Official Assignee in Bankruptcy in the Estate of Clark v Herbert HC Napier CIV 2009-020-446

[2010] NZHC 678

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2009-020-446

BETWEEN  THE OFFICIAL ASSIGNEE IN BANKRUPTCY IN THE ESTATE OF ALASDAIR STRUAN CLARK Plaintiff

ANDSANDRA GAYLENE HERBERT Defendant

Hearing:         6 May 2010

Appearances: F. Cleary - Counsel for Plaintiff

G.W. Calver - Counsel for Defendant

Judgment:      6 May 2010

ORAL JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

Solicitors:           Elvidge & Partners, Solicitors, PO Box 609, Napier

Scannell Hardy & Co, Solicitors, PO Box 219, Hastings 4156

THE OFFICIAL ASSIGNEE IN BANKRUPTCY IN THE ESTATE OF ALASDAIR STRUAN CLARK V SANDRA GAYLENE HERBERT HC NAP CIV-2009-020-446 6 May 2010

Introduction

[1]      Before the Court is an application for summary judgment by the plaintiff. This is opposed by the defendant.

[2]      The issue in this case is a relatively straight forward matter.   The plaintiff Official Assignee claims that Alistair Struan Clark (“Mr Clark”) who is an undischarged bankrupt made repayments of $60,000.00, $1,500.00 and $13,661.78 between March and May 2007 (prior to his adjudication in bankruptcy) towards a loan which the defendant had made to him many years earlier which, according to the plaintiff, is a voidable preference in terms of s 56 Insolvency Act 1967.

[3]      The defendant contends that this is not the case and that the repayments in question were not paid to her by Mr Clark but instead from a United Kingdom company, London Securities PLC (“the London company”) which had effectively purchased land in the Hawkes Bay and carried on farming businesses there for some period of time in the name of Mr Clark purely as its trustee.

[4]      The defendant maintains that over the relevant period of time total advances were made by her to the London company amounting to some $150,000.00 because the  company  was  experiencing  some  financial  difficulty  and  the  repayments  in March – May 2007 were merely the best she could expect by way of part repayment from the company.

[5]      The essential point of issue before me therefore is whether these repayments of $60,000.00, $1,500.00 and $13,661.78 were made by Mr Clark personally in which event they may well comprise voidable preferences which should be set aside on the basis that they were made within 2 years of his bankruptcy, or alternatively whether they were made in his name purely as trustee for the London company.

Counsel’s Arguments and my Decision

[6]      The application before me is one for summary judgment by the plaintiff.  It is clear from r 12.2 High Court Rules that the onus is on the plaintiff to satisfy the

Court that the defendant has no defence to the claim made against her for the summary judgment application to succeed – Pemberton v Chappell [1987] 1 NZLR

1.

[7]      The Court must be satisfied that there is no defence.  This has been regarded generally as meaning whether the Court is satisfied that the plaintiff’s case is unanswerable.   If there is an arguable defence then summary judgment is to be refused – Towers v R & W Hallaby Limited [1987] 3 NZCLC 100, 064.

[8]     McGechan on Procedure at paragraph HR12.2.08 deals with conflicting affidavits filed for summary judgment proceedings.  It states:

It  is  well established that as  a  general rule in  determining summary judgment applications, the Court will refrain from attempting to resolve genuine conflicts of evidence or to assess the credibility of the parties’ statements in their affidavits. However, the object of the procedure would be thwarted if spurious defences or plainly contrived factual conflicts were permitted to prevent judgment being obtained, especially in the context of the structure of r 12.2 where the onus is on the applicant.

[9]      Turning now to the evidence before the Court in the present case, the plaintiff has filed an affidavit of Judith Ann Johnson (Ms Johnson) dated 11 September 2009 in support of his summary judgment application.  This affidavit annexes as Exhibit “B” financial statements for Mr Clark who is described as “Orchardist, Havelock North” for the year ending 31 July 2006.  These accounts are prepared by Markhams MRI Hawkes  Bay  Chartered  Accountants.    It  is  interesting  to  note  that  in  the statement of financial position shown for Mr Clark, a property described as “Eastella at St Georges Road” with a value of $363,175.00 is noted as an asset.  In addition these accounts note under Mr Clark’s statement of financial position that as at 31

July 2006 he had a non-current liability owing to “Sandra Herbert – advance on demand” of $97,000.00.

[10]     On its face, these financial statements would seem to indicate that in July

2006 Mr Clark did indeed own the farmlet property in question known as Eastella and had a liability of $97,000.00 owing to the defendant.  This would tend to support the plaintiff’s position and argument here.

[11]     In response, the defendant has filed affidavits from herself on 21 April 2010, from Mr Clark dated 13 April 2010 and from Henry John Horsewell dated 14 April

2010.

[12]     Each of these affidavits and in particular that from Mr Horsewell who states he was a director of London Securities PLC the London company at the time, depose that the purchase of a series of properties culminating in the purchase of the Eastella farmlet property was undertaken by Mr Clark purely as a trustee for the London company.  The reason for this is not entirely clear, although it may be that it relates to perceived difficulties with overseas investment requirements in this country.

[13]     Both Mr Clark and Mr Horswell also annex to their affidavits a document entered into on 2 October 1986 by Mr Clark which purports to indicate that a 270.33 hectare property in the Hawkes Bay then being acquired in his name was to be held in Trust for the  London company.   This Trust Deed also goes on to state that additional property and assets is likely to be acquired by Mr Clark and held again in Trust for the London company.   These 3 affidavits provided for the defendant all contend unequivocally that the original $150,000.00 advances made by the defendant through Mr Clark were for the London company and their Hawkes Bay farming operations, and indeed the repayments of $60,000.00, $1,500.00 and $13,661.78 made between March and May 2007 were effectively made by the London company although through Mr Clark as its trustee.

[14]     This affidavit evidence provided by the defendants has not met with any response from the plaintiff.   It clearly conflicts with the evidence of Ms Johnson provided for the plaintiff and in particular, the clear details in the annual accounts and  statement  of  financial  position  prepared  for  Mr  Clark  by  Markhams  MRI Hawkes Bay annexed to her affidavit.

[15]     Where does this leave the Court today?

[16]     In my view this is a case where the Court must refrain from attempting to resolve what are clearly genuine conflicts of evidence here.   The evidence of the

defendants as I have noted above is diametrically opposed to that provided by the plaintiff and as outlined in Mr Clark’s financial statements.

[17]     The Court here must accept that prima facie there is evidence before it from the defendants that the funds repaid to the defendant were from Mr Clark purely in his capacity as a trustee of the London company and not personally.

[18]     Before me Mr Calver for the defendants accepted that the position seemed to be somewhat “muddy” given what was the clear inference from the financial statements for Mr Clark provided as an Exhibit to Ms Johnson’s affidavit which appeared to show that the loans in question from the defendant were made to him personally.

[19]     Notwithstanding this, however, there is no doubt these are matters which would benefit from a rigorous testing at trial and appropriate cross-examination.

[20]     For all these reasons, in my view, this is not an appropriate case for summary judgment to be granted.

[21]     The plaintiff’s application for summary judgment is dismissed.

[22]     As to costs, in my view, these should properly be dealt with when this matter is ultimately disposed of at trial.  There is to be no order made as to costs.

‘Associate Judge D.I. Gendall’