Hayes v Official Assignee - [2018] NZHC 1858

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2017-419-189

[2018] NZHC 1858

BETWEEN
MAURICE DESMOND HAYES

Plaintiff

AND

OFFICIAL ASSIGNEE

Defendant

Hearing: 25 and 26 June 2018

Counsel:

D O’Neill for Plaintiff

P Cornegé for Defendant

Judgment:

25 July 2018

JUDGMENT OF WHATA J

This judgment was delivered by me on 25 July 2018 at 3.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: ………………………….

Solicitors: Nielsen Law, Hamilton
Insolvency and Trustee Service, Auckland

HAYES v OFFICIAL ASSIGNEE [2018] NZHC 1858 [25 July 2018]

[1] Mr Hayes claims the Official Assignee has breached his duties as a liquidator to, among other things, take possession of three buses belonging to Taniwha Buses Ltd (Taniwha), in liquidation. Mr Hayes is a 50 per cent shareholder in Taniwha. He claims the other shareholder, Mr Gunson, kept the buses and used them after liquidation but the Official Assignee did nothing about it.

Background

[2] The parties have helpfully provided a detailed agreed chronology of facts. I reproduce that here.

[3] Taniwha was placed into liquidation on 20 August 2014. Mr Hayes is the sole director and also an unsecured creditor in the sum of $40,220. He provided a statement of affairs to the Official Assignee on 29 August 2014. Earlier the same month, he had suggested action should be taken quickly to take control of three buses owned by Taniwha but in the possession of Mr Gunson, including: a 1986 Mitsubishi Fuso, a 1990 Mitsubishi Fuso and a 1989 Hino Rainbow. Mr Hayes did not trust Mr Gunson to preserve their value. He also provided Mr Gunson’s address, a Bus Stop 2001 Ltd (Bus Stop) valuation and Motorweb information about the three buses to the Official Assignee and said the charges against the buses were invalid. The Bus Stop valuation valued the buses at $82,500.

[4] On 17 September 2014, the Official Assignee obtained Motocheks for the three buses and, on 22 September 2014, requested Mr Hayes provide proof of debt. The Official Assignee, on 2 October 2014, issued a first liquidator’s report, which did not recognise the Bus Stop value of the buses. Mr Hayes wrote to the Official Assignee with concerns regarding the report. His letter queries the Official Assignee’s failure to take possession of the buses, misinformation in the report, and suggests Mr Gunson has misappropriated company assets. He registers his concern that the buses were continuing to be used, and the Official Assignee was failing to recover any revenue from their use.

[5] The Official Assignee also contacted Mr Gunson in October. Mr Gunson confirmed his address and that he retained three buses, two Mitsubishi Fusos and one Hino Rainbow. The Official Assignee then emailed Mr Gunson and requested details about the buses. Mr Hayes was advised the Official Assignee would examine Mr Gunson if he became uncooperative. It transpired that Mr Gunson advised his accountant would provide the requested information.

[6] In December 2014, Mr…

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 Hayes v Official Assignee

Details

AGLC: Hayes v Official Assignee [2018] NZHC 1858
Case: [2018] NZHC 1858
Decision Date: 25 July 2018

CaseChat Overview and Summary

In Hayes v Official Assignee, the plaintiff, Maurice Desmond Hayes, a 50 per cent shareholder in Taniwha Buses Ltd, alleged that the Official Assignee, who was the liquidator of the company, had breached his duties by failing to take possession of three buses belonging to the company. Hayes sought compensation for the loss he claimed resulted from the Official Assignee's inaction. The court had to determine whether the Official Assignee's decision to not seize the buses was reasonable, whether any breach caused Hayes' loss, and if it was just to compensate Hayes for any loss caused by the breach.

The court found that the Official Assignee's decision not to seize the buses was reasonable, as the valuation provided by Hayes was unreliable, and a standard independent valuation placed a low value on the buses. The court also held that even if there was a breach, it was unlikely that the sale of the buses would have resulted in a surplus to creditors after expenses. Furthermore, Hayes failed to adequately mitigate his loss by not taking up opportunities to fund the recovery process or to pursue the retrieval himself. The court concluded that the claim failed, and the Official Assignee did not breach his duty by refusing to seize the buses.

The court found that while the Official Assignee's ineffectiveness over a period of 18 months was the genesis of this proceeding, the action was not improperly brought and served as a flag-post to Official Assignees of what not to do. The court decided to let costs lie where they fall, but submissions may be filed no more than three pages in length, if necessary, on costs. If the submissions do not persuade the court to change its mind, costs on the cost memoranda are likely to follow.

Orders