Thurston v ANZ Bank New Zealand Limited
[2017] NZHC 3269
•22 December 2017
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
I TE KŌTI MATUA O AOTEAROA TE PAPAIŌEA ROHE
CIV-2017-454-44 [2017] NZHC 3269
BETWEEN KENNETH WILLIAM THURSTON
Plaintiff
AND
ANZ BANK NEW ZEALAND LIMITED Defendant
Hearing: 27 November 2017 Appearances:
Plaintiff in Person
R L Pinny for DefendantJudgment:
22 December 2017
JUDGMENT OF CLARK J
[1] In this proceeding the plaintiff, Kenneth Thurston, sues ANZ Bank New Zealand Ltd for $78.3 million. Mr Thurston claims ANZ sold various properties without serving the requisite notices pursuant to the Property Law Act 2007.
[2] ANZ applies to strike out Mr Thurston’s claim on the basis Mr Thurston has no standing to bring the claim. As well, it is said the statement of claim is unintelligible, pleads no cause of action and the pleading is likely to cause prejudice and delay.
[3] In the alternative, ANZ seeks security for costs.
THURSTON v ANZ BANK NEW ZEALAND LIMITED [2017] NZHC 3269 [22 December 2017]
Background
[4] Kenneth Thurston was director and sole shareholder of the Thurston Group of companies. Two of the Group’s operating companies were Aotearoa Coolstores Ltd (Aotearoa) and Tawera Land Company Ltd (Tawera).
[5] As at March 2010 the Thurston Group was indebted to ANZ in the order of
$30 to $40 million. The indebtedness of Aotearoa and Tawera to ANZ was secured by (amongst other securities) mortgages over various properties owned by Aotearoa and Tawera. In accordance with its powers of mortgagee sale ANZ sold 17 properties owned by Aotearoa and Tawera. Pursuant to the terms of General Security Agreements provided by the companies ANZ also appointed receivers to Tawera and Aotearoa. Aotearoa was already in receivership and liquidation. Tawera had also already been placed into liquidation. Both companies have since been removed from the Register of Companies as have all other companies in the Thurston Group.
[6] After ANZ realised its securities, and following the receivership and liquidation of the Thurston Group, approximately $4 million was due and owing by the Thurston Group to ANZ. That has not been repaid.
[7] Mr Thurston was adjudicated bankrupt on 15 October 2010. He was discharged from bankruptcy on 8 November 2013. As at 31 July 2017 the Official Assignee had not applied to the Court for an order under s 408 of the Insolvency Act 2006 releasing the Assignee from the administration of the estate.
Strike-out principles
[8] The principles applying to a strike-out application are settled. The principles relevant to this proceeding are the following:
(a) Except for pleaded allegations which are entirely speculative and without foundation pleaded facts, whether or not admitted, are assumed to be true.
(b)The jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument.
[9] In Carter Holt Harvey Ltd v Minister of Education1 the Supreme Court confirmed the principles as conveniently summarised by the Court of Appeal in Attorney-General v Prince and Gardner.2 A strike-out on the basis of prejudice or delay requires an element of impropriety and abuse of the court’s processes.3
Examples include unnecessarily prolix pleadings, scandalous or irrelevant pleadings, pleading of purely evidential material, and unintelligible proceedings.4
[10] Where a defect in a pleading may be cured by amendment which the party is willing to make the Court may permit amendment rather than striking out the pleading.5
Parties’ arguments
ANZ’s position
[11] Ms Pinny, counsel for ANZ, submitted the statement of claim discloses no reasonably arguable cause of action and cannot succeed as Mr Thurston lacks standing to bring a claim in respect of any of the matters identified in his statement of claim. The properties which ANZ sold, allegedly in breach of the Property Law Act requirement for service of notices, were not owned by Mr Thurston but by the companies. Both companies have been removed from the register and have ceased to exist. Prior to removal, Aotearoa and Tawera were in receivership and liquidation and as the receivers’ and liquidators’ reports indicate significant debts remained unpaid at the conclusion of the respective liquidations. Any tenable claim against ANZ for damages could have been expected to have been investigated by the liquidators and,
if viable, pursued.
1 Carter Holt Harvey Ltd v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at [10].
2 Attorney-General v Prince and Gardner [1998] 1 NZLR 262 (CA) at 267–268.
3 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53, [2013]
2 NZLR 679 at [89].
4 At [89].
5 In Marshall Futures Ltd v Marshall [1992] 1 NZLR 316 (HC) Tipping J distinguished between a pleading “which is a total write-off and one which is deficient but is capable of effective repair”.
[12] Mr Thurston has no standing to bring the claim in any other capacity.
Mr Thurston was made bankrupt on 15 October 2010 at which date any rights he possessed in any property, including any rights he may have had to bring a claim against ANZ, vested in the Official Assignee. Ms Pinny submitted Mr Thurston’s subsequent discharge from bankruptcy does not alter that position.
[13] As to prejudice or delay, the second ground of strike-out, ANZ’s position is that Mr Thurston’s pleading falls squarely within the categories which the Court of Appeal in Commissioner of Inland Revenue v Chesterfields Preschools Ltd held were required for a strike-out under this ground.6 The only cause of action comprised a factual pleading. No legal cause of action has been identified. Other extensive pleadings are irrelevant, concern evidential matters, or are vague and imprecise. The statement of claim is otherwise unintelligible. As a consequence, ANZ cannot understand the legal basis for the allegations made against it. Nor is it fairly informed of the case against it and it is unable to provide a meaningful response. The statement of claim is so fundamentally defective, ANZ submits, that an opportunity to re-plead will serve no useful purpose.
Mr Thurston’s position
[14] Unsurprisingly, as an unrepresented litigant, Mr Thurston’s statement of claim lacks the finesse which might be expected of a claim drafted by an experienced solicitor. The background to the cause of action refers to:
(a) the collapse of the Manawatu based Thurston Group;
(b)irregularities that emerged subsequently primarily concerning one individual in ANZ appointed apparently to manage the Thurston Group;
(c) allegations that the ANZ employee issued instructions concerning the
Group when he was motivated by self-interest.
6 Commissioner of Inland Revenue v Chesterfields Preschools Ltd, above n 3, at [89].
[15] Mr Thurston pleads irregularities in terms of compliance with the Property
Law Act and that ANZ has continually refused to supply the notices in question.
Mr Thurston specifically pleads:
Please note, should the ANZ Bank (2017) supply ANZ Bank and National Bank Property Law Act Notices, Affidavit of Service that comply with the Property Law Act 2007 when the ANZ National Banks and their appointed Receivers dealt with
$67 million Thurston Group assets, the following will be accepted: This Statement of Claim is Misleading. All current
and future proceedings against the ANZ Bank (all parties) will be at an end.
[16] Then follows a heading “Corruption Funding” under which Mr Thurston makes serious allegations against a bank employee who had a senior managerial role. I shall refer to him as Mr L. It is alleged Mr L used different bank accounts to make payments for activities he did not want viewed.
[17] Under a heading “What went wrong” the statement of claim elaborates on
Mr L’s alleged defaults including that Mr L “took $141,000 from Thurston Group bank accounts in favour of Bell Gully”.
[18] The cause of action is then set out at page 5 of the statement of claim:
Between 15 February 2010 and 13 May 2013 (the day the National Bank Receivers McDonald Vague retired) the ANZ Bank, National Bank took control, sold down $67 million Aotearoa Coolstores Ltd and Tawera Land Company Ltd commercial and rural property assets (bank valuations) without valid Property Law Act 2007 notice.
The undertaking not a mistake or oversight, but a planned action. Substantial evidence is held to support.
[19] I questioned Mr Thurston closely about the capacity in which he brings his claim and the relationship between his claim and the monetary relief sought.
Mr Thurston courteously responded to my questions. It is not necessary that I record all that he said but the essential points bearing on his standing are these:
(a) Mr Thurston brings this claim as a past shareholder of companies that are no longer on the Register of Companies.
(b)Only two Property Law Act notices had to be served. ANZ has not produced evidence of service of the notices.
(c) Mr Thurston was a guarantor of the lendings to both Aotearoa and
Tawera.
(d)When asked how the alleged failures to serve notices under the Property Law Act caused Mr Thurston loss he said ANZ did not have the right to deal with the properties without service of notices in respect of the properties.
(e) The sums sought by way of relief represent ANZ’s valuations of the Thurston Group at the time they were sold. Essentially Mr Thurston’s claim is in respect of the values of the properties that were dealt with in the allegedly unauthorised way.
(f) When asked why he should have the full value of the properties the subject of the allegedly unauthorised dealings Mr Thurston was candid. He said he had to pick a figure so he took the total value of the properties that the Property Law Act notices, had they been served, would have covered.
[20] The crux of the matter, Mr Thurston submitted, was that properties were stripped from him without the requisite notices and before either company was put into receivership or liquidation. The basis of the claim is that he was the sole shareholder of both companies, his loss was caused by the sale and the sales were unauthorised.
Assessment
Does Mr Thurston have standing?
[21] The starting point is s 101 of the Insolvency Act 2006:
101 Status of bankrupt’s property on adjudication
(1) On adjudication,—
(a) all property (whether in or outside New Zealand) belonging to the bankrupt or vested in the bankrupt vests in the Assignee without the Assignee having to intervene or take any other step in relation to the property, and any rights of the bankrupt in the property are extinguished; and
(b) the powers that the bankrupt could have exercised in, over, or in respect of any property (whether in or outside New Zealand) for the bankrupt’s own benefit vest in the Assignee.
(2) This section is subsection to section 104.
[22] “Property” is defined to mean “rights, interests, and claims of every kind in relation to property however they arise”.7 Thus, any entitlement, or interest,
Mr Thurston had in suing ANZ is caught by s 101. Mr Thurston brings this action as a former shareholder and thus, presumably, in pursuance of the rights he once had as owner of his shareholding.
[23] Mr Thurston is now a discharged bankrupt. The question is whether this changed status affects his ability to bring this proceeding. The authorities, such as they are in this area, establish that Mr Thurston’s right to bring his claim which vested in the Official Assignee at bankruptcy, remains with the Assignee notwithstanding
Mr Thurston’s discharge from bankruptcy.
[24] As Master Williams QC observed in Official Assignee v Probert whether the Official Assignee had power to bring proceedings in view of Mr Probert’s discharge from bankruptcy some 16 months earlier is a matter of some substance on which, at that point, there was no authority in New Zealand:8
[discharge from bankruptcy under the Insolvency Act 1967] does not terminate both the right and the obligation of the Official Assignee to continue to administer the bankrupt’s estate. Those rights and obligations, by statute, continue until the granting of the application to the Court which the Official Assignee is required to make for an order releasing him from the administration of the estate pursuant to s 133(1) [now s 408 of the Insolvency Act 2006].
7 Insolvency Act 2006, s 3 definition of “property”.
8 Official Assignee v Probert [2001] 2 NZLR (HC) at 506.
…
There is no section divesting the Official Assignee of [property vested in the Assignee] at any stage, certainly not on the bankrupt’s discharge, whether automatic or following application.
Such also accords with the common sense of the matter. Although in most cases no doubt the whole of the bankrupt’s estate has been fully administered prior to discharge, such is clearly not invariably the case – the Official Assignee claims that such is not the case here – and it is not to be supposed that the legislature would have intended to terminate, automatically, all the Official Assignee’s rights in respect of the bankrupt’s property on the bankrupt’s discharge. Such an interpretation would run the risk of cutting across all contracts or other legal obligations which may be extant at the date of discharge.
[25] On appeal, the Court of Appeal held that Mr Probert’s right to be indemnified passed to the Official Assignee on Mr Probert’s bankruptcy and it made no difference in principle, in that case, that he had been discharged from bankruptcy.9
[26] Counsel for ANZ submitted there are sound policy reasons underpinning the principle established in Official Assignee v Probert. In a proceeding such as this the rationale is rather obvious. The final reports of the receivers and liquidators show significant debts remained unpaid at the conclusion of the respective liquidations. Yet Mr Thurston seeks to bring an $80 million claim without any undertaking to pay to the company or the company’s creditors or his own creditors. But for the Probert principle a bankrupt with significant unpaid creditors could, post discharge, obtain a financial windfall yet avoid applying any of the windfall to his or her unpaid creditors in the bankruptcy.
[27] In conclusion, any claim the plaintiff had in respect of the sale of the properties vested and remains vested in the Official Assignee until the Official Assignee has obtained a court order pursuant to s 408 of the Insolvency Act. As at 31 July 2017 the Official Assignee had not applied to the Court for an order releasing her from the administration of the bankruptcy estate. The statement of claim must be struck out as
Mr Thurston lacks standing to bring the claim.
9 Probert v Official Assignee CA328/90, 19 June 1991 at 4.
[28] This conclusion is sufficient to dispose of the strike-out application. For completion I turn to ANZ’s second ground.
Is the pleading likely to cause prejudice or delay?
[29] Even allowing for the fact the statement of claim is prepared by an unrepresented litigant, by a long measure, it falls short of the requirements of a proper pleading:
(a) A large number of the “pleadings” are in fact questions. For example:
• Why did Mr L refuse to supply invoicing after taking $141,000 from
Thurston Group bank accounts?
• Why was Mr L so aggressive towards the Thurston Group Directors?
• Why did he drive from Wellington to Feilding, walk unannounced into Thurston Group Head Office and loudly demand Kenneth Thurston stand down as director … ?
• Why did Mr L want to put Aotearoa into receivership?
(b)There is no relationship between the relief sought and the would be cause of action, that is, the $78.3 million claimed as a result of the alleged failure to serve Property Law Act notices.
(c) Some of the pleadings border on being scandalous for example, the claim that Mr L used three different bank accounts to make payments for activities he did not want viewed and that he instructed receivers “to make substantial payments and not record the fact of those payments”.
[30] It is clear the pleadings, because of their prolix nature, evidential content and in many respects unintelligible nature, will cause prejudice and delay. On this ground as well the claim must be stuck out. The fundamental deficiencies in the statement of claim are not remediable. The statement of claim is not clear or intelligible. There is
no cause of action. Nor is it clear even what facts are relied on as amounting to the proposed cause of action.
[31] Having reached this conclusion, it is unnecessary to address the application for security for costs.
Result
[32] For the foregoing reasons an order is made striking out the statement of claim.
[33] ANZ is entitled to costs which are awarded on a 2B basis.
Karen Clark J
Solicitors:
Bell Gully, Wellington for Defendant
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