TSB Bank Ltd v Dollimore - [2015] NZHC 3175

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-1779 [2015] NZHC 3175

IN THE MATTER
of section 348 of the Property Law Act

2007

BETWEEN

TSB BANK LTD Applicant

AND

DARRYLE DENISE DOLLIMORE First Respondent

DARRYLE DENISE DOLLIMORE and

TRISHUL TRUSTEES LTD Second Respondent

Hearing: 26 November 2015

Counsel:

J Anderson for Applicant
M J Utting for First Respondent
T Juneja for Second Respondent

Judgment:

11 December 2015

JUDGMENT OF PALMER J

This judgment was delivered by me on 11 December 2015 at 4.00 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Clendons (Auckland) for Applicant
Utting Law (Auckland) for Respondents

TSB BANK LTD v DOLLIMORE [2015] NZHC 3175 [11 December 2015]

Summary

[1] TSB Bank Limited (TSB) applies under s 348(2) of the Property Law Act

2007 (the Act) for an order setting aside a disposition of property or, alternatively, that the respondents pay reasonable compensation. It is concerned that the sale of a property by a Mr Wheldale to his ex-wife Ms Dollimore, just before TSB obtained summary judgment against him and before he was adjudged bankrupt, intentionally prejudiced TSB. I decline the application because the preference of secured creditors over TSB, an unsecured creditor, does not constitute an intention to prejudice TSB under the Act. My reasons follow.

Facts

[2] In 2009 Mr Wheldale borrowed $483,000 from TSB as mortgage finance for the purchase of two properties. He defaulted and the properties were sold at mortgagee sales in 2012 but a substantial shortfall remained. On 30 June 2013 TSB issued proceedings against Mr Wheldale which were heard on 24 October 2013 when summary judgment was entered for TSB for $254,570.86.1

[3] Mr Wheldale and Ms Dollimore, the first respondent, married in 1995. They separated during 2013 though Mr Wheldale continued to live at 27 Taipari Rd Te Atatu, with Ms Dollimore, until September 2013. Ms Dollimore continued to live at that property.

[4] On 9 October 2013 Mr Wheldale sold 27 Taipari Rd Te Atatu, his only remaining substantial asset, to Ms Dollimore for $590,000. Settlement was originally scheduled for 23 October, the day before the summary judgment hearing, but was delayed until 12 November 2013. On settlement Ms Dollimore transferred ownership to the Piwakawaka Family Trust in which Trishul Trustees Ltd, the second
respondent, acted as professional trustee.

1 TSB Bank Ltd v Wheldale [2013] NZHC 2799.

[5] Mr Wheldale was adjudicated bankrupt on 26 June 2014. There are no funds in Mr Wheldale’s estate. TSB is an unsecured creditor. The property is subject to an interim freezing order pending the determination of these proceedings.

Law

[6] Subpart 6 of Part 6 of the Act enables a court to order that property acquired under certain prejudicial dispositions by a debtor be restored for the benefit of creditors (s 344). In particular, relevant to the present application:

(a) The subpart applies to a debtor who “was insolvent at the time, or became insolvent as a result, of making the disposition” (s 346(1)(a),…

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 TSB Bank Ltd v Dollimore

Details

AGLC: TSB Bank Ltd v Dollimore [2015] NZHC 3175
Case: [2015] NZHC 3175
Decision Date: 11 December 2015

CaseChat Overview and Summary

In the case of TSB Bank Limited v Dollimore, the High Court of New Zealand was tasked with determining whether the sale of a property by Mr. Wheldale to his ex-wife, Ms. Dollimore, before he was adjudged bankrupt, prejudiced the interests of TSB Bank Limited, an unsecured creditor. The central legal issues were whether the disposition of the property was made with the intention to prejudice TSB, and whether Ms. Dollimore, who acquired the property, did so in good faith and for valuable consideration.

The court found that while the disposition did prejudice TSB's interests, it did not constitute an intention to prejudice as defined by the Property Law Act 2007. The court held that the preference of secured creditors over an unsecured creditor such as TSB is a routine and reasonable occurrence and does not amount to an intention to prejudice. Furthermore, the court determined that Ms. Dollimore acquired the property for valuable consideration and in good faith, as she was unaware of the prejudicial nature of the disposition and believed that the secured creditors were being paid. Consequently, the court declined TSB's application for an order setting aside the disposition or for compensation.

The final orders of the court were that TSB Bank Limited's application for an order setting aside the disposition of the property at 27 Taipari Rd Te Atatu or for compensation was declined. The interim freezing orders on the property were set to expire. The court reserved the issue of costs, allowing TSB Bank Limited to file a memorandum by a specified date if the parties could not agree on costs themselves.

Orders