Gibson v Robert Burnes Trustee (2009) Limited - [2015] NZHC 1022

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-3165 [2015] NZHC 1022

BETWEEN
BRENDON JAMES GIBSON AND

GRANT ROBERT GRAHAM Applicants

AND

ROBERT BURNES TRUSTEE (2009) LIMITED, PAT REDPATH O'CONNOR AND KAY O'CONNOR

Respondents

Hearing: 20, 21 and 22 April 2015

Counsel:

RB Stewart QC and M Arthur for Applicants
J Cox for Respondents

Judgment:

15 May 2015

JUDGMENT OF FOGARTY J

This judgment was delivered by me on 14 May 2015 at 3.00 p.m., pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Solicitors: Chapman Trip, Auckland
Rennie Cox, Auckland

GIBSON AND ANOR v ROBERT BURNES TRUSTEE (2009) LTD AND ORS [2015] NZHC 1022 [15 May
2015]

Introduction

[1] The receivers of NZF Money Ltd (NZF) apply to the Court for orders that:

(a) The interest of Covenant Trustee Services Limited (the Trustee), as trustee for the Stockholders of NZF, ranks ahead of the interest of Robert Burnes Trustee (2009) Limited, Pat Redpath O’Connor and Kay O’Connor, as trustees of the Hillview Trust, in relation to:

(i)The sum of $1,844,087.76 (as particularised in the Schedule to the originating application) held in Chapman Tripp’s trust account plus interest;

(ii)Any other recoveries made by NZF under the loans listed in the Schedule.

(together, the Funds).

(b) The respondents pay the costs of this application.

[2] Of the sum of $1,844,087.76, as pleaded in the originating application,

$553,787.72 was in respect of the loan known as the Seaside loan. The parties have settled that issue in favour of the applicants by a consent order dated 16 March 2015 which reads:

ORDERS IN RELATION TO PROCEEDS OF SEASIDE LOAN

To: Robert Burnes Trustee (2009) Limited, Pat Redpath O’Connor and
Kay O’Connor

1The orders sought in the consent memorandum dated 13 March 2015 were granted by the Honourable Justice Asher on 16 March 2015.

2 The following orders were made:

2.1the interest of the Covenant Trustee Services Limited (Covenant), as trustee for the Stockholders of NZF, ranks ahead of the interest of Robert Burnes Trustee (2009)

Limited, Pat Redpath O’Connor and Kay O’Connor as trustees of the Hillview Trust in relation to:

(a) the sum of $553,787.72 held in Chapman Tripp’s trust account, and being recoveries under the Seaside loan (as defined in the originating application), together with all interest that has accrued on that sum; and

(b) any other recoveries made by NZF under the Seaside loan.

[3] Accordingly, I proceed on the basis that the application proceeds, amending the sum in (i) to $1,290,300.04 and removing from the schedule recoveries made by NZF under the Seaside loan.

[4] This is a dispute as to priority of securities. The applicants are the receivers of a failed finance company, NZF. The competing securities are a floating first charge, now fixed, granted by NZF and held now by the Trustee1 pursuant to the trust deed entitled “Trust Deed in respect of secured debenture stock”, on the one hand; and three security sharing arrangements (SSAs) executed between NZF and…

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: [2015] NZHC 1022
Decision Date: 15 May 2015

CaseChat Overview and Summary

In Gibson v Robert Burnes Trustee (2009) Limited, the High Court of New Zealand considered a dispute over the priority of securities between the receivers of a failed finance company, NZF, and the trustees of the Hillview Trust. The key issue was whether certain security sharing arrangements (SSAs) executed between NZF and the Hillview Trust were in the ordinary course of NZF's business, thereby permitting them under the trust deed. The Court found that the SSAs were not in the ordinary course of business and therefore did not fall within the exception provided in the trust deed. As a result, the receivers were entitled to the funds held in Chapman Tripp's trust account and any other recoveries made by NZF under the loans in question. The Court reserved the question of costs, indicating that if the parties could not agree, it would receive limited submissions on the issue.

Orders