Official Assignee v Yarrow - [2020] NZHC 2594

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2020-404-001749

[2020] NZHC 2594

IN THE MATTER OF the bankruptcy of PAUL STEVEN YARROW (bankrupt)

BETWEEN

OFFICIAL ASSIGNEE IN BANKRUPTCY OF THE PROPERTY OF PAUL STEVEN YARROW

Plaintiff

AND

PAUL STEVEN YARROW

First Defendant

AND

MICHAEL CHANEL FINNIGAN

Second Defendant

AND

DUNCAN DOVICO TRUSTEES LIMITED

Third Defendant

AND

JOHN SANDERSON

Fourth Defendant

AND

SALVATORE RUSSO

Fifth Defendant

Hearing: On the papers

Counsel:

G A D Neil & H L Hui for the Plaintiff

Judgment:

2 October 2020

JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 2 October 2020 at 4 pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

OFFICIAL ASSIGNEE v YARROW [2020] NZHC 2594 [2 October 2020]

Introduction and parties

[1] The plaintiff is the Official Assignee in bankruptcy of Paul Steven Yarrow (Mr Yarrow). The Official Assignee’s substantive claims in this proceeding arise out of dealings between Mr Yarrow (who is the first defendant), the P S Yarrow Trust No. 4 (PSYT4), and the P S Yarrow Family Trust (No. 3) (PSYFT3). Each defendant either is, or has been, a trustee of both trusts.

[2] At the same time as commencing the proceeding the Official Assignee has applied, without notice, for a freezing order under Part 32 and for a direction that Part 18 of the High Court Rules is to apply to the proceeding. The freezing order is sought over property held by the fourth and fifth defendants as the current trustees of the PSYT4.

[3] The application is supported by a comprehensive affidavit made by Vethashni Naicker and by two memoranda of counsel. The background facts set out below are based on Mr Naicker’s affidavit.

Background facts

[4] Mr Yarrow was a director of Yarrows (the Bakers) Limited (Yarrows) from 14 July 2004 until he was adjudicated bankrupt on 19 September 2017. Yarrows borrowed substantial sums from Westpac New Zealand Limited (Westpac).

[5] On 31 July 2006 Mr Finnigan (the third defendant) settled the PSYFT3. Mr Finnigan and Mr Yarrow were appointed its trustees. The same day Mr Finnigan and Mr Yarrow, as trustees of the PSYFT3:

(a)Entered into an agreement to purchase a property in Northcote Point, Auckland (the Property) for $1,300,000.

(b)Entered into a term loan agreement with the vendors for $700,000 (the Vendor Finance), which was payable on 30 March 2007 and was secured by a mortgage over the Property.

(c)Entered into a deed acknowledging indebtedness to Mr Yarrow for contributions he made towards the purchase of the Property in the sum of $464,695.45. The deed provided that the debt was payable on demand, but that the creditors could not make demand within a period prescribed by the then tax legislation (a period that appeared to be not less than seven years).

[6] On 7 August 2006 the Property was transferred to Mr Finnigan and Mr Yarrow (as trustees of the PSYFT3), and a mortgage was…

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 Yarrow

Details

AGLC: Official Assignee v Yarrow [2020] NZHC 2594
Case: [2020] NZHC 2594
Decision Date: 2 October 2020

CaseChat Overview and Summary

Official Assignee v Yarrow [2020] NZHC 2594 was a case heard by Campbell J in the High Court of New Zealand. The Official Assignee, acting as the bankruptcy representative of Paul Steven Yarrow, filed a claim against Yarrow and several other defendants regarding property transactions and debts. The primary legal issues revolved around whether certain transactions were prejudicial dispositions of property under the Property Law Act 2007 and whether they constituted insolvent gifts under the Insolvency Act 2006. The court had to determine if the Official Assignee had a good arguable case, if the defendants had assets to which the freezing order could apply, and if there was a risk of the assets being dissipated.

The court found that the Official Assignee had a good arguable case for both options presented, which aimed to either retransfer property or reactivate certain debts. The court accepted that the transactions in question were dispositions of Yarrow’s property, were made while Yarrow was insolvent, and were intended to prejudice creditors. The court also found that the Official Assignee had a good arguable case regarding the insolvent gift claims. Additionally, the court concluded that the defendants had assets subject to the freezing order and that there was a significant risk of those assets being dissipated. The balance of convenience favored making the orders, and the court approved the form of the freezing order and the application for Part 18 of the High Court Rules to apply to the proceeding. The court granted the relief sought by the Official Assignee, including the freezing order and the application of Part 18 rules to the proceeding.

Orders