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Regal Castings Ltd v Lightbody

Regal Castings Ltd v Lightbody

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Case Copied 23 October 2008 78 min read

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IN THE SUPREME COURT OF NEW ZEALAND
SC 72/2007
[2008] NZSC 87

BETWEENREGAL CASTINGS LTD

Appellant

ANDG M AND G N LIGHTBODY

First Respondents
ANDA C HORROCKS, G M LIGHTBODY AND G N LIGHTBODY

Second Respondents

Hearing:10 April 2008

Court:Elias CJ, Blanchard, Tipping, McGrath and Wilson JJ
Counsel:J McCartney and G S Caro for Appellant

D K Wilson for Respondents

Judgment:23 October 2008

JUDGMENT OF THE COURT

A The appeal is allowed.
BIt is declared that the second respondents (the trustees) hold a one-half share of their interest in the property at 68 Salisbury Road, Birkdale (Lot 4 DP 46944, Certificate of Title 1852/71 North Auckland Registry) upon trust for the Official Assignee of the estate of Mr Lightbody, to be dealt with by the Assignee for the benefit of Mr Lightbody’s creditors.
CThe trustees are ordered to transfer a one-half share in the property to the Official Assignee subject to the mortgage to the ANZ National Bank Ltd.
DThe appellant is awarded costs and reasonable disbursements which are to be paid by the second respondents. Costs in the High Court are to be fixed by that Court. Costs are fixed in relation to the appeal to the Court of Appeal at $6,000 and in this Court at $15,000.
ELeave is reserved to the parties and the Official Assignee to apply to the High Court for any further orders or directions as may be necessary to enable the Assignee to realise the net value of the interest in the property or as otherwise may be necessary to implement the orders of this Court.

REASONS

Para No

Elias CJ  [1]
Blanchard and Wilson JJ  [24]
Tipping J  [80]
McGrath J  [165]

ELIAS CJ
[1] In November 1998 Mr Lightbody and his wife transferred their home into the ownership of a family trust of which they and their solicitor, Mr Horrocks, were trustees. The consideration for the transfer was a debt of $230,000 to be repaid in one sum on 12 November 2005. Contemporaneously with the transfer, $54,000 of the debt was forgiven. Mr and Mrs Lightbody then progressively gifted sums to the trust under a programme which extinguished the debt by December 2002. At the time of the transfer of the property, Mr Lightbody was personally responsible for the debts owed by his jewellery business, Capro Three Limited, to its major supplier, Regal Castings Limited. Regal Castings had effectively been providing working capital to Capro for many years. In a restructuring agreement in 1995, by which interest on the debt was waived, Capro’s then debt to Regal Castings of $356,358 was converted into a term loan repayable by monthly instalments and with the balance owing to be paid in 2000. By the date of the transfer in November 1998, the amount of the term loan was approximately $220,000 but the monthly instalment payments had risen to $4,000 per month. In addition, Regal Castings had continued to supply Capro…

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.

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Details

Case: [2008] NZSC 87
Decision Date: 23 October 2008

CaseChat Overview and Summary

Regal Castings Ltd sued Mr Lightbody seeking to have the transfer of his home into a family trust set aside on the basis that it was made with intent to defraud Regal Castings, his creditor. The Supreme Court of New Zealand allowed the appeal and ordered that the trustees of the family trust hold one-half of the property upon trust for the Official Assignee for the benefit of Mr Lightbody's creditors. The Supreme Court held that the transfer of the house was an alienation with intent to defraud within the meaning of s 60 of the Property Law Act 1952. The Court concluded that the evidence demonstrated that Mr Lightbody had an intent to hinder, delay or defeat Regal's recourse to his interest in the house property should it ever prove necessary for Regal to have such recourse. The Court further held that the indefeasibility provisions of the Land Transfer Act 1952 did not preclude the making of the order sought by Regal.

Orders