WESTPAC NEW ZEALAND LIMITED v YARROW [2017] NZHC 2261

WESTPAC NEW ZEALAND LIMITED v YARROW [2017] NZHC 2261

Court held debtor failed to establish a reasonably arguable case that Westpac owed or breached fiduciary duties giving rise to an equitable set-off sufficient to extinguish the guaranteed liability; no credible causation or loss linkage established; the guarantee and no-set-off clauses were enforceable; balancing statutory discretionary factors (including public interest, investigatory utility and accountability) adjudication was appropriate; order adjudicating debtor bankrupt was made.

Citation
[2017] NZHC 2261
Parties
Substituted Creditor: Westpac New Zealand Limited; Judgment Debtor: Paul Steven Yarrow
Court
High Court
Jurisdiction
New Zealand
Judgment Date
19 September 2017
Procedural Posture
Bankruptcy Adjudication / Post Hearing Judgment
Outcome
Adjudication order made; debtor adjudicated bankrupt
Legal Topics
Guarantee, Equitable Set Off, Fiduciary Duty, Receivership, Bank Customer Relationship, Causation, Discretion to Adjudicate Bankrupt
Insolvency Bankruptcy Equity Contract Commercial Law Guarantee Equitable Set Off Fiduciary Duty +4 more

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Parties

Westpac New Zealand Limited

Substituted Creditor

Paul Steven Yarrow

Judgment Debtor

Procedural Posture

Bankruptcy Adjudication / Post Hearing Judgment

Legal Issues

  1. 1 Whether creditor owed fiduciary duties to company or guarantor
  2. 2 Whether equitable set-off arising from alleged fiduciary breaches defeats guarantor's liability
  3. 3 Whether no-set-off clauses and guarantee render set-off unavailable

Ratio Decidendi

Court held debtor failed to establish a reasonably arguable case that Westpac owed or breached fiduciary duties giving rise to an equitable set-off sufficient to extinguish the guaranteed liability; no credible causation or loss linkage established; the guarantee and no-set-off clauses were enforceable; balancing statutory discretionary factors (including public interest, investigatory utility and accountability) adjudication was appropriate; order adjudicating debtor bankrupt was made.

Court Disposition

Adjudication order made; debtor adjudicated bankrupt

Orders

  • Debtor to be adjudicated bankrupt effective when this judgment is issued by the Registrar
  • Parties to file memoranda on costs (maximum six pages each) within 15 working days