Grant v Bhana

[2015] NZHC 2596

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

CIV-2014-463-169 [2015] NZHC 2596

BETWEEN

DAMIEN GRANT AND STEVEN KHOV

AS LIQUIDATORS OF RANOLF COMPANY LTD (IN LIQUIDATION) Applicants

AND

STEPHEN BHANA First Respondent

JASU MATI BHANA Second Respondent

Hearing:	21 October 2015
Counsel:	B J Norling and A Cherkashina for Applicants No appearance by or on behalf of the Respondents
Judgment:	21 October 2015

JUDGMENT OF BREWER J

Solicitors:           Waterstone Insolvency (Auckland) for Applicants

(Copy to Respondents in person)

GRANT AND KHOV AS LIQUIDATORS OF RANOLF COMPANY LTD (IN LIQUIDATION) v BHANA [2015] NZHC 2596 [21 October 2015]

[1]      The  applicants  are  liquidators  of  Ranolf  Company  Ltd.     Mr Bhana  is described as the person who has had effective control over that company at material times.  Ms Bhana, the second respondent, is described as a director of the company.

[2]      I am satisfied from the affidavits which have been filed by the applicants that Mr Bhana and Ms Bhana have deliberately frustrated the liquidation process.   In particular,  and of relevance for this  application, they have persistently failed to produce to the applicants the books, records and documents relating to the company and to an associated trust, the Ranolf Trust.

[3]      On 13 October 2014, the applicants filed an originating application for orders to compel the respondents to produce the relevant documents and to provide the applicants with relevant information as to the identities of current and past trustees of the Ranolf Trust and details of the assets of the Ranolf Trust.

[4]      The  respondents  took  no  steps.     Accordingly,  on  25 November  2014, Woolford J  made  the  orders  sought  and  these  were  sealed  and  served  on  the respondents.  Mr Bhana was served on 18 December 2014 and Ms Bhana was served on 22 December 2014.   An explanatory memorandum was served on them at the same time.  I attach a copy of the orders of Woolford J to this judgment for the sake of completeness.

[5]      I am  satisfied  on  the  subsequent  affidavits  that  have  been  filed  that  the respondents have taken no steps to comply with the orders of the Court.   I am satisfied also that the applicants have made all reasonable attempts to convince the respondents to comply with the orders of the Court.

[6]      On  16 July  2015,  the  applicants  applied  on  notice  for  orders  that  the respondents be held in contempt of Court, fined, and imprisoned unless they comply with  the  orders  of  the  Court.    That  application  was  served  on  Ms Bhana  on

26 September 2015 and on Mr Bhana on 29 September 2015.  Contemporaneously, a

copy  of  the  affidavit  of  Mr Jones  sworn  on  15 July  2015  in  support  of  the interlocutory application was served also.1

[7]      There has been no appearance today by or on behalf of the respondents.

[8]      In reliance on the affidavits filed by the applicants, I am satisfied beyond reasonable doubt that the respondents are in contempt of Court.  That is to say, they have  deliberately  disobeyed  the  orders  of  the  Court  made  by  Woolford J  on

25 November 2014.  Those orders are unambiguous in their terms and are binding upon the respondents.  The respondents knew about the orders, were reminded of the orders and failed/refused to act on them.2

[9]      Where  there  has  been  a  deliberate  defiance  of  a  Court  order,  a  mere declaration  that  the  respondents  have  acted  in  contempt  of  Court  will  not  be sufficient.  Rather, a penalty should be imposed.  As the Supreme Court in Siemer v Solicitor-General observed:3

The objective of the summary process in contempt of court proceedings is to protect the ability of the courts to exercise their constitutional role of upholding the rule of law. Effective administration of justice under our constitution requires that the orders of the courts are obeyed unless properly challenged or set aside. Public confidence in the administration of the law, also necessary for its effective administration, requires that there is a strong expectation  that  those  who  ignore  court  orders  are  quickly  brought  to account.

[10]     I  am  not  prepared  to  decide  penalty  in  this  hearing  without  better understanding the positions of the respondents.  I do observe that fines are normally considered appropriate where contempt of Court has been established.  The issue for

me is how I proceed from this point.

1      The affidavits of Sharon Dingwall sworn on 14 October 2015 and confirming service do not have as exhibits copies of the documents actually served. Accordingly, there is no specific record that the copy of the interlocutory application on notice served had included in it the date of today’s hearing. However, counsel appearing for the applicants have told me that the delay in serving the documents was because of the delay in receiving from the Court the service copies of the notice with the hearing date included. Ms Cherkashina told me that she gave the Court service copies to the office administrator for service. I accept those assurances and, given the further information I have from the registry staff as to the efforts made to confirm with the respondents the date of today’s hearing, I am confident that proper service was effected.

2      Solicitor-General v Krieger [2014] NZHC 172.

3      Siemer v Solicitor-General [2010] NZSC 54, [2010] 3 NZLR 767, at [26].

[11]     Pursuant  to  r 17.84,  I  direct  the  issue  of  an  order  arresting  each  of  the respondents.   The respondents are to be brought before the Court on 5 November

2015 at 9:00 am and until then they are to be kept in safe custody.  This order will lie in Court until 2:15 pm on 2 November 2015.  It will then be executed unless earlier varied or revoked in accordance with the following direction.

[12]   Leave is reserved to the respondents to file affidavits attesting to their compliance with the orders of the Court made by Woolford J on 25 November 2014. If  such  affidavits  are  filed  prior  to  2:15 pm  on  2 November  2015,  then  the respondents may also request that the execution of the arrest order be varied or revoked.

[13]     If, because of such application, I vary or revoke the arrest order, or if the arrest order is executed, then a date will be set for a penalty hearing.

[14]     I direct the applicants to serve a copy of this Judgment on the respondents as soon as possible.  This is to be in addition to the standard efforts of the registry to distribute the Judgment to the parties.  I will require affidavits of service from the applicants.    If  the  applicants  are  unable  to  serve  the  judgment  by  5:00 pm  on

30 October  2015  then  they  are  to  advise  the  registry  of  that  by  10:00 am  on

2 November 2015.  The registry is directed to at once bring any such advice to my attention.

[15]     The applicants are entitled to costs on this application.  In view of the nature of the application,  those  costs  will  be on  an actual  and  reasonable basis.   The applicants are to file a memorandum setting out their actual and reasonable costs so

that a further order quantifying costs can be made.

Brewer J