Williams v Simpson HC Hamilton CIV 2010-419-1174
[2010] NZHC 1817
•29 September 2010
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 Respondent
Hearing: 29 September 2010
Counsel: K J Crossland for Applicant
No appearance by or on behalf of Debtor
M J Hammond and C Bryant for Trustees of B V Adams No 2 Trust
Judgment: 29 September 2010
(ORAL) JUDGMENT OF HEATH J
Solicitors:
Stace Hammond, PO Box 19101, Hamilton
Tompkins Wake, PO Box 258, Hamilton
WILLIAMS V SIMPSON HC HAM CIV 2010-419-1174 29 September 2010
Introduction
[1] On 17 September 2010,[1] I granted interim relief in favour of Mr Williams, the trustee in bankruptcy of Mr Simpson, with respect to the latter’s adjudication in England on 7 September 2009.
[1] Williams v Simpson HC Hamilton CIV 2010-419-1174, 17 September 2010.
[2] The interim relief granted, pending determination of an application to recognise the English bankruptcy, took three forms. The first authorised the Court’s agent, the Official Assignee at Hamilton to conduct a search of and to seize specified property in a dwelling, garage and other outbuildings situated at 35 Ann Street, Hamilton, where Mr Simpson resides. The second suspended Mr Simpson’s right to transfer, encumber or otherwise dispose of any of his assets situated in New Zealand. The third authorised the Official Assignee to summon Mr Simpson for examination before an Associate Judge of this Court. That examination subsequently took place, before Associate Judge Faire, on 21 September 2010.
[3] The interim relief was granted under art 19 of Schedule 1 to the Insolvency (Cross-border) Act 2006. There is a discussion of the scope of the interim relief provision in my earlier judgment.[2] I held, as a matter of law, that art 19 extended to enable search for and seizure of assets believed to be the property of the debtor through the search warrant procedure available to the Official Assignee in a New Zealand bankruptcy.[3]
[2] Ibid, see paras [44]-[46].
[3] Insolvency Act 2006, s 150.
[4] When the search was undertaken on 20 September 2010, bullion, currency and precious metals of the type for which the search was authorised were located. During the course of the search, I received an application to extend the scope of the warrant to enable documents and data held on electronic devices to be seized. I made an order on that day to that effect.[4] In doing so, I declined to authorise cloning of computer hard drives on the basis that my authority under art 19 was limited to protection of assets and the safeguarding of the interests of creditors while the trustee
[4] Williams v Simpson HC Hamilton CIV 2010-419-1174, 20 September 2010.
in bankruptcy’s application for recognition of the English bankruptcy was pending before this Court.
A second interim relief application
[5] After the examination of Mr Simpson, the trustee in bankruptcy sought a further examination order in respect of four people. Two were trustees of the B V Adams No 2 Trust; Mr Clough and Ms Mann. They are the registered proprietors of the property at 35 Ann Street. The other two were involved in dealing in precious metals. The purpose of the proposed examination was to enable issues of ownership raised by Mr Simpson during his examination to be determined promptly. I declined to make an order of that type because I did not regard it as “urgently needed to protect the assets of the debtor or the interests of the creditors” pending disposition
of the recognition application.[5]
[5] Insolvency (Cross-border) Act 2006, Schedule 1, art 19(1).
[6] In the course of the same judgment, on 22 September 2010, I was asked to clarify the scope of the order I made on 20 September 2010, authorising the Official Assignee to search for and to seize documentation of the type I have described. In that judgment, I confirmed my intention that those documents be retained by the Official Assignee, but not used for investigative purposes, pending further order of the Court. The clear intention was for the documents to be kept in safe-keeping until the rights of the trustee in bankruptcy were recognised in New Zealand.
A third interim relief application
(a) The nature of the application
[7] Today, a further application for interim relief was made, only two days before the scheduled hearing of the recognition application on 1 October 2010. The application was made on a without notice basis. It sought the ability to search the
Ann Street property again; for bullion, currency, precious metals and allied documentation.
[8] The basis of the application came from two affidavits; one by Mr Holloway, a builder from Hamilton, and the other from Mr Currie, the Official Assignee at Hamilton.
[9] In short, Mr Currie’s deposition established there was a shortfall between the bullion seized and documentation identified bullion obtained. The difference is said to be 41 bars. As a result of the audit carried out by the Official Assignee, inquiries were made to ascertain whether there were other places in which bullion could be stored.
[10] Mr Holloway was contacted. He has sworn an affidavit deposing that in December 2009, his company was contracted by Mr Simpson to replace flooring at the Ann Street property. As a result of that engagement, two compartments were created within the house. Mr Holloway says that Mr Simpson told him that the first was a place for storage of water and a survival kit. The second was to store suitcases. Somewhat bizarrely, Mr Holloway says that Mr Simpson told him he was doing this “because he believed the world was going to end”.
[11] Mr Holloway’s employees installed the first compartment under the dining room. Part of the floor could be lifted up if screws that were installed were removed. This part of the floor was not glued by the contractors. The second compartment is located off a downstairs storeroom, leading underneath the kitchen. That enables access under the rest of the house. There is an existing hatch for under floor access. In that area, a concrete pad was laid and a concrete block surround constructed.
[12] Based on that evidence, I am asked to authorise a further search of the Ann Street property not only in the area of the two compartments but also in the balance of the dwelling, garage and outbuildings.
[13] That request is made because of concerns on the part of the trustee in bankruptcy about Mr Simpson’s credibility and a fear that he may have moved
bullion stored in the compartments back inside the house and placed it within safes that have already been searched or, indeed, in other places around the dwelling. Mr Crossland, for the trustee in bankruptcy, has, for example, identified that some bars were found in the vanity unit in the bathroom and others under documents contained in the bottom drawer of a filing cabinet; two bars were located underneath that bottom drawer.
[14] Mr Hammond, for the trustees of the B V Adams No 2 Trust, as registered proprietors of the dwelling, submitted that the scope of the search should be restricted to the two rooms identified in Mr Holloway’s affidavit. He confirms, and I expressly record at his request, that his instructions from the two trustees, Mr Clough and Ms Mann, are to co-operate in allowing searches to be undertaken in terms authorised by the court. They have no desire, Mr Hammond informs me, to obstruct in any way the functions that the Official Assignee is undertaking at the direction of the Court. In making that submission, Mr Hammond made it clear that he had no instructions to consent to any search order. However, an order was not actively opposed.
[15] Ms Bryant, for the same trustees, made submissions also about the scope of any search. Her submissions were directed to the extent to which the Official Assignee and members of a search party may be entitled to look at documents to ascertain whether they are relevant for seizure or privileged. That concern arose out of the possibility that some documents had been used inappropriately by the Official Assignee to undertake further inquiries and as a result of the location of a photograph taken of a cheque book that was found in the dwelling.
[16] The latter photograph was significant because it was a cheque book in the name of “J W Smith”, an alias that the trustee in bankruptcy alleges was used by Mr Simpson. In his examination before Judge Faire, Mr Simpson described “Mr Smith” as a person whom he knew in Hong Kong.
[17] Before I deal specifically with the issue of a further warrant, I record two other matters raised by counsel for the trustees of the B V Adams No 2 Trust.
[18] The first is a concern that Mr Simpson’s 13 year old daughter may be at home when any search is undertaken. That is now a real possibility given the hour (5.30pm) and the need for any warrant to be executed this evening. I add, in that regard, that pursuant to directions I made earlier today, no communication has been made to Mr Simpson of the possibility of an additional search.
[19] The particular problem concerning Mr Simpson’s daughter can be met by one of the trustees, Ms Mann, being present when the search party attends at the residence. She can go to the property to make such explanations as she thinks appropriate to the daughter and assuage any concerns she may have. I hope that she would also be able to allow entry to the property on a more cordial basis than occurred on the first occasion.
[20] The second issue concerns media interest. There has been publicity in the media about the original search. Mr Hammond has expressed concerns about confidentiality in respect of any further search. Mr Crossland, for the trustee in bankruptcy, has not indicated any opposition to the search being undertaken in a discreet fashion without the media being alerted to what is happening.
[21] I do not intend to make any orders in that regard but I do expect the Court’s agents to act in a manner that will ensure, so far as possible, that members of the media do not learn of the search at least until the public hearing of the recognition application in two days time. I make no order because I know that Mr Currie is well aware of his responsibility as an officer of the Court.
[22] As I indicated in my judgment of 17 September 2010, the threshold test for issue of a search warrant is that there must be “reason to believe” that any relevant property is concealed in any place.[6]
[6] Insolvency Act 2006, s 150(1).
[23] This is a separate application for search than was made initially. Therefore, the applicant bears the onus of demonstrating there is reason to believe that such property is concealed.
[24] Any warrant that may issue, if that standard is reached, must be tailored in respect of the scope of the property which there is reason to believe may be concealed. As I indicated in my earlier judgment, I apply the test enunciated by the court of Appeal in R v Williams[7] and hold that reason to believe means an “objective and credible basis for thinking that a search will turn up the items named in the warrant”.
[7] R v Williams [2007] 3 NZLR 207 (CA) at para [213].
[25] Given the result of the audit conducted by the Official Assignee and the bizarre circumstances in which the two compartments came to be constructed at the Ann Street property during the period of the English bankruptcy, I am satisfied that there is reason to believe that there is bullion, currency or other precious metals or documents in relation to them located in the two compartments to which Mr Holloway refers.
[26] I am less sure about the likelihood of similar assets or documentation being discovered in other parts of the premises; save for in the safes that have already been searched which may have been re-filled with goods of the type I have described. I am satisfied that there is reason to believe that may have occurred in light of the information that has been gathered from Mr Simpson. But, I am not prepared to authorise a search that goes any wider than that as, in my view, there is merely suspicion in that regard that cannot be substantiated to the degree set out in the R v Williams test.
[27] On that basis, I make orders on the following terms:
a) A search warrant shall issue authorising the Official Assignee at Hamilton, together with such assistants as may be necessary to enter the dwelling, garage and any other outbuildings situated at 35 Ann Street, Hamilton for the purpose of searching for and seizing any safes or other receptacles that contain bullion, currency or other precious metals and any bullion, currency or precious metals located in them or their surrounds. The search shall be limited to the two areas of the property described in the affidavit of Michael Ian Holloway sworn on
28 September 2010 and to any other safes or other receptacles in the dwelling, garage or other outbuildings.
b)The Official Assignee is also authorised to search for and seize any documents (as that term is defined in s 3(1) of the Insolvency Act
2006) in the area of any safes or other receptacles containing bullion, currency or other precious metals within the dwelling, garage and other outbuildings except for those rooms to which Mr Holloway refers. So far as those rooms are concerned, the search for and seizure of documents as defined may be undertaken throughout those areas.
c) In undertaking the search, those who execute the search warrant are authorised, if necessary, to use force to enter the premises, whether by breaking open doors or otherwise and to break open any safe or receptacle in order to ascertain whether bullion, currency or precious metals or documents as defined are stored in them.
d) The warrant is issued subject to the following additional conditions:
i) The warrant shall be executed by the Official Assignee at
Hamilton and at least one constable.
ii)The Official Assignee shall be accompanied to the property by Ms Mann as a trustee of the B V Adams No 2 Trust, who shall enter the property first to speak to Mr Simpson’s daughter (if present) about the search to be undertaken. Ms Mann may remain throughout the search if she wishes.
iii)Any bullion, currency or precious metals seized shall be taken immediately to Armourguard’s premises in Hamilton to be safely stored in a vault overnight and then taken to the premises of Westpac Banking Corporation in Auckland where they shall be stored in a secure vault pending further order of the Court.
iv)Any documents as defined shall be seized and taken to the Official Assignee’s office at Hamilton where they shall be stored and held in safe keeping and not be the subject of investigation pending further order of the Court.
v)The Official Assignee is authorised to photograph items that are seized so that there is no dispute as to the documents and items actually taken from the premises.
vi)If the execution of the warrant does not occur in the presence of Mr Simpson, the Official Assignee at Hamilton shall leave a written notice in a prominent place in the dwelling stating that the date and time when the warrant was executed, the buildings which were searched and the names of those involved in the execution process. The notice shall also contain a list of property seized during the course of the search. Otherwise the provisions of s 151 of the Insolvency Act 2006 apply.
vii)In seizing documents as defined, the Official Assignee or other members of the search team shall only look at the documents
to the extent necessary to determine whether they are relevant to the property of Mr Simpson. If any documents appear to be of a privileged nature, they shall be placed in a separate envelope or envelopes which shall be sealed and not opened until such time as the trustees of the B V Adams No 2 Trust and Mr Simpson have had an opportunity to inspect them and to challenge seizure on grounds of privilege.
viii)The Official Assignee at Hamilton shall file and serve a report of what occurred within 48 hours of completion of the search process. Service shall be effected on all parties who have given notice of intention to be heard on the application for recognition.
[28] Costs reserved.
P R Heath J
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