Williams v Simpson HC Hamilton CIV 2010-419-1174

[2010] NZHC 1937

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV 2010-419-1174

UNDER  the Insolvency (Cross-border) Act 2006

BETWEEN  STEVEN JOHN WILLIAMS Applicant

ANDALAN GERAINT SIMPSON Debtor

Hearing:         5 November 2010

Counsel:         K J Crossland and P J Morris for Applicant

P F Gorringe for Debtor
D M O'Neill for Mr Clough
P J Morgan QC for Ms Mann
A Reimer-Reeder and J Cuellar for Commissioner of Inland Revenue
G Caro for Official Assignee

Judgment:      5 November 2010

(ORAL) JUDGMENT (NO. 6) OF HEATH J

Solicitors:

Stace Hammond P O Box 19-101 Hamilton 3244

Tompkins Wake, PO Box 258, Hamilton Kerry Burroughs, PO Box 19307, Hamilton Anderson Lloyd, PO Box 201, Queenstown

Inland Revenue Department, PO Box 761, Waikato Mail Centre, Hamilton
Companies Office, PO Box, Auckland
Counsel:
P Gorringe, PO Box 7098, Hamilton

D M O’Neill, PO Box 815, Hamilton

P J Morgan QC, PO Box 19021, Hamilton

WILLIAMS V SIMPSON HC HAM CIV 2010-419-1174  5 November 2010

[1]      Mr Simpson was adjudged bankrupt on 9 September 2009 by the High Court of Justice in England.  Though discharged from that bankruptcy one year later, his assets remain vested in his trustee in bankruptcy in that jurisdiction.  The trustee, Mr Williams,  made  an  application  to  this  Court  for  recognition  of  the  English bankruptcy under the Insolvency (Cross-border) Act 2006.  That was done because he had reason to believe there were assets of Mr Simpson in New Zealand.

[2]      Mr Williams also sought interim relief in the form of a search warrant and examination orders.  Those orders were sought on the basis that there was reason to believe bullion was stored at Mr Simpson’s residence in Hamilton.   Interim relief was granted in those terms.[1]  A second search warrant was issued on 29 September

[1] Williams v Simpson HC Hamilton CIV 2010-419-1174, 17 September 2010.

2010.[2]    As a result of the searches undertaken on 20 and 29 September 2010 and a

[2] Williams v Simpson HC Hamilton CIV 2010-419-1174, 29 September 2010. 

subsequent voluntary delivery to the Court’s agent (the Official Assignee) bullion with a gross value in excess of $2,000,000 has been secured and is held by the Official Assignee, pending further order of the Court.

[3]      In a judgment given on 12 October 2010,[3] I declined to recognise the English bankruptcy as either a foreign main or foreign non-main proceeding under Schedule

1 to the Insolvency (Cross-border) Act 2006.  However, I did make an order to assist the English Court, which had sought assistance to get in assets in New Zealand. That order was made under s 8 of the Insolvency (Cross-border) Act 2006, for the reasons set out in that judgment.

[3] Williams v Simpson HC Hamilton CIV 2010-419-1174, 12 October 2010.

[4]      I made a number of orders which were ancillary to the s 8 order.[4]   For present purposes, it is sufficient to note that they involved

[4] Ibid, para [89].

a)        The seized assets being entrusted to the Official Assignee.

b)The Official Assignee being required to take possession of the items seized and to conduct a forensic analysis of computer data and other

documents in his possession, with a view to determining ownership of the items.

c)        Examination powers were given to the Official Assignee.

d)Provision  was  made  for  advertisement  of  the  orders  and  for  the making of claims to the property seized and the making of monetary claims by creditors situated in New Zealand.

[5]      The Official Assignee was asked to file and serve a report on or before 2

November 2010, setting out the results of his inquiries into ownership of the assets seized, the value of the assets seized, a list of any other assets Mr Simpson may own that are situated in New Zealand and the names, number and value of New Zealand based creditors who had given notice of their claims.

[6]      A hearing took place today to consider the Official Assignee’s report and to determine what further orders should be made.  During the course of the hearing a number of developments occurred which it is necessary to record.

[7]      First, Mr Simpson was prepared to execute a worldwide authority in favour of Mr Williams.   This will enable Mr Williams to make inquiries, throughout the world, of assets in the name of Mr Simpson.  That is an authority Mr Simpson has, to date, declined to give to the trustee.  The provision of that authority negates the need for this Court to require the Official Assignee to undertake further investigations into assets that may be situated overseas.

[8]      Second, Mr Simpson advised that the beneficial owners of the shares in a

New Zealand based company, Henmur Ltd, were the trustees of the B V Adams No

2 Trust.  Both Mr Morgan QC for Ms Mann, and Mr O’Neill, for Mr Clough (the trustees of that Trust) did not have explicit instructions on that point when this issue was first raised.  Mr Morgan’s client has given evidence to the Official Assignee on the topic, which the Official Assignee has summarised as indicating that Mr Simpson was the beneficial owner.  Mr Clough has not had an opportunity to respond.

[9]      Two items of property in the name of “J W Smith” were raised.  That is a name that the trustee in bankruptcy says that Mr Simpson used as an alias.  They are funds  in  an  English  bank  account  and  a  property  on  the  Isle  of  Wight  which Mr Simpson indicates is owned by Tiger Speed Ltd, on behalf of the B V Adams Trust No 2 Trust.

[10]     Mr Simpson has also advised that all bullion held by him at the time the orders were made in this Court has now been seized.  While Mr Crossland, for Mr Williams, indicates the position may be to the contrary, that is an issue that it may be necessary to explore further.

[11]     I debated with counsel the form of orders that could be made to progress matters further.  In particular, all involved agreed it was necessary to keep costs to a minimum.  As I have emphasised during the course of the hearing, the ability to keep costs to a minimum will depend upon Mr Simpson’s willingness to give full disclosure of his asset position, something that I am satisfied has not occurred to date.

[12]     For reasons which I will give as soon as practicable, I make the following orders today:

a)       I  declare  that  all  property  seized  during  the  execution  of  search warrants at 35 Ann Street, Hamilton on 20 and 29 September 2010, together with bullion surrendered voluntarily by Mr Simpson subsequently, is property of Mr Simpson and has vested in Mr Williams, as his trustee in bankruptcy in England.

b)The Official Assignee is authorised to sell that property (with the exception of currency) and to hold the net proceeds of sale in a trust account, pending further order of the Court.

c)       All foreign exchange seized during the course of the two searches shall be converted and banked into the trust account opened by the Official Assignee, pending further order of the Court.

d)The Official Assignee shall make no payments from the trust fund, save as authorised by this Court.

e)       Subject to (g) below, the Official Assignee is authorised to summon for examination any person whom he believes is able to give information about the assets of Mr Simpson in New Zealand.  For the sake of clarity, I indicate that extends not only to properly currently known but also property that may subsequently come to the attention of the Official Assignee.

f)        The Official Assignee is authorised to exercise the powers conferred by ss 165, 166, 167 and 171 of the Insolvency Act 2006 subject to ss 168, 169 and 172.   The powers extend to the ability to require a person to produce and to surrender any document in his or her possession or control relating to Mr Simpson’s property conduct or dealings in accordance with s 165(1)(b).

g)       With  regard  to  Ms  Mann  and  Mr  Clough,  the  following  specific directions are made:

i)No  further  examination  of  Ms  Mann  shall  occur  without further order of this Court, made on notice to Ms Mann.   I record that Mr Morgan, on her behalf, indicated any such application would be opposed.  It is likely a defended hearing on that substantive issue would be required.

ii)Leave is reserved for the Official Assignee to summon Mr Clough to be examined but he shall have seven days within which to apply to set aside the summons.  If application were made, no examination shall be held until the Court has determined the application.

h)Because there is a commonality of interest between Mr Williams, as trustee  of  the  English  bankruptcy  and  the  Official  Assignee,  in

relation to the identification of property in New Zealand, it is open for a representative of Mr Williams to attend any examination conducted by the  Official  Assignee.    The  Official  Assignee  is  authorised  to instruct one counsel to conduct the examination, who may (but does not need to) be Mr Crossland or someone else from his firm.

i)The  Official  Assignee  shall  return  to  Mr  Simpson  the  cloned computer data taken from the computer seized from Mr Simpson’s home.   The original computer shall be retained by the Official Assignee, for evidential purposes.

j)Mr Simpson may make an application under either s 163 or s 164 of the Insolvency Act 2006 for living expenses to be paid to him by the Official Assignee out of assets realised.   I make it clear that full disclosure will be expected from Mr Simpson if he were to be given the benefit of an allowance of that type by the Official Assignee. Having said that, whether and, if so, what quantum allowance is made is for the Official Assignee to determine.

k)Memoranda from counsel for Ms Mann and Mr Clough shall be filed and served on or before 12 November 2010, setting out their views on beneficial ownership in respect of Henmur Ltd shares, the Isle of Wight property and the account at Nationwide Bank in the name of J W Smith.

l)The Official Assignee shall file and serve a further report on all developments subsequent to this hearing, on or before 17 December

2010.

[13]     Transcripts of examinations conducted by the Official Assignee to date can be released to Mr Williams, subject to s 169 of the Insolvency Act 2006, in relation to publication.   Mr Williams shall have possession of the transcripts on the same statutory terms that the Official Assignee holds them.

[14]     I intend also to appoint an examiner who will be authorised to confer with all parties  and  their  solicitors  or  counsel  for  the  purpose  of  either  facilitating  a resolution of issues at large or recommending a process to this Court to enable expeditious determination of all substantive questions to enable distribution of realised proceeds to occur.  I intend to appoint a senior person to this role and will name that person in a draft order I shall circulate to counsel next week for comment.

[15]     The examiner will be invited to inquire into questions of costs, ownership and distribution.   The examiner’s costs shall be paid out of funds held by the Official Assignee on trust.   Counsel will have an opportunity to comment not only on the wording of the draft order but also on any jurisdictional or discretionary issues that might arise from my reasons for making that appointment.

[16]     I have not made any order in relation to the examination of witnesses in respect of overseas assets.  Those matters are now for the English trustee to pursue based on the worldwide authority.  If he were of the view that further assistance was required from this Court, I would expect a specific Letter of Request to be issued by the English Court indicating precisely what inquiries that the English Court wished this Court to authorise.

[17]     Costs reserved.

P R Heath J