern about overlap between the IRD proceedings and the current proceedings, the application would not have been necessary. He does not accept that the application could have been avoided simply by the Official Assignee seeking clarification from the receivers of their position.

[4]    It is correct that the order ultimately made was not one that had been sought. The Official Assignee had sought an order “staying … enforcement of the orders made by Venning J … pending final resolution/determination of whether GST is payable

…”. The stay application I made was less than what was being sought. However, I do not see that being of great moment. The order was of the same nature; the ambit was simply less than what had been sought. More importantly, it seemed to me an obvious solution to the problem that both parties faced and it is clear from their submissions that the receivers themselves now regard it as such.

[5]    In these circumstances, it hardly lies with the receivers to say that they should have costs because, had the application been framed slightly differently, they would have agreed to it. It seems to me that there has been a lack of constructive communication between the parties and this issue reflects that dynamic. In my view, both parties achieved something out of the application and the best course is for costs to lie where they fall. Both applications for costs are accordingly refused.

P Courtney J