Official Assignee at Hamilton v Scott [2013] NZHC 2945 (2 December 2013)

Last Updated: 28 February 2014

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2012-470-815
CIV-2012-470-816 [2013] NZHC 2945

BETWEEN THE OFFICIAL ASSIGNEE AT HAMILTON

Applicant

AND LEWTYN MICHAEL SCOTT First Respondent

WOOD WALTON TRUSTEES (2010) LIMITED

Second Respondent

ALH TRUSTEE CO LIMITED Third Respondent

WOOD WALTON TRUSTEES (2011) LIMITED

Fourth Respondent

ASB BANK LIMITED Fifth Respondent

Hearing: (on the papers) Appearances: S N Cameron for Applicant

L M Scott in person

No appearance by second to fifth respondents

Judgment: 2 December 2013

JUDGMENT OF LANG J

_{[on application for stay of execution of judgment]}

This judgment was delivered by me on 2 December 2013 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

_{Date...............}

THE OFFICIAL ASSIGNEE AT HAMILTON v LEWTYN MICHAEL SCOTT [2013] NZHC 2945 [2 December

2013]

[1] On 5 November 2013, I delivered a judgment in which I granted two originating applications by the Official Assignee for orders cancelling several transactions under s 206(6) of the Insolvency Act 2006 (“the Act”).¹ I also made orders under s 207 of the Act retransferring assets from trusts associated with Mr Scott to the Official Assignee.

[2] Mr Scott immediately applied for a stay of execution of the judgment pending determination of an appeal to the Court of Appeal. The Official Assignee opposed that application, because he wished to begin giving effect to my judgment as soon as possible.

[3] It was initially necessary for me to deal with the application for stay urgently, because I was due to travel overseas for a week on 10 November 2013. In addition, the principal property to which the application relates, a residential property situated in Pillans Road, was due to be the subject of a mortgagee sale by ASB Bank Ltd on

14 December 2013. The Official Assignee wished to work closely with the bank in order to ensure that the sale of that property realised the best possible price. I therefore directed Mr Scott and counsel for the Official Assignee to file written submissions in accordance with an abbreviated timetable. I indicated that I would then determine the application for stay on the papers.

[4] Mr Scott did not file an affidavit in support of his application, and he also elected not to file any submissions in accordance with the timetable I imposed. This lack of activity on Mr Scott’s part mirrors the approach he took to the substantive proceedings. He elected not to address the merits of the Official Assignee’s claim in his affidavits in those proceedings, and he also withdrew from the trial when I refused to grant him an adjournment.

[5] On 8 November 2013, Mr Scott filed a memorandum indicating that he needed further time to take legal advice in relation to his application for stay of the judgment. I therefore issued a Minute on 8 November 2013 advising that I would

_{not be able to deal with the application prior to my departure overseas. I also}

¹ Official Assignee v Scott & Ors [2013] NZHC 2919.

observed that, until such time as the application had been determined, the Official

Assignee was entitled to act on the basis of the orders I had made.

[6] By 18 November 2013 Mr Scott had failed to file any submissions in support of his application for stay. I therefore issued a Minute on that date advising that I would issue a judgment based on the material on the file if Mr Scott did not file submissions by 22 November 2013. This prompted Mr Scott to file another document on 21 November 2013 that purported to be an “Urgent Application for Stay” of my judgment. He did not file a supporting affidavit or submissions in support of that document.

[7] By this stage counsel for the Official Assignee had filed a memorandum confirming that the ASB Bank had sold the Pillans Road property at the mortgagee sale on 14 November. The sale price was not sufficient to fully repay the debt secured by the Bank’s mortgage.

[8] On 26 November 2013, I issued a further Minute in which I directed that I would be issuing my judgment on Friday 29 November 2013, and that Mr Scott should file his submissions prior to that date if he wished me to take them into account in determining his application for stay. By 29 November, however, Mr Scott had not filed any submissions.

[9] Mr Scott’s failure to file evidence and submissions in relation to his application for stay means that I have no option but to determine it based on the information contained in the application itself, together with the matters raised in the submissions for the Official Assignee.

[10] Mr Scott’s application is based on an assertion that his appeal rights will be rendered nugatory if execution of the judgment is not stayed. I assume that he is concerned that the Official Assignee will take steps to dispose of the assets affected by the judgment if the stay is not granted. He would therefore lose the benefit of those assets if his appeal is ultimately successful.

[11] If Mr Scott’s approach to litigation thus far is any guide, however, the appeal process is likely to be very drawn out. A stay of execution would merely encourage Mr Scott to delay advancing the appeal for as long as possible. The interests of justice require the Official Assignee to be able to execute the orders I have made as quickly as he considers appropriate.

[12] In any event, the most substantial asset affected by my judgment is the Pillans Road property. As recorded above, the ASB Bank has now sold that property, so my judgment will have no effect so far as it is concerned.

[13] To the extent that the appeal relates to Mr Scott’s interest in the Ohakana section, it needs to be remembered that Mr Scott only owns a one-eighth share in that section. The remaining interests in the land are owned by members of Mr Scott’s family, who are likely to be the only parties interested in acquiring the interest now held by the Official Assignee. I anticipate that it may take some considerable time for the Official Assignee to negotiate a sale of Mr Scott’s interest in the property. In the event that he does so, I direct that the net sale proceeds are to be held in the Official Assignee’s trust account until further order of the Court.

[14] The remaining assets that are subject to the judgment are currently in Mr Scott’s possession. They are a boat, a trailer and a Massey Fergusson tractor. Mr Scott has failed to provide any reasons why the Official Assignee should not now be permitted to realise these assets for the benefit of his creditors. They are likely to be of minimal value in any event. If and when the Official Assignee takes possession of these items, I direct that he is to hold the proceeds of any sale in his trust account pending further order of the Court.

[15] If the proceeds of sale are held by the Official Assignee, Mr Scott’s appeal rights will not be rendered nugatory. If Mr Scott advances his appeal expeditiously and his appeal succeeds, he will receive the benefit of the assets because he will be entitled to any funds held by the Official Assignee. Moreover, as I have already indicated, any order staying my judgment would merely encourage Mr Scott to delay the appeal process for as long as possible. That would not be in the interests of justice, or in the interests of Mr Scott’s creditors.

_{[16] The application for stay is accordingly dismissed.}

Lang J

Solicitors:

Almao Douch, Hamilton

Copy to:

L M Scott