Official Assignee v Scott - [2012] NZHC 2579

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV 2012-470-778 [2012] NZHC 2579

BETWEEN THE OFFICIAL ASSIGNEE AT HAMILTON
Applicant

ANDLEWTYN MICHAEL SCOTT First Respondent

ANDWOOD WALTON TRUSTEES (2010) LIMITED
Second Respondent

ANDALH TRUSTEE CO LIMITED Third Respondent

ANDWOOD WALTON TRUSTEES (2011) LIMITED
Fourth Respondent

ANDASB BANK LIMITED Fifth Respondent

Hearing: (on the papers)

Counsel: S N Cameron for Applicant

Judgment: 5 October 2012

JUDGMENT OF HEATH J

This judgment was delivered by me on 5 October 2012 at 9.30am pursuant to Rule
11.5 of the High Court Rules
Registrar/Deputy Registrar

Solicitors:
Almao Douch, PO Box 19-173, Hamilton

THE OFFICIAL ASSIGNEE AT HAMILTON V SCOTT HC TAU CIV 2012-470-778 [5 October 2012]

The application

[1] Mr Scott was adjudged bankrupt on 22 July 2011. By operation of law, his property passed to the Official Assignee for realisation and distribution to his creditors, in accordance with statutory priorities.1 Problems have arisen during the administration of Mr Scott’s bankrupt estate. The Official Assignee seeks a freezing order to restrain Mr Scott and trustees of the Ohakana Trust2 from dealing with specified real and personal property, as well as ancillary orders designed to enable him to obtain relevant information about the assets.

[2] The application was filed on 24 September 2012. The following day, I issued a Minute identifying three particular concerns.3 They related to the absence of an undertaking as to damages, whether the evidence was sufficient to establish a risk of dissipation of the assets and whether ancillary orders were needed, given the Official Assignee’s own statutory powers to examine.

[3] Ms Cameron, for the Official Assignee, has filed a supplementary memorandum addressing the three issues. As an undertaking as to damages has now been filed, there is no need to address that specifically. Also, while signalling a need to hear orally from counsel on the “risk of dissipation” issue, having now considered the supplementary memorandum I am prepared to act on it without the need for oral submissions. I am, however, giving a fully reasoned judgment, so that any Judge who may be required to hear an application to set aside or vary the orders is aware the basis on which they have been made.

The factual matrix

[4] The grounds of the Official Assignee’s claim are set out in detailed affidavits sworn by Ms King, a Principal Insolvency Officer with responsibility for administration of the bankrupt estate, and his Senior Investigating Accountant, Mr
Clothier. He has been involved in the analysis of financial information obtained in

1      Insolvency Act 2006, s 101, 217 and 273.
2      See para [10] below.
3      Official Assignee v Scott HC Tauranga CIV 2012-470-778, 25 September 2012.

relation to Mr Scott’s bankruptcy. Mr Clothier deposes that the provable debts in the bankruptcy (totalling in excess of $350,000) were incurred with legal firms instructed to act for Mr Scott in litigation involving the estate of his late father.

[5] In December 2009, about 18 months before his adjudication, Mr Scott received an inheritance…

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 Scott

Details

AGLC: Official Assignee v Scott [2012] NZHC 2579
Case: [2012] NZHC 2579
Decision Date: 5 October 2012

CaseChat Overview and Summary

In the High Court of New Zealand, the Official Assignee applied for a freezing order to restrain Mr Scott and the trustees of the Ohakana Trust from dealing with specified real and personal property. The application was made to prevent the dissipation of assets and to facilitate the administration of Mr Scott's bankrupt estate. The Official Assignee also sought ancillary orders to compel Mr Scott and the trustees to provide information about the assets.

The court had to decide whether the Official Assignee had established a good arguable case that Mr Scott had engaged in irregular transactions that could be set aside, whether the assets were within the jurisdiction and whether there was a real risk of dissipation of assets. The court also needed to consider whether ancillary orders were necessary, given the Official Assignee's statutory powers to examine.

The court found that the Official Assignee had established a good arguable case on the substantive claim, as the transactions occurred within two years of adjudication and there was evidence of Mr Scott's knowledge and involvement in the transfers. The assets in question were all within New Zealand, and there was a real risk of dissipation, as Mr Scott had not cooperated with the Official Assignee and had taken steps to diminish the value of the Pillans Road property. The court concluded that ancillary orders were appropriate, given Mr Scott's obstructive conduct during the examination process.

The court made a freezing order in accordance with the draft submitted by the Official Assignee, with some amendments. The order restrained the trustees from disposing of or dealing with the specified assets and required Mr Scott and the trustees to provide information to the Official Assignee. The order would lapse unless cancellation proceedings were issued before a specified date. Costs were reserved.

Orders