Robinson v Robinson [2016] NZHC 3149 (20 December 2016)

	Home \| Databases \| WorldLII \| Search \| Feedback High Court of New Zealand Decisions

BETWEEN	CHRISTOPHER JOHN ROBINSON First Plaintiff ALISON CHRISTINA ROBINSON Second Plaintiff
AND	IAG NEW ZEALAND LIMITED First Defendant RUSSELL JOSEPH AND MARTIN JORGENSEN Second Defendants MAURICE FLETCHER Third Defendant ASB BANK LIMITED Fourth Defendant

Hearing:	23 August 2016
Appearances:	Richard Barnsdale for the Plaintiffs Craig Stevens and Brad Cuff for the First Defendant Peter Hunt and Michael Cavanagh for the Second and Third Defendants Liz Gellert for the Fourth Defendant
_Judgment:	_{20 December 2016}

This judgment was delivered by me on 20 December 2016 at 10:30 am pursuant to Rule 11.5 of the High Court Rules.

ROBINSON & ANOR v IAG NEW ZEALAND LIMITED & ORS [2016] NZHC 3149 [20 December 2016]

[1] This application represents the latest skirmish in a longstanding dispute over a Northland property and the fire which destroyed it.

[2] It is brought under s 119(2) of the Insolvency Act 2006 (“the Act”). The plaintiffs, Mr and Mrs Robinson, as bankrupts, seek an order that the litigation rights in respect of a proceeding to recover insurance monies, having been disclaimed by the Official Assignee, be vested in them.

[3] While a complex exercise, I consider it necessary to describe in some detail the background to this dispute. This is for two reasons. First, it is relevant to the merits of the present application and, secondly, I have not been able to find a complete or readily comprehensible chronology within the substantial volume of documents which have accumulated on this file in the course of the various claims which have been brought by the parties in relation to this dispute.

[4] Mr and Mrs Robinson originate from the United Kingdom though they lived for some years in France. They arrived in New Zealand in July 2005 as immigrants under the business investor scheme with the intention of settling and setting up a home here.

[5] By all accounts Mr Robinson is a talented man; he claims to hold degrees in architecture, mathematics, computing and physics, as well as an honorary doctorate in microcomputers. For reasons which will become apparent later in this judgment, these various qualifications assume significance.

[6] Soon after they arrived, Mr and Mrs Robinson purchased a property through Propdoc Ltd (“Propdoc”) which they incorporated to manage their affairs. The property was situated at 125A Ness Road in Killara, Kerikeri (“the property”). There they lived until the property was completely destroyed by fire in September 2011.

[7] In 2007, the dwelling on the property, along with some equestrian facilities and a portion of the land, was purchased from Propdoc by another Robinson company, Killara Property Limited (“Killara”). Propdoc retained ownership of the balance of the land.¹At all material times, Mr Robinson was the sole director of both companies. The shares were held by him, Mrs Robinson or one or both of their children.

[8] Sometime later, at some expense, the house was converted into a luxury lodge. The result was a modern and well-furnished facility with grounds and facilities covering some 11 hectares.

8 October 2011. $100,000 in contents was also covered under a separate policy with

[10] In an affidavit dated 22 August 2016, Mr Robinson claims that the equity in the property exceeded $2,200,000 in 2011. The contents were valued at $600,000 and vehicles and other assets at $100,000. But there were liabilities. Propdoc had outstanding debts to the ASB totalling some $800,000 under both a term loan agreement and a revolving credit facility. These lending arrangements were secured, among other things, by a first mortgage over the property and by guarantees provided by both Killara and the Robinsons.

[11] Unfortunately, it seems the couple had difficulty running the lodge profitably. It seems that they rather quickly began to run into financial difficulties.

[12] In May 2011, Propdoc first defaulted by exceeding the borrowing limit of the revolving credit facility. ASB made a formal demand for payment on 25 July 2011, and a separate demand on the Robinsons as guarantors on the same day.²Initially it

[13] On 29 July 2011, Mr Robinson issued unusual and plainly optimistic proceedings naming the Attorney-General as defendant. Although there were three different causes of action, the essence of the claim was that the Robinson family had been induced to settle in this country by the false representation (made by various government entities) it was “100% Pure New Zealand”. It was alleged that contrary to this representation thousands of parcels of public and private land were in fact contaminated with industrial waste and pesticides. This included the land occupied by the Robinsons.

[14] Mr Robinson claimed that, unbeknownst to him or his wife, property they had purchased had been used as a waste disposal site some years previously and that testing of the water and soil had revealed large quantities of arsenic, lead, copper and other toxic materials. Mr Robinson claimed this had only been discovered in July

2010 and, as a consequence, he and his wife had been forced to undertake extensive

[15] Despite this, Mr Robinson claimed the lodge had to be closed to protect the health and safety of visitors. He described the property as valueless. This assertion, however, directly contradicts the evidence as to value which Mr Robinson has deposed to in his affidavit of 22 August 2016. Similarly Mr Robinson claimed that the family had suffered serious and ongoing health problems as a result of their exposure to the contaminants. The damages claimed were extraordinary. A total of

“Cost of immigration	$100,000
Loss of property investment	$2,600,000
Loss of business income	$1,000,000
Disablement and suffering of plaintiff	$3,500,000
QALY adjustment of plaintiff’s wife (25 years)	$2,500,000
QALY adjustment, children (40 years each)	$8,000,000
Future medical costs	$4,000,000
Interest
Costs”

[17] On 16 August, the ASB issued notices under the Property Law Act 2007 against both Propdoc and Killara declaring mortgagee sales would be initiated in the event steps were not taken to address the outstanding debt owed by Propdoc. It seems nothing was done in response.

[18] On the morning of 9 September 2011, Mr and Mrs Robinson drove to Hamilton for what they claim was a pre-planned three or four day visit for their daughter to view Waikato University, and to visit their son who was enrolled as a student there. At around midnight, the property was destroyed by fire, along with two vehicles in the garage. So extensive was the damage, there was no possibility of repair or recovery.

[19] The Robinsons say the first they knew of this was when they received a telephone call at 9:00am on 10 September. They immediately returned north to inspect the damage.

[20] Mr and Mrs Robinson lodged an insurance claim with IAG in an attempt to cover their losses.

[21] However, almost immediately, concerns began to emerge as to the cause of the fire. IAG engaged Russell Joseph, a Wellington fire investigator, to examine the scene and report on the cause. He concluded the fire had been deliberately lit. This view was shared by the New Zealand Fire Service which conducted a parallel investigation. Mr and Mrs Robinson accepted IAG’s conclusion. The matter was referred to the Police.

[22] IAG then engaged Martin Jorgensen, a computer forensic examiner, and Maurice Fletcher, a private investigator, in an attempt to identify who had started the fire.

[23] In the interim, in February 2012, the ASB commenced summary judgment proceedings against Propdoc, Mr and Mrs Robinson and Killara to recover the debt

of $793,200.57. Shortly afterwards the property was sold at mortgagee sale and the net proceeds of $322,484.32 were applied in part settlement of Propdoc’s debt.³In August 2012 judgment was entered by consent against Propdoc and the Robinsons for the sums of $450,000 and $467,207.30 which remained unpaid.⁴

[24] On 27 February 2012, Mr Robinson discontinued his proceedings against the Attorney-General. I have no material before me indicating why he took that course although it seems likely the cost of pursuing the claim, when balanced against the remote chances of success, were the likely reasons.

[25] However, apparently dissatisfied with how long IAG’s investigations were taking, the Robinsons issued proceedings on 26 March 2012 against IAG (“the 2012 proceedings”). They alleged IAG failed to act reasonably in its investigation of their insurance claim and had breached the contract between them. They sought special damages of $2,340,000 and exemplary damages of $20,000.

[26] Shortly afterwards the extensive investigations conducted by Messrs Jorgensen and Fletcher, in conjunction with the Police, were completed. The opinion of the experts was that Mr Robinson had caused the fire by remotely accessing a printer attached to his home computer. This had been set up to trigger an ignition device when activated. Mr Robinson had used “Log Me In” computer software installed on the laptop he had taken to Hamilton. Mr Robinson’s qualifications and experience were central to this theory. The alleged motive was that the Robinsons’ financial position had deteriorated to such an extent that arson and insurance fraud became an attractive option.

[27] On 17 April 2012, Mr Robinson was arrested on charges of arson. He denied any connection with the fire. He pointed out that windows had been broken at the property and that rocks, bottles of accelerant, alcohol and other items were found

_{scattered around the property. He suggested the fire had been the work
of vandals.}

⁴Judgment was entered against both parties on 22 August 2012 following orders made by Faire

[28] On 3 May 2012, IAG’s solicitors wrote to the Robinsons and advised that their claims would be declined because the fire had been deliberately set by Mr Robinson.

[29] Agreement was reached between the parties that the 2012 proceedings against IAG be stayed pending the determination of the arson prosecution. Faire AJ (as he was then) made an order to this effect on 21 May 2012.⁵

[30] Owing to the Robinsons’ parlous financial position, the judgment debt owed to the ASB remained unpaid for some time and the bank was left with no further assets to realise in execution of the debt. On 29 January 2013, bankruptcy notices were issued against Mr and Mrs Robinson. They applied to set these aside. Their application was dismissed in an oral judgment delivered by Christiansen AJ.⁶

[32] On 24 April 2013, Mr and Mrs Robinson issued a second set of proceedings against IAG (“the 2013 proceeding”). They claimed IAG had breached its contract of insurance by failing to accept their insurance claim and had been negligent in investigating the fire. This proceeding added Messrs Joseph, Jorgensen and Fletcher as second and third defendants and the ASB as fourth defendant. The Robinsons’ case was that these parties, in concert with IAG, had fabricated the evidence against Mr Robinson and the ASB had negligently contributed in ordering that the remains of the lodge be cleared from the property prior to the mortgagee sale thereby eliminating the possibility that further forensic evidence could be uncovered. The damages were also increased to $6,316,000.

[33] Shortly afterwards the Robinsons formally discontinued the 2012 proceeding which had become redundant by reason of the 2013 proceeding. IAG was awarded

⁵Robinson v IAG New Zealand Limited HC Auckland CIV-2012-404-1629, 21 May 2012 (Minute

⁶On 10 September 2013; ASB Bank Limited v Christopher John Robinson & Anor [2013] NZHC

[34] On 2 May 2013, Mr Robinson sent an email to IAG’s solicitor (copying in several others). The email was entitled “Without Prejudice: - re Robinsons v IAG plus others”. In it Mr Robinson threatened to publish allegations of serious criminal conduct by IAG and its investigators on his website unless, among other things, IAG paid him $5,500,000 in damages, assisted in causing the arson charges to be dismissed and agreed not to initiate any further civil or criminal proceedings against him or his family. This rather clumsy tactic led Mr Robinson to be charged with blackmail. He was eventually convicted following a jury trial and sentenced to nine

months’ home detention.⁸In the course of this prosecution, it was revealed that

[35] On 13 August 2013, a three day Judge-alone hearing on the arson charge commenced before Judge D J McDonald in the Whangarei District Court.

[36] The Crown applied to have the expert evidence of Messrs Joseph and Jorgensen ruled admissible. This evidence included observations Mr Joseph had made at the scene of the fire, as well as evidence of internet-based research which had been carried out by Mr Robinson using terms such as remote printing, insurance, fire, etc. One aspect of this evidence was particularly controversial. Mr Joseph and Mr Jorgensen set up and recorded a demonstration of how the “Log Me In” software could be used to remotely access the printer, and draw a piece of paper through its mechanism, in turn causing an attached ignition device to spark and create a fire. The Crown sought to adduce this evidence in support of its theory that Mr Robinson had caused the fire.

[37] Mr Robinson applied to have the charges dismissed or stayed. Judge McDonald reserved his decision on all three applications at the conclusion of the hearing.

[38] In the meantime, on 31 October 2013, the first, second, third and fourth defendants applied to stay the 2013 proceeding pending the determination of the arson prosecution against Mr Robinson. The Robinsons opposed the stay. Brewer J

granted the stay.⁹His Honour said he adopted this course for reasons of common sense. This was because the criminal prosecution involved the same central issues of fact and would be determined in a relatively short space of time. It seems that a grant of legal aid was being considered by the Legal Services Agency at this point and as a result Mr and Mrs Robinson were represented to a limited extent by Mr Barnsdale, who had not by then been formally instructed but appeared as counsel in the present matter before me.

[39] Judge McDonald delivered his reserve decision on 28 January 2014.¹⁰He refused to dismiss or stay the proceeding. He also ruled the expert evidence, including the video recording of the demonstration, admissible. Mr Robinson appealed.

[41] On 17 June 2014 the Court of Appeal delivered its decision in respect of the evidence challenge.¹²The Court determined the evidence of Messrs Joseph and Jorgensen would not be substantially helpful in terms of s 25 of the Evidence Act

2006 and ruled it inadmissible. The Court considered that there was a fatal gap in the Crown’s case. A key aspect of the Crown’s theory was not only that Mr Robinson’s home computer had been accessed remotely but that either a print command had been sent from his laptop in Hamilton, or software had been installed on the home computer which would cause it to automatically print any email received or opened. Mr Jorgensen had confirmed he could find no evidence a command was sent to print an email or that automatic printing software had been installed. In the absence of such proof, the Court considered the expert evidence, including the demonstration, was not sufficiently probative to be “substantially

[42] The Court did, however, expressly state that if the Crown was able to provide the necessary evidential foundation at a later stage or provide an explanation for the absence of such evidence, a renewed application could be made.

[43] The Crown did re-apply for orders admitting this evidence. While conceding there was no direct evidence of a print command, it argued there was evidence that automatic printing software had been installed a month before the fire although this had not been used to print on the night in question. The Crown submitted the absence of the sort of evidence identified by the Court of Appeal could be explained in such a way which would justify the appropriate drawing of the inferences. Judge McDonald, after hearing complicated and detailed evidence about the computer systems in question, determined that the Crown had not met the threshold set by the Court of Appeal. He ruled the evidence inadmissible in a decision delivered on

[44] It appears the prosecution stalled at this point. The Police have since withdrawn the arson charges against Mr Robinson.

[45] This complex and lengthy recital leaves only the 2013 proceeding alive. These were the proceedings stayed by Brewer J on 31 October 2013.

[46] The litigation rights to this claim vested in the Official Assignee on the Robinsons’ adjudication on 28 March 2014. However, on 9 June 2016, the Official Assignee disclaimed these rights in relation to the first, second, third and fourth defendants on the basis that the litigation could not reasonably be funded from the assets of the Robinsons’ estate.

[47] With the criminal proceeding resolved, Mr and Mrs Robinson now apply to have the disclaimed litigation rights vested in them as bankrupts under s 119(2) of the Insolvency Act 2006 so that they may continue to prosecute the claim. Earlier

the defendants had applied for orders striking out the proceeding. However, this was stayed pending the determination of the present matter.

(1) A person suffering loss or damage as a result of disclaimer by the Assignee may—

(a) claim as a creditor in the bankruptcy for the amount of the loss or damage, taking account of the effect of an order made by the court under paragraph (b);

(b) apply to the court for an order that the disclaimed property be delivered to, or vested in, that person.

(2) The bankrupt may also apply for an order that the disclaimed property be delivered to, or vested in, the bankrupt.

(3) The court may make an order under subsection (1)(b) or (2) if it is satisfied that it is fair that the property should be delivered to, or vested in, the applicant.”

[50] The effect of this provision is that the Court enjoys a broad and largely unfettered discretion. It may make an order under s 119(2) if it considers it is “fair” to do so. In the absence of restrictive language in subsection (3), I consider this assessment should be made in an holistic manner and in light of all the surrounding circumstances the Court considers relevant.

[51] Before I proceed further, certain administrative matters must first be dealt with. As mentioned earlier, Messrs Joseph and Jorgenson, Mr Fletcher and the ASB

were named as second, third and fourth defendants to the 2013 proceeding respectively. However, in their synopsis of argument filed on 22 August 2016, the Robinsons advised they only wished to proceed in respect of IAG. At the hearing before me, orders were sought striking out the claim as it applied to the three other defendants. Mr Barnsdale, for the plaintiffs, recorded he did not oppose. I indicated I would grant the orders and excused counsel for the second, third and fourth defendants for the remainder of the hearing. I now make formal orders striking out

[52] As a result, I shall deal only with the submissions made by Mr Barnsdale for the Robinsons and Mr Stevens for IAG.

[53] Mr Barnsdale submits this matter is relatively straightforward. He says the Robinsons’ claim against IAG has never been tested in a civil Court, despite the prolonged history of the dispute. He submits fairness dictates that the litigation rights be re-vested in the Robinsons so this may occur.

[54] On question of the claim’s merits, Mr Barnsdale points out that where an insured disputes the refusal of an insurer to accept a claim the following must be established:

[55] He argues that once these threshold issues are established, as he submits they are in this case, the burden shifts to the insurer to prove the loss resulted from the insured’s own act or from an excluded peril. This must be met to the ordinary civil

_{standard of proof recognising the seriousness of the allegations in a
given case.}¹⁶_He

submits IAG will struggle to meet this onus. The Crown’s theory of causation was considered to be deficient by the Court of Appeal and the critical element of proof that Court identified remains missing.

[56] Mr Stevens places greater emphasis on s 119 itself. He submits, if I understand correctly, that there is an absolute bar to the application being granted in that a bankrupt applying under subsection (2) is required to demonstrate that he/she has suffered loss as a result of the disclaimer in the same manner as a party claiming under s 119(1). He submits the section heading, “Position of person who suffers loss as result of disclaimer”, lends support to this argument. He argues there was no such loss in the Robinsons’ case.

[57] In any event, Mr Stevens submits it would not be fair to vest the litigation rights in the plaintiffs. He points out that the property was never actually personally owned by the plaintiffs. It was owned by Propdoc and Killara. He also submits that IAG’s case is a very strong one particularly having regard to the circumstantial evidence. Thus he submits the Robinsons’ claim has little merit, noting it would be extremely unfair to put IAG at the risk of further unmeritorious litigation particularly as any potential hearing is likely to occupy several weeks and involve many witnesses. If the Robinsons’ claim was to fail it is highly unlikely that they would have the means to meet an adverse costs order.

[58] The position is compounded, Mr Stevens submits, by Mr and Mrs Robinson’s imminent discharge from bankruptcy. The ASB is listed as having a property interest under the insurance policy, and Mr and Mrs Robinson currently owe the bank some

$467,207.30 as a result of the summary judgment entered against them. Once they are discharged from bankruptcy, which will almost certainly take place before the claim is resolved, their debt to the ASB will be extinguished. In the event they succeed they will receive a windfall benefit in the amount of $467,207.30.

[59] Mr Stevens adds that the 2013 proceeding is of substantially the same nature as the discontinued 2012 proceeding. Pursuant to r 15.24 of the High Court Rules,¹⁷

the plaintiffs therefore cannot bring the 2013 proceeding until they have first paid the costs award against them in relation to the 2012 proceeding.

[60] Because it relates to Mr and Mrs Robinson’s standing to make the application in the first place, it is first necessary to address Mr Stevens’ submission on whether the Robinsons need to be able to demonstrate loss as a result of the disclaimer in order to apply under s 119(2).

[61] I cannot accept the interpretation advanced by Mr Stevens. To do so would contradict the plain wording of the statute. The section relevantly provides:

(1) A person suffering loss or damage as a result of disclaimer by the Assignee may—

(b) apply to the court for an order that the disclaimed property be delivered to, or vested in, that person.

(2) The bankrupt may also apply for an order that the disclaimed property be delivered to, or vested in, the bankrupt.

[62] Subsection (2) contains no reference to loss and no words linking it to the previous subsection. I do not consider that the section heading can be relied on in this instance. Had Parliament intended to incorporate loss as a requirement in s 119(2) it would have been a simple matter for it to have done so.

[63] However, I have little trouble accepting the balance of Mr Stevens’ arguments. I consider that fairness clearly dictates that an order not be made in Mr and Mrs Robinson’s favour.

31 March 2017. It is obvious that the 2013 proceeding will not be resolved until well after this date. As such their debt to the ASB will be extinguished before any potential award of damages is made, in the event of success. This would leave them

[65] Additionally, the Robinsons’ prospects of success must be assessed as low or indeed, very low. It has been held that the merits of a claim are relevant to whether a vesting order should be made under s 119 and this, in my view, is the strongest factor operating in IAG’s favour.¹⁸Although I am reluctant to exhaustively review the respective arguments, the circumstantial evidence against Mr Robinson is strong on any view. The couple were plainly in financial difficulties at the time of the fire.

The ASB had issued repeated demands in respect of the debts owed by Propdoc and had already issued Property Law Act 2007 notices foreshadowing the likelihood of a mortgagee sale. No steps were taken to meet this debt by either Propdoc or Killara, or by Mr and Mrs Robinson as guarantors. The most likely reason for that is they had no funds to meet their creditors. This is further reflected in Mr Robinson’s evidently hopeless proceedings against the Attorney-General which, in addition to his convictions for blackmail in both New Zealand and Britain, also demonstrate a propensity on his part to adopt dishonest and/or difficult conduct when he considers the circumstances may justify such a course.

[66] Likewise, there is the evidence of the relevant “Log Me In” software being installed on Mr Robinson’s computer and of internet searches having been carried out on terms such “as remote printing”, “insurance”, “fire”, etc. I accept that the Court of Appeal determined there was an evidential lacuna in the Crown’s theory. However, in respect of the 2013 proceeding, the Court would not be applying the onerous criminal standard of proof. As confirmed by the Court of Appeal in AMI v Devcich, in civil cases concerning arson the standard of proof which applies is the ordinary civil standard of the balance of probabilities bearing in mind the seriousness

of the allegations.¹⁹In my view, there is a strong evidential foundation from which it

may properly be inferred Mr Robinson was the author of this sophisticated plan to cause the fire by remote ignition and that he carried out this strategy thus causing the

fire which incinerated his property. The prospects of success in the 2013 proceeding are remote in the extreme in my view.

[67] I have reached this conclusion leaving aside one matter Mr Stevens referred to. This is the question of the legal ownership of the property and how it might influence Mr and Mrs Robinson’s standing to bring the claim. In Mr Robinson’s affidavit, he states that Propdoc sold a portion of the property to Mr and Mrs Robinson’s family trust in 2007. Mr Barnsdale argued that it appeared to him this trust had failed and that, by operation of law, the litigation rights in respect of the insurance claim had fallen to Mr and Mrs Robinson as beneficiaries. Mr Stevens points out that Mr Barnsdale was in error and that the portion of land was sold to

Killara; a company and not a family trust.²⁰Mr Stevens produced title searches in

support of this submission which demonstrate that no trust was ever involved in the ownership of the property. His belief is that neither Killara nor Propdoc was ever liquidated and that their removal from the Register, which occurred after the 2013 proceeding was filed, was simply due to the fact they stopped filing annual returns. No evidence was adduced in support of this claim. However, if it is correct, then Mr and Mrs Robinson do not appear to have standing to bring the claim themselves. It seems that both Killara and Propdoc were the correct legal entities which should have commenced the proceedings.

[68] Finally, I note that the Robinsons’ financial position continues to be strained. If IAG were required to enter into lengthy and complex litigation (the best estimate being several weeks of hearing time and that some 30 witnesses would be required), it would undoubtedly incur significant costs which they would have little or no prospect of meeting. This too is persuasive in the context of an overall assessment of fairness. A similar observation may be made in respect of the outstanding costs the Robinsons still owe in respect of the 2012 proceedings.

[69] Taking all these matters into account and for the reasons set out above, I am not satisfied it would be fair for the litigation rights in respect of the 2013 proceeding

²⁰The background section of this judgment has been prepared to reflect this fact.

Mr Barnsdale, Hamilton DLA Piper, Wellington McElroys, Auckland Simpson Grierson, Auckland

High Court of New Zealand Decisions

Robinson v Robinson [2016] NZHC 3149 (20 December 2016)