McKay v Johnson - [2016] NZHC 357

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-2511 [2016] NZHC 357

UNDER
Part 19 of the High Court Rules and s 34

of the Receivers Act 1993

IN THE MATTER

of H B Garments Limited (in liquidation and in receivership) and HAD Garments Limited (in liquidation and in receivership)

BETWEEN

A J MCKAY Applicant

AND

C A JOHNSON First Respondent

G M SMITH Second Respondent

Hearing: 2 March 2016

Appearances:

R B Stewart QC for Applicant
No appearance for First Respondent
Second Respondent in person

Judgment:

4 March 2016

JUDGMENT OF WHATA J

This judgment was delivered by Justice Whata on
4 March 2016 at 3.00 p.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors:
Simpson Grierson, Auckland
Copy to:
G M Smith, Auckland

A J MCKAY v C A JOHNSON [2016] NZHC 357 [4 March 2016]

[1] This matter came before me as Duty Judge. A number of matters required attention namely:

(a) Whether Mr Smith’s “without notice” application to set aside the inspection order granted by Brewer J on 10 December 2015 (the inspection application) should be allowed to proceed and if so, how it should proceed;

(b) Whether Mr Smith’s subpoenas in respect of counsel for the applicant

are valid;

(c) Whether there should be an adjournment of a 10 March 2016 hearing date on the basis that Mr Smith was not aware that the purpose of the hearing was to resolve the substantive dispute.

[2] I:

(a) Granted leave to Mr Smith to pursue his interlocutory application dealing with the lawfulness of the inspection order and whether the evidence obtained as a consequence of the inspection is admissible;

(b) Declined Mr Smith’s oral application for an adjournment (with

reasons to follow);

(c) Set aside Mr Smith’s subpoenas;

(d) Imposed the following timetabling orders:

(i)Mr Smith is to file and serve any forensic evidence relating to the inspection by 5.00 pm Monday 7 March 2016;

(ii)Mr McKay shall use his best endeavours to file and serve reply forensic evidence by 5.00 pm Tuesday 8 March 2016;

(iii)Mr McKay must file and serve any notice of opposition and supporting affidavits in respect of the inspection application by
5.00 pm Tuesday 8 March 2016;

(iv)Mr Smith is to file and serve any reply affidavits in respect of the inspection application by 5.00 pm Wednesday 9 March
2016; and

(v)Mr Smith is to file and serve submissions on both the inspection application and the substantive matter by 5.00 pm Wednesday 9 March 2016.

[3] My reasons now follow.

Background

[4] The essential claim is helpfully and succinctly described in the oral judgment of Fogarty J of 23 February 2015.1 I repeat it here for ease of reference:

[1] This is an application for directions by receivers. At the heart of the issue between the applicants and the respondents, who are also receivers, is a contest between Westpac, as the successor to Trust Bank, and the BNZ over priority of security interests over two…

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 McKay v Johnson

Details

AGLC: McKay v Johnson [2016] NZHC 357
Case: [2016] NZHC 357
Decision Date: 4 March 2016

CaseChat Overview and Summary

In McKay v Johnson, the High Court of New Zealand addressed several urgent matters in a long-standing dispute concerning the priority of security interests over HB Garments and HAD Garments. The primary issue was whether Westpac, successor to Trust Bank, had a valid security interest over the companies’ assets, which was contested by receivers acting on behalf of the Bank of New Zealand (BNZ). The court examined the enforceability of a General Security Agreement (GSA) dated around 1995 and subsequent agreements, and whether there was a need for BNZ to refund moneys recovered under mistaken securities. The court granted orders confirming Westpac’s security interests as valid and enforceable, pending resolution of refund and costs issues.

The court dealt with several procedural applications, including a "without notice" application by the second respondent, Geoff Smith, to set aside an inspection order. Despite Smith’s late filing and claims of Registry mishandling, the court allowed the application to proceed, recognizing the importance of the legality of the inspection. The court also set aside Smith’s subpoenas for the applicant’s counsel, finding no justification for requiring their evidence. Finally, the court denied Smith’s request for an adjournment of the substantive hearing date, concluding that the hearing would resolve both the substantive issues and Smith’s application regarding the inspection order. The court issued detailed timetabling orders to ensure the efficient progress of the remaining matters.

Orders