Official Assignee v MacKenzie - [2022] NZHC 781

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2021-419-000176

[2022] NZHC 781

UNDER Insolvency Act 2006

IN THE MATTER OF

The bankruptcy of MALCOLM OWEN MACKENZIE, an application by the Official Assignee in bankruptcy of the property of MALCOLM OWEN MACKENZIE for an

order determining the amount of a creditor’s claim and for directions

IN THE MATTER OF

An application by MALCOLM OWEN MACKENZIE for an order cancelling a creditor’s claim and for directions

BETWEEN

OFFICIAL ASSIGNEE

Applicant

AND

MALCOLM OWEN MACKENZIE

Respondent

Hearing: 9-10 March 2022

Appearances:

P V Cornegé for Applicant D G Hayes for Respondent

M R Taylor for Brian MacKenzie

Judgment:

13 April 2022

JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by Associate Judge Andrew on 13 April 2022 at 2.00 pm
pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar

Date …………………………….

OFFICIAL ASSIGNEE v MACKENZIE [2022] NZHC 781 [13 April 2022]

Introduction

[1] Malcolm MacKenzie was adjudicated bankrupt on 30 November 2018, on a debtor’s petition.1 This followed an unsuccessful claim by him in this Court against his father’s estate. A substantial costs award was entered against him in favour of the sibling defendants.

[2] Brian MacKenzie is Malcolm’s cousin. He is an accountant and provided significant forensic accountancy services and support to Malcolm in both the estate and earlier trust litigation.

[3] Brian has filed a claim in Malcolm’s bankruptcy for $316,353 for unpaid services rendered to Malcolm in the estate litigation. Malcolm disputes that claim and says that he and Brian agreed to a “success fee” arrangement only. Because the estate litigation was unsuccessful, Malcolm says that Brian is not entitled to any fee.

[4] These proceedings initially began as an application by the Official Assignee under s 252 of the Insolvency Act 2006, seeking a determination of the amount of Brian’s claim in the bankruptcy. Malcolm has also filed an application seeking a cancellation or a reduction of Brian’s claim.2 The parties are agreed that I should consider both applications as an appeal under s 226 of the Act.3 The critical issues I must determine are as follows:

(a)Does Brian have a valid claim?

(b)If so, what is the quantum of that claim?

Factual background

[5] Malcolm’s father died in December 2013. Shortly after, disputes arose between Malcolm and his siblings in relation to Malcolm’s entitlements to assets

1      Insolvency Act 2006, s 47.
2      Insolvency Act 2006, s 238.
3      An order under s 238, seeking cancellation, is not available because an order cannot be made cancelling a creditor’s claim unless it has been admitted. (The Official Assignee has not formally admitted Brian’s claim).

owned by a family trust called the Pencarrow Trust, and in Donald’s (Malcolm’s father) estate.

[6] Brian assisted Malcolm in relation to both disputes. There were two proceedings brought by Malcolm, one in relation to the Pencarrow Trust and the other in relation to Donald’s estate.

[7]Both proceedings were…

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 Official Assignee v MacKenzie

Details

AGLC: Official Assignee v MacKenzie [2022] NZHC 781
Case: [2022] NZHC 781
Decision Date: 13 April 2022

CaseChat Overview and Summary

The Official Assignee filed an application seeking a determination of the amount of a creditor’s claim against Malcolm MacKenzie, who had been adjudicated bankrupt. The creditor, Brian MacKenzie, Malcolm’s cousin, claimed $316,353 for unpaid services rendered to Malcolm in the estate litigation. Malcolm disputed the claim, arguing that he and Brian had agreed to a success fee arrangement, and because the estate litigation was unsuccessful, Brian was not entitled to any fee. Malcolm also filed an application seeking a cancellation or a reduction of Brian’s claim. The critical issues for the court to determine were whether Brian had a valid claim, and if so, the quantum of that claim.

The court found that there was a valid claim, as the evidence established that the parties had a supplementary oral agreement changing the initial arrangements recorded in writing. The court rejected Malcolm’s argument that there was a success fee arrangement, as Malcolm had acknowledged in his email to the Official Assignee that Brian would be compensated for all his work when the matter was concluded. The court found that Brian’s claim should be admitted, and the quantum of Brian’s remuneration should be assessed on a quantum meruit basis. The court concluded that fair and reasonable remuneration for Brian was $225,000 plus GST.

The court granted the appeal against the decision of the Official Assignee not to admit Brian’s claim in Malcolm’s bankruptcy. The court also found that Malcolm, as the losing party, should pay costs to Brian on a 2B basis plus disbursements. If the parties could not agree on costs, then memoranda were to be filed within 14 days.

Orders