Harris v The Bankhouse Trust Limited

[2019] NZHC 883

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-000340

[2019] NZHC 883

BETWEEN

KEITH VINCENT HARRIS and IAIN ANDREW NELLIES

Applicants / Plaintiffs

AND

THE BANKHOUSE TRUST LIMITED

Respondent / Defendant

Hearing:

16 April 2019

Appearances:

H L Quinlan for the Applicants / Plaintiffs

No Appearance of, or for the Respondent / Defendant

Judgment:

18 April 2019

JUDGMENT OF EDWARDS J

This judgment was delivered by me on Thursday, 18 April 2019 at 10.30 am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:    Anthony Harper, Auckland

HARRIS and NELLIES v THE BANKHOUSE TRUST LTD [2019] NZHC 883 [18 April 2019]

[1]    The applicants were appointed joint and several receivers of CIT Holdings Ltd (in liquidation) (CIT) on 31 March 2017. They were appointed by the respondent, The Bankhouse Trust Ltd (Bankhouse).

[2]    The applicants seek summary judgment for fees and costs incurred in the course of their appointment.  This  includes  legal  fees  for  proceedings  in  the  High Court, and the Court of Appeal.1 In the latter, the Court of Appeal found that the applicants’ appointment was invalid because the appointment was made in bad faith. The Court of Appeal further ruled that the applicants were not entitled to recover from the assets of CIT Holdings Ltd the costs and expenses incurred in “purportedly conducting the receivership pursuant to the terms of the general security deed or under the provisions of the Receiverships Act 1993”.2

[3]    In this proceeding, the applicants seek to recover their costs and fees pursuant to an indemnity provided in the Deed of Appointment. Relevant clauses of that Deed provide:

4.1BTL covenants with the Receivers that, in consideration of the receivers accepting the appointment under this Deed, BTL will indemnify and keep indemnified the Receivers from and against all claims, demands, proceedings, losses, costs, expenses or other liabilities whatsoever that may be brought again, suffered, sustained or incurred by the Receivers:

4.1.1Arising out of or in connection with any invalidity, defect or irregularity in the General Security Agreement whether as to irregular execution, registration, or otherwise, or in the appointment of the Receivers, or in the execution or purported execution of any of the powers of BTL under the General Security Agreement; or

4.1.2In the exercise or purported exercise by the Receivers of any of the functions and powers granted to them in respect of the Property under the General Security Agreement or pursuant to the Receivers Act 1993.

[4]    Those indemnities are subject to, and conditional upon, matters set out in cl 4.2 of the Deed, none of which apply in this case.

1      Harris v Bank of New Zealand [2017] NZHC 2374; Fatupaito v Harris [2018] NZCA 497.

2 At [75].

[5]    By letter dated 18 December 2018, the applicants (through their solicitors) requested an undertaking that Bankhouse would pay them in accordance with cl 1 of the Deed of Indemnity. Bankhouse did not respond to that letter. Nor has it raised any reason why the sums sought do not fall within the indemnity clause.

[6]    The application was served on 28 February 2019 and an affidavit of service has been filed. Bankhouse has not taken any steps and there was no appearance by, or on behalf of, Bankhouse when the matter was called in the summary judgment list on Tuesday, 16 April 2019.

[7]    Having considered the application, affidavit and memoranda filed in support of the application, I am satisfied that the respondent does not have an arguable defence to the claim and summary judgment should be entered accordingly.

[8]I order as follows:

(a)Judgment is entered in favour of the applicants against the respondent for the sum of $347,637; and

(b)Interest in the sum of $3,781.45; and

(c)Costs on a schedule 2B basis being $9,143, and disbursements in the sum of $1,400.

Edwards J