Grant v Joseph

[2022] NZHC 142

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2021-485-277

[2022] NZHC 142

BETWEEN

DAMIEN MITCHELL GRANT

Applicant

AND

TIAVARE RICHARD CURTIS JOSEPH

Respondent

Hearing:	8 February 2022
Counsel:	W van Roosmalen for Applicant No appearance for Respondent
Judgment:	11 February 2022

RESERVED JUDGMENT OF CHURCHMAN J

Background

[1]                 The applicant is the liquidator of Options Trading and Investments NZ Limited (in liquidation) (“the Company”).

[2]                 The respondent acted as the sole director of the Company and holds documents on behalf of the Company.

[3]                 The applicant has issued written notices to the respondent pursuant to s 261(1) of the Companies Act 1993 (the Act) requesting the provision of the books and records of the Company.

[4]                 The applicant has sent notices to the respondent pursuant to s 261(3)(c) of the Act requesting the attendance of the respondent at an interview under oath.

GRANT v JOSEPH [2022] NZHC 142 [11 February 2022]

[5]                 The respondent has failed to provide the books and records as requested, or to attend an interview under oath as requested.

[6]On 3 August 2021, Associate Judge Johnston made orders that the respondent:

(a)produce the books, records and documents of the company under his control;

(b)attends an interview under oath or affirmation; and

(c)pays costs to the liquidator on a 2B basis in the sum of $9,130.50.

[7]                 On 27 August 2021, the respondent was served with the sealed Court order. The respondent has failed to comply with the sealed order.

Contempt application

[8]                 By interlocutory application dated 30 November 2021, the applicant applied for the following orders:

(a)that the respondent be held in contempt of Court;

(b)that the respondent pay a fine of $10,000 or such other amount as the Court thinks appropriate, payable in whole or in part to the applicant;

(c)that  unless  the  respondent  complies  with  the  Court  order  dated  3 August 2021 within 10 working days, the respondent will be imprisoned; and

(d)that the respondent pays the applicant’s costs of and incidental to this application.

[9]                 An affidavit of service dated 15 December 2021 has been filed confirming that the respondent, on 7 December 2021, was served with the following documents:

(a)interlocutory application on notice for contempt dated 30 November 2021;

(b)affidavit of Damien Grant sworn on 24 November 2021 in support of the application; and

(c)order of substituted service dated 15 July 2021.

The law of contempt

[10]             The law of contempt in New Zealand is now governed by the Contempt of Court Act 2019. This Act codified the prior common law.

[11]             Section 16 provides that certain Court orders may be enforced. The orders made by Associate Judge Johnston in this case fall within the type of order able to be enforced. Section 16(2) provides that the Court may enforce an order against a party, non-party or other person bound by the order by taking action provided for in subs (3) and (4) of the section on application by:

(a)the party who sought the order or undertaking being enforced; or

(b)a person who benefits from or has an interest under the order or undertaking.

[12]The applicant is therefore a person able to apply to enforce an order under s 16.

[13]             Section 16(3) provides that the Court must not proceed unless it is satisfied that other methods of enforcing the Court order have been considered and are inappropriate or have been tried unsuccessfully. Section 16(3)(b) says that, if so satisfied, the Court must make a finding as to whether it is proved beyond reasonable doubt that:

(a)the Court order being enforced has been made in clear and unambiguous terms and it is clearly binding on the person;

(b)the person had knowledge or proper notice of the terms of the Court order or undertaking being enforced; and

(c)the person has, without reasonable excuse, knowingly failed to comply with the Court order.

[14]             If the requirements of ss 16(1), (2) and (3) are met beyond reasonable doubt, the Court may:

(a)issue a warrant committing the person or a director or an officer of the Body Corporate, as the case may be, to a term of imprisonment not exceeding six months;

(b)impose a fine:

(i)in the case of an individual, not exceeding $25,000; or

(ii)in the case of a Body Corporate, not exceeding $100,000

(c)order the individual or a director or an officer of the Body Corporate, as the case may be, to do community work, not exceeding 200 hours as the Court thinks fit.

[15]             The rationale for making orders by way of sanction for breach of a Court order was set out by the Court of Appeal in Siemer v Solicitor-General:1

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. Achieving these aims as part of the objective of the law of contempt.

1      Siemer v Solicitor-General [2010] 3 NZLR 767.

Analysis

[16]             On the basis of the evidence referred to above, I am satisfied that the requirements of ss 16(1), (2) and (3) are met.

[17]             It is clear that the respondent has had knowledge of this application and has knowingly failed to comply with the Court order. The Court order itself is in clear and unambiguous terms. I am satisfied of these matters beyond reasonable doubt.

[18]I now turn to consider what the appropriate sanction should be.

Imprisonment

[19]             The power of imprisonment is sparingly used and is not available if there is an alternative. A course of deliberate and repeated failure to comply with an injunction or similar order of the Court may justify the remedy of imprisonment. An example of this is Siemer v Solicitor-General where the majority of the Supreme Court committed the appellant to three months’ imprisonment for such behaviour.2

[20]             I invited Mr van Roosmalen to refer me to any decision where, on similar facts, the Court had granted a remedy for contempt by way of imprisonment. He referred me to the decision of Grant and Khov v Bhana and submitted that Brewer J had ordered a remedy of imprisonment.3 That is not correct. Pursuant to r 17.84 of the Hight Court Rules 2016 (HCR), Brewer J directed the issue of an order arresting each of the respondents in that case and directing that they bought before the Court. That order was said to lie in Court in order to allow compliance with certain directions.

[21]             A further decision was issued on 17 November 2016 following the substantive hearing.4 In that decision, Brewer J expressly refused to direct the remedy of imprisonment.5 He noted that:6

2      Siemer v Solicitor-General [2010] 3 NZLR 767.

3      Grant and Khov v Bhana [2015] NZHC 2596.

4      Grant and Khov v Bhana [2016] NZHC 2755.

5 At [2].

6 At [11].

The cases that have involved imprisonment recently have been for such matters as breaching injunctions or where, because of bankruptcy, fines would serve no purpose.

[22]             Brewer J noted that even what he described as deliberate attempts to delay and frustrate the Court process by the respondents in Grant and Khov v Bhana, did not meet the threshold for imprisonment.

[23]             Accordingly, on the basis that the sort of behaviour justifying a remedy of imprisonment for contempt is not present in this case, I decline to make such an order.

Fine

[24]             In Grant and Khov v Bhana, Brewer J surveyed recent cases in relation to the imposition of financial penalties.7 He referred to observations of Dunningham J in Queen Elizabeth the Second National Trust v Netherland Holdings Ltd8 that fines in excess of $5,000 seemed to be reserved for cases involving persistent intentional breaches of an order, or engaging in conduct that amounted to a “systematic” campaign to breach an order in a manner designed to bring a party to civil litigation into disrepute.

[25]             Brewer J also referred to the decision of Heath J in Grant and Khov v Grewal where Heath J had been satisfied beyond reasonable doubt that Mr Grewal had deliberately decided either not to comply with the Court order, or to delay, in order to frustrate the liquidators in the exercise of their statutory duties. Heath J had ordered that Mr Grewal pay a fine of $10,000 stating that a fine of that amount was required to denounce the conduct, and to hold Mr Grewal accountable for bringing the administration of justice into disrepute, and to deter others from acting in this way. Brewer J noted that Heath J ordered that the fines be apportioned as to 50 per cent each between the Crown and the liquidators.9

[26]            When measured against the conduct referred to in the above case, the conduct of the respondent is not as serious as that of the respondent in Grant and Khov v

7 At [10].

8      Queen Elizabeth the Second National Trust v Netherland Holdings Ltd [2014] NZHC 1094, [2015] NZAR 1815

9      Grant and Khov v Grewal [2016] NZHC 1564.

Grewal. Allowing a modest adjustment for inflation, the appropriate penalty is, in my view, a fine of $8,000. Accordingly, I impose a fine of $8,000.

[27]             In accordance with the decisions discussed above, it is appropriate that this fine be apportioned 50 per cent to the Crown and 50 per cent to the applicant.

Churchman J

Solicitor:

A S Botterill, Auckland for Applicant cc:       T R C Joseph, Respondent