Noyce v Lexus Trustees Limited

[2025] NZHC 1885

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2025-404-1215

[2025] NZHC 1885

UNDER

the Insolvency Act 2006

IN THE MATTER

of an application for orders varying a court- approved proposal under s 339 of the Insolvency Act 2006

BETWEEN

DIGBY JOHN NOYCE

Applicant

AND

LEXUS TRUSTEES LIMITED and SALLY

ANNE JUDITH RIDGE as trustees of the 24 TRUST

First Respondent

Continued over page

Hearing:

10 July 2025

Appearances:

E Laven for the Applicant

No appearance for the Respondents

Judgment:

10 July 2025

JUDGMENT OF ROBINSON J

This judgment was delivered by me on 10 July 2025 at 3:00pm pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Solicitors:
McMahon Butterworth Thompson, Auckland

Copy to:
The Respondents

NOYCE v LEXUS TRUSTEES LIMITED & ORS [2025] NZHC 1885 [10 July 2025]

HEARTLAND BANK LIMITED

Second Respondent

WESTPAC NEW ZEALAND LIMITED
Third Respondent

ASB BANK LIMITED
Fourth Respondent

CAPTAIN SPRINGS CONSORTIUM (A SYNDICATION)

Fifth Respondent

COLIN STEVENS
Sixth Respondent

IAN ALBERT FENNING and WENDY

DAWN FENNING as trustees of the DUDLEY ROAD TRUST

Seventh Respondent

BDO AUCKLAND LIMITED
Eighth Respondent

UDC FINANCE LIMITED
Ninth Respondent

FLETCHER DISTRIBUTION LIMITED
Tenth Respondent

[1]    The applicant, Digby Noyce, is the trustee of a court approved proposal calling for the payment of $180,000 to the creditors of Warren Ian Fenning.1 Mr Noyce applies for an order under s 339 of the Insolvency Act 2006 varying the terms of the proposal so that the distribution of $100,000 to Mr Fenning’s creditors will fully and finally settle the proposal and satisfy all his creditors’ claims. Mr Noyce also seeks leave to commence the proceeding by way of originating application.

Background

[2]    Mr Noyce instructed Aaron Nicholls to act as his solicitor and counsel in relation to the proposal. Mr Nicholls also acted for Mr Fenning.

[3]    Mr Noyce explains that Mr Fenning arranged for $181,666 to be paid into  Mr Nicholl’s trust account for the purposes of implementing the proposal. These payments were made to Mr Nicholl between 9 October 2019 and 14 September 2022. Mr Noyce instructed Mr Nicholls to pay out the funds in accordance with the proposal. Mr Noyce says he followed up with Mr Nicholls on numerous occasions, by email and by phone. Mr Noyce says Mr Nicholls assured him all was well, that some creditors had been paid and others would be in due course.

[4]    Mr Nicholls was subsequently suspended from practice and then struck off the roll of barristers and solicitors for misappropriating $700,000 of client funds from his trust account. On 2 July 2024 the New Zealand Law Society advised Mr Noyce’s solicitor that as of January 2024 there were no funds in Mr Nicholls’ trust account under Mr Fenning’s name.

[5]    On 8 October 2024 the Law Society approved a claim by Mr Noyce with the Lawyers & Conveyancers Fidelity Fund for $100,000.2 However, noting the passage of time and that the compensation payment would not be sufficient to meet the terms of the proposal, the Law Society required evidence that the compensation payment would reinstate the proposal before the compensation would be paid. The Law Society (through counsel) advised this evidence could include:

1      Fenning v Lexus Trustees & Ors [2019] NZHC 3009.

2      This is the maximum amount payable on an individual claim under Regulation 11 of the Lawyers and Conveyancers Act (Lawyers: Fidelity Fund) Regulations 2008.

(a)a copy of an order of the High Court varying the terms of the earlier proposal; or

(b)a sworn statement from Mr Noyce as trustee confirming that the proposal will be implemented in compliance with the existing Court orders once the compensation payment is received.

[6]    The compensation payment will not be sufficient to satisfy the proposal in accordance with its approved terms. Mr Noyce is unable to provide a sworn statement that it will. He therefore makes this application to vary the terms of the proposal.

The creditors’ views/service

[7]    On 25 March 2025 the second respondent, Heartland Bank, confirmed through solicitors that it agrees to the variation. Heartland Bank is Mr Fenning’s largest creditor, by a significant margin.

[8]    On 7 April 2025 Mr Noyce through his solicitor sought the views of the other creditors. The third, sixth, and seventh respondents advised they also agreed with the variation. Counsel acting for the second-named first respondent, Ms Ridge, requested further information. There was no response from other creditors.

[9]    There are affidavits of service confirming service on the first-named first respondent and each of the fourth, fifth, sixth, eighth, ninth and tenth respondents. Service on each of the third, sixth and seventh respondents was effected by arrangement. None of these respondents have taken steps to oppose the application.

[10]   I have seen correspondence between counsel in which counsel for Ms Ridge confirms to Mr Thompson for Mr Noyce that she does not wish to participate in the proceeding, and that Mr Thompson can advise the Court accordingly.

Discussion

Originating application

[11]   Ordinarily proceedings in which relief is sought solely under the Insolvency Act are to be made under Part 18.3 However, I am satisfied that in the present case it is in the interests of justice to grant Mr Noyce’s application under r 19.5 for leave to commence the proceeding by originating application. The matter is straightforward. The issues are confined. Proper determination of the proceeding does not require particularised pleadings or interlocutory procedures.4

Variation

[12]   The Court may vary a proposal on the application of the trustee if it is satisfied that any of the grounds set out in s 339(2) of the Insolvency Act apply.5 These grounds are:

…

(b)        the insolvent has failed to carry out or comply with the terms of the proposal;

(c)        the creditors generally will suffer injustice or undue delay if the proposal proceeds;

(d)for any other reason the proposal ought to be varied or cancelled.

[13]   In these unusual and highly unfortunate circumstances I am satisfied the proposal ought to be varied, broadly in accordance with the order sought. Mr Fenning carried out the terms of the proposal by arranging funds to be paid to Mr Nicholls as the trustee’s solicitor, and Mr Noyce as trustee instructed Mr Nicholls to make payments in accordance with the proposal. The reasons for some of the delays are not entirely clear, but ultimately the proposal has failed because of misappropriation by Mr Nicholls, in flagrant breach of his professional and fiduciary obligations. The Fidelity Fund has responded accordingly.

3      High Court Rules, r 18.1(b)(ix).

4      Solar Bright Ltd v Martin [2019] NZHC 300 at [20] – [24].

5      Insolvency Act 2006, s 229(1)(a).

[14]   Mr Noyce has provided a revised schedule of distributions he will make to Mr Fenning’s creditors if the sum of $100,000  is available  for distribution.  But   Mr Noyce will only receive the $100,000 from the Law Society if he is able to provide it with the evidence it reasonably requires. It is therefore in the interests of all parties that the Court grants the variation sought.

Result

[15]   The applicant has leave under r 19.5 to commence the proceeding by originating application.

[16]   The terms of the proposal approved by the Court in Fenning v Lexus Trustees & Ors [2019] NZHC 3009 are varied so that distribution to the creditors of Warren Fenning of the sum of $100,000 that Mr Noyce is to receive from the New Zealand Law Society Fidelity Fund as compensation for breaches of obligations by Mr Noyce’s solicitor, Aaron Nicholls, will fully and finally settle the proposal and satisfy all creditors’ claims.

Robinson J