Spencer v Prestidge HC Auckland CIV 2007-404-187

[2008] NZHC 2503

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2007-404-187

IN THE MATTER OF     the Insolvency Act 1967

ANDIN THE MATTER OF  a Proposal under Part XV of the Insolvency Act 1967 made by Susan Spencer, an insolvent

BETWEEN  SUSAN SPENCER Plaintiff

ANDMYLES JOHN PRESTIDGE Respondent

ANDOFFICIAL ASSIGNEE IN BANKRUPTCY OF THE PROPERTY OF KIM HILTON SPENCER

Objector

Hearing:         25 February 2008

Appearances: M C Black for insolvent and proposed trustee

K I Bond for respondent
G Neil for Official Assignee

Judgment:      13 August 2008 at 2 pm

JUDGMENT OF ASSOCIATE JUDGE ROBINSON

This judgment was delivered by me on 13 August 2008 at 4 pm, Pursuant to Rule 540(4) of the High Court Rules

Registrar/Deputy Registrar

Date……

Counsel/Solicitors:           Meredith Connell, PO Box 2213, Auckland

M C Black, PO Box 1984, Auckland

North Harbour Law, Orewa, Auckland

SUSAN SPENCER V MYLES JOHN PRESTIDGE AND ANOR HC AK CIV 2007-404-187 13 August 2008

[1]      The  insolvent  applied  to  the  Court  for  the  approval  of  her  proposal  to creditors under Part XV of the Insolvency Act 1967. Her application was opposed by Myles Prestidge, the above named respondent, who had filed proceedings to adjudicate the insolvent a bankrupt on the grounds that the insolvent had failed to comply with a bankruptcy notice. The application for approval was also opposed by the  Official  Assignee.  The  Official  Assignee’s  right  to  oppose  the  application resulted from the adjudication of Mr Kim Spencer as bankrupt. The insolvent is indebted to Mr Kim Spencer in the sum of either $450,000 or $524,115. Mr Kim Spencer was adjudicated bankrupt on 1 August 2007.

[2]      When  the  application  by  the  insolvent  for  approval  of  her  proposal  to creditors came on for hearing on 25 February 2008, that application was withdrawn. At the same time Mr Prestidge withdrew his application for an order adjudicating the insolvent a bankrupt. On the withdrawal of the application counsel for the official assignee sought an order for costs. Consequently, directions were made for the filing of memoranda by all parties relating to the official assignee application for costs.

[3]      Counsel for the official assignee in support of the application for costs points out that the proposal by the insolvent was deficient in that it did not comply with Part XV of the Insolvency Act 1967. It is also pointed out on behalf of the official assignee that full preparations had to be made for a defended hearing estimated to take one day on 25 February 2008. Counsel was not advised of the settlement until he attended the Court to oppose the application on the date fixed for hearing.

[4]      Counsel for the official assignee also seeks costs in connection with an application to the  Court for  a  priority fixture.  Counsel  for  the  official  assignee therefore seeks costs assessed on a 2B basis totalling $5,360 together with disbursements of $389.78. Included in those costs, are costs assessed for preparation for a full day hearing of $1,600 and not a quarter of a day hearing of $400. Costs are assessed on a quarter of a day hearing because that is in fact the time taken for the hearing.

[5]      In reply, counsel for the insolvent and trustee points out that because the matter was only settled on execution of the appropriate documents on 25 February

2008, it was not possible to advise the official assignee of the settlement prior to that time. It is also submitted that the insolvent should not have to pay the extra costs involved in seeking a priority fixture. The application for a priority fixture resulted from the Court’s inability to arrange a fixture within a reasonable time because of pressure of work on the Court.

[6]      Counsel for the official assignee spent considerable time in preparing for the hearing to occur on 25 February 2008. The submissions he prepared total 29 pages and call into question whether the proposal did comply with the law. As he was not advised  of  the  settlement  until  the  date  of  the  hearing,  counsel  for  the  official assignee was obliged to prepare for a full day fixture.

[7]      Litigants who delay settlement in this way must accept responsibility for costs  incurred  in  anticipation  of  the  hearing  proceeding.  I  therefore  have  no hesitation in concluding that the official assignee is entitled to costs for preparation on the basis of a hearing taking one day. I can see no justification for limiting those costs to a hearing of quarter of a day.

[8]      Similarly, I am satisfied that the official assignee is entitled to the extra costs involved  in  applying  for  a  priority  fixture.  That  application  was  prompted  by evidence obtained by the official assignee to the effect that the insolvent had incorporated new companies since the application for the approval of the proposal was made, and no details of the companies and their dealings had been provided to the  insolvent’s  creditors.  Furthermore,  the  insolvent  had  taken  directorship  of twenty-nine companies on 1 August 2007 upon the resignation and subsequent adjudication of her husband Kim Spencer. The official assignee had also ascertained that the Phantom trust of which the insolvent is the sole director and shareholder of its corporate trustee and is a beneficiary, was endeavouring to sell a 2006 Salthouse launch named “Phantom” for $3.6 million. The existence of the Phantom trust had not been disclosed by the insolvent in her statement of affairs.

[9]      In the circumstances, I order that the insolvent applicant pay the costs of the official assignee assessed on a 2B basis including the costs involved in applying for a priority fixture and the costs involved in preparing for a full day hearing on 25

February 2008. In addition, the official assignee is entitled to disbursements as fixed

by the registrar.

Associate Judge Robinson