Williams v Simpson HC Hamilton CIV 2010-419-1174

[2010] NZHC 1722

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:         22 September 2010

Counsel:         P J Morris for Applicant

C Bryant for the trustees of the B V Adams No 2 Trust
No appearance by, or on behalf of the Debtor

Judgment:      22 September 2010

(ORAL) JUDGMENT (NO. 3) 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  22 September 2010

Introduction

[1]      Mr Simpson was adjudged bankrupt in England on 7 September 2009.  Mr Williams has been appointed as his trustee in bankruptcy.   There are no extant bankruptcy proceedings involving Mr Simpson in New Zealand.

[2]      Mr Williams sought an order under the Insolvency (Cross-border) Act 2006 for recognition of the English bankruptcy.  That application has not yet been heard. It is set down for hearing at 11.45am on 1 October 2010.  Pending determination of that application, Mr Williams sought interim relief under art 19 of Schedule 1 to the Act.

The first interim relief application

[3]      Interim relief was granted in a judgment I gave on 17 September 2010.  In granting relief on a without notice basis, I emphasised that the scheme and purpose of  the  UNCITRAL  Model  Law  on  Cross-border  Insolvency  adopted  by  the provisions of Schedule 1 to the Act in New Zealand, required the Court to determine applications of interim relief in a manner that accorded with the spirit of art 19. Referring to some comparator cases from the United States, I determined that flexibility of approach was desirable.  I also identified the need to assist the general body of creditors, under a collective insolvency regime, as the primary purpose of art 19.

[4]      For reasons set out in that judgment, I granted interim relief entitling the Official Assignee at Hamilton, as the Court’s agent, to conduct a search of a property at 35 Ann Street, Hamilton to search for safes or other receptacles containing bullion or other precious metals.  The Official Assignee was also authorised to summon the debtor, Mr Simpson, to be examined before an Associate Judge of this Court on 21

September 2010.   That examination took place yesterday, before Associate Judge

Faire.

[5]      On 20 September 2010, the search was undertaken.  During the course of the search an urgent application was referred to me to extend the items which may be searched for and seized in light of what had been discovered during the course of the search to that time.  I extended the warrant to allow for both hard copy and electronic data found at the premises to be taken into safe keeping by the Official Assignee and to be retained pending further order of the Court.

[6]      Cloning of computers was not authorised at that stage.   My intention was simply to protect assets and to safeguard the interests of creditors in ensuring that ultimately relevant assets could be properly located and dealt with.

Clarification of extended search order

[7]      Today, Ms Bryant, for the trustees of the B V Adams No 2 Trust, sought clarification of that supplementary order in relation to hard copy documentation seized.  I have confirmed that my intention is that the Official Assignee at Hamilton retain those documents but not carry out any investigation of them, pending further order of the Court.  Mr Morris, for the applicant, has informed me that the Official Assignee does not intend to review those documents at this stage.

[8]      Therefore, the position is that the documents seized under para [4] of my second judgment of 20 September 2010 shall be kept in safe keeping and not be examined by the Official Assignee, pending further order that may be made after the recognition application has been heard and determined.

Further interim relief application

[9]      Following the examination of Mr Simpson yesterday, Mr Williams seeks further orders under art 19.  Examination is sought of four people; two are trustees of the B V Adams No 2 Trust, Mr Clough and Ms Mann; and two are involved in dealing in precious metals, Mr Astley, of Regal Castings Ltd, and Mr Squire, of Ord Minnett Financial.  The purpose of the application is to enable issues of ownership raised by Mr Simpson during his examination to be determined promptly; or, at least

to obtain further information to assist in the resolution of any disputes as to ownership.

[10]     In determining whether to make an order of the type sought, I must focus carefully on the terms of art 19(1) of Schedule 1 to the Act.  Interim relief may only be granted if “urgently needed to protect the assets of the debtor or the interests of the creditors”.

[11]     At this stage, all assets known to the applicant have been seized and are kept in safe custody, pending determination of the recognition application.  The evidence sought to be obtained from the four proposed examinees goes to ownership of those assets.  Ownership is an issue which will require resolution if this Court makes an order, under art 15 of Schedule 1, recognising the foreign proceeding as either a main or a non-main proceeding; or, if otherwise some form of relief were granted in terms of s 8 of the Act.

[12]     I do not consider that examination of the proposed deponents at this stage meets the criteria of art 19(1).  The evidence is not required to protect assets of the debtor.   The interests of creditors have already been protected through seizure of assets from the home of the debtor and from evidence given at the examination before Judge Faire yesterday.

Miscellaneous issues

[13]     I add two comments I made to counsel at the outset of today’s hearing.  The first is that I am assigned to deal with all issues in relation to the application for recognition  and  any consequential  issues,  including determination  of  ownership. The  second  is  that  I  deliberately  made  orders  on  17  September  2010  that  Mr Simpson be examined before an Associate Judge of the Court to avoid the possibility that my view of any issue arising in the proceeding might be coloured by evidence obtained by examination, which may not be relevant to determination of specific issues.

[14]     While I accept that there will be occasions in the future where I will need to refer to specific aspects of the examination (or, indeed, to the whole transcript if it is sought to be admitted against Mr Simpson or the trustees), I will do so only to the extent necessary on the particular application before me.

Result

[15]     The application by Mr  Williams for orders of examination in respect  of

Mr Astley, Mr Squire, Ms Mann and Mr Clough is dismissed.

[16]     All questions of costs remain reserved.  It may be that they can be dealt with appropriately in the context of the recognition application, depending on the parties

who appear and wish to be heard on that.

P R Heath J