Official Assignee v Black Bag Limited

[2016] NZHC 2469

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2014-404-0019 [2016] NZHC 2469

BETWEEN

OFFICIAL ASSIGNEE

Plaintiff

AND

BLACK BAG LTD AND ANOR Defendants

Hearing:	17 October 2016
Counsel:	H Rennie QC and G Neil for Plaintiff M J Fisher and K N Ng for Defendants
Judgment:	17 October 2016

(ORAL) JUDGMENT OF HEATH J

Solicitors:

Meredith Connell, Auckland J K Hamilton, Tauranga Counsel:

H Rennie QC, Wellington

M J Fisher, Auckland

OFFICIAL ASSIGNEE v BLACK BAG LTD AND ANOR [2016] NZHC 2469 [17 October 2016]

[1]      The Official Assignee in bankruptcy of the property of Edward John Harman has brought proceedings against Black Bag Ltd and Mr Lloyd Ferguson.  There are a number of causes of action pleaded by the Official Assignee.  One which has been the subject of particular comment today is based on a claim of voidable gift.  It is agreed that the maximum amount payable (inclusive of interest but exclusive of costs) in the event that the Official Assignee were successful, is something in the order of $3 million.

[2]      Black  Bag  Ltd  and  Mr  Ferguson  apply  to  vacate  the  hearing  of  this proceeding.  That is set down over seven days, to commence on 7 November 2016. Three grounds have been advanced.

[3]      The first is based on a conflict of interest that has emerged in respect of the expert accounting witness who has been engaged on behalf of Black Bag Ltd and Mr Ferguson.  It has recently come to light that someone within the firm of which Mr Lucas is a member, had given advice to the Official Assignee in respect of this claim. As privilege is claimed in respect of that advice, it is inappropriate for Mr Lucas to continue to act.

[4]      The second concerns a complaint that there is insufficient time for any expert engaged by the defendants to consider a large volume of documentation recently made available by the Official Assignee.

[5]      The third ground is that any prejudice caused to the Official Assignee through an adjournment of the proceeding can be cured adequately by conditions, and the ability for experts to confer once an accountant engaged by the defendants has considered the position and reached an opinion.

[6]      Mr Rennie QC, for the Official Assignee, made submissions in opposition to the contention that the experts had not had an adequate opportunity consider the information but, realistically, accepted that the conflict of interest which has recently come to light caused more difficulty when weighing the competing interests of justice on an adjournment application.  He accepted that as long as the adjournment

was accompanied by appropriate conditions, prejudice to the Official Assignee may be cured.

[7]      Over the lunch adjournment, Mr Fisher, for the defendants, took instructions from  Mr  Ferguson  to  ascertain  whether  a  bank  bond  could  be  given  to  secure payment of a sum up to $3 million in the event that the plaintiff was successful in the proceeding.  He has obtained instructions to agree to such a bond being given.  In addition, he is in a position to consent to various timetabling directions to ensure the proceeding is ready for trial.  The next available date is 3 July 2017, when eight days are available.

[8]      In the circumstances, and without going into the competing contentions in any more detail, I vacate the hearing scheduled for 7 November 2016 and excuse appearances from counsel.  The proceeding is set down for a hearing over eight days, commencing on 3 July 2017.

[9]      The adjournment is granted on the condition that Black Bag Ltd and Mr Ferguson provide a bond up to $3 million through a bank on which the Official Assignee can call if successful in his claim.

[10]     Mr Rennie will confer both with his instructing solicitors and the Official Assignee and suggest a form of wording for the bond to Mr Fisher.  It is anticipated that the wording will be agreed.   However, if there were any delays, Mr Fisher is confident that alternative security can be made available until such time as the bond has been executed.  That assurance, so far as Mr Fisher is able to give it, is provided on the basis that the order vacating the hearing will take effect immediately.

[11]     During the course of argument, counsel for the Official Assignee raised a potential problem with limitation issues should it be necessary to enforce judgment. While that concern is mitigated, to some extent, by the bond to be provided, it will not apply to questions of costs.

[12]     Mr  Fisher,  on  behalf  of  the  two  defendants,  is  authorised  to  waive  any limitation points that might arise from today’s date in that regard.  As limitation is a

pleading point, no question will arise in future proceedings of that type if a claim were necessary.   The precise terms of the undertaking provided in respect of the limitation issue is as follows:

Mr Ferguson will agree that for limitation purposes, in relation to any proceedings that the plaintiff or a liquidator of Black Bag Ltd may file against him under the Companies Act 1993, the Property Law Act 2007 or wider law howsoever arising out of his directorship of Black Bag Ltd and/or receipt of property from Black Bag Ltd, that time ceases to run from the day of the order vacating the fixture until the date the plaintiff or the liquidator of Black Bag Ltd commences proceedings against Mr Ferguson.

[13]     I direct:

(a)       Affidavit  evidence  shall  be  filed  and  served  on  behalf  of  the defendants on or before 16 December 2016.

(b)Any further affidavit evidence on behalf of the plaintiff shall be filed and served on or before 20 January 2017.

[14]     It is anticipated that counsel will be able to arrange a conference of experts, hopefully around March 2017.  That will provide sufficient time for opinion issues to be considered prior to the July hearing.  I am confident that counsel will be able to deal with these issues as between themselves.

[15]     Either counsel may request a telephone conference before me at short notice in the event that any further direction is required either in relation to the form of the wording of the bank bond or as to directions for the expert conference.

[16]     Any other issues of a procedural nature which may impact on the trial date may also be the subject of a request for a telephone conference.    I expect the common bundle for trial to be filed on or before 29 June 2017.

[17]     Given the nature of the bond to be provided I am satisfied that no wasted

costs order is required. All questions of costs are reserved for trial.

P R Heath J