Nicholson v Lowther
[2024] NZHC 3240
•5 November 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-000678
CIV-2024-404-001090 [2024] NZHC 3240
BETWEEN GRANT NICOLSON
Plaintiff
AND
ISAAC LOWTHER
First Defendant
STEVEN KHOV
Second DefendantKIERAN JONES
Third Defendant
Hearing: 10 October 2024 Appearances:
G Jindal for the Plaintiff
K Puddle for the Defendants
Judgment:
5 November 2024
JUDGMENT OF GORDON J
This judgment was delivered by me
on 5 November 2024 at 11 am, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors: TWA Legal, Auckland
Ormiston Legal, Auckland
NICOLSON v LOWTHER [2024] NZHC 3240 [5 November 2024]
[1] This is a decision on applications brought by the plaintiff, Grant Nicolson, and one application brought by the defendants.
[2] The proceedings concern the liquidation of a company, Blue Bins Ltd (in liq) (Blue Bins). Mr Nicolson is the director and majority shareholder of Blue Bins. Blue Bins was in the business of rubbish skip hire and rubbish removal.
[3] After receiving professional advice, on 28 February 2024 Mr Nicolson resolved in his capacity both as director and a shareholder to put Blue Bins into liquidation. In doing so, he resolved that Blue Bins was unable to continue its business by reason of its liabilities.
[4] It seems that Mr Nicolson subsequently had a change of heart about his decision to put Blue Bins into liquidation. He has filed a statement of claim in the proceeding CIV-2024-404-678 (678 proceeding) seeking orders: terminating the liquidation of Blue Bins under s 250 of the Companies Act 1993; reinstating Blue Bins “on the business directory” under s 329 of the Companies Act; and a range of orders against the liquidators on the basis that they have breached provisions in the Companies Act and on the basis that one of their employees acted without a liquidator’s practice licence.
[5] The second and third defendants, Steven Khov and Kieran Jones, are the liquidators of Blue Bins and directors of Khov Jones Ltd, a chartered accounting practice specialising in insolvency and forensic accounting. Mr Khov and Mr Jones were appointed as liquidators on a joint and several basis. The first defendant, Isaac Lowther, is an employee of Khov Jones Ltd.
[6] Mr Nicolson acted for himself when he filed the 678 proceeding. Since then he has filed a number of interlocutory applications in that proceeding, including those that were for hearing before me. One of those interlocutory applications in the 678 proceeding is an application dated 10 May 2024 for orders against Mr Khov and Mr Jones under the Contempt of Court Act 2019. Mr Nicolson had earlier filed another application under the Contempt of Court Act which he styled as an originating application seeking orders against Mr Khov, Mr Jones and Mr Puddle, counsel for the
defendants. The originating application was treated as a separate proceeding and given the file number CIV-2024-404-1090 (1090 proceeding).
[7] Mr Nicolson continued to act on his own behalf until shortly before the hearing when the Court received a notice of change of representation dated 4 October 2024 advising that Mr Nicolson would be represented by Mr Jindal of the law firm Ormiston Legal. Mr Jindal appeared at the hearing on behalf of Mr Nicolson but advised the Court he was only instructed for that hearing.
[8] That was confirmed subsequent to the hearing when Mr Jindal filed a second notice of change of representation dated 11 October 2024 which recorded that Mr Nicolson would be self-represented.
The applications
[9] The applications which I heard and which are determined in this judgment are as follows:
(a)the defendants’ application for security for costs dated 9 May 2024 in the 678 proceeding;
(b)the plaintiff’s application by way of a memorandum for consolidation of the 678 and 1090 proceedings dated 4 June 2024;
(c)the plaintiff’s applications for contempt orders:
(i)originating application dated 30 April 2024 (1090 proceeding); and
(ii)interlocutory application dated 10 May 2024 (678 proceeding); and
(d)the plaintiff’s interlocutory application dated 17 April 2024 seeking an order for immediate termination of the liquidation of Blue Bins and the
involvement of Khov Jones Ltd as liquidators; and reinstatement of Blue Bins “on the business directory”.
[10] I will consider the applications in the order in which they are listed above. I also address the defendants’ suggestion by way of written submission for the Court to make an extended order restricting Mr Nicolson from commencing or continuing a civil proceeding under s 166 of the Senior Courts Act 2016.
Security for costs
Background
[11] In order to understand the defendants’ application for an order that Mr Nicolson pay security for costs and the quantum sought, it is necessary to set out the manner in which Mr Nicolson has approached the proceedings. He has filed a number of documents, often said to be on an urgent basis, some of which are repetitive and some made on a without notice basis. In relation to the first two points there is a minute of the Court dated 15 May 2024 where the Judge refers to two applications for orders under s 250 of the Companies Act and states that the orders sought “do not have the indicia of urgency”. In relation to the latter point the Court directed that each of those documents be served on the defendants.
[12] Mr Nicolson’s approach, which I refer to further below, is a factor in the Court’s decision on security for costs. In brief, the approach appears to be driven first by Mr Nicolson’s apparent misunderstandings and misconceptions regarding a liquidation. I refer to some of those later in this judgment.
[13] Second, while the extent to which Mr Nicolson is receiving assistance from Tanya Dunstan1 is unknown, on 12 April 2024 as recorded in a minute of Associate Judge Sussock, Ms Dunstan appeared as the support person for Mr Nicolson at the chambers call on 12 April 2024. The minute of Associate Judge Sussock records that
1 On 10 November 2023 Brewer J made an order in Re Dunstan [2023] NZHC 3176 restraining Ms Dunstan from commencing or continuing civil proceedings in the Supreme Court, the Court of Appeal, the High Court and in the District Court (including the Family Court) without first obtaining leave of a Judge of the High Court. Justice Brewer directed that the order was to take effect from the date of the judgment and to continue in effect for a period of three years.
she explained to Mr Nicolson it was important that he did not take advice from Ms Dunstan as she is not a lawyer and it was not in his interests to rely on the approaches she suggested.
[14] Then at a mention on 22 April 2024, as recorded in the minute of Associate Judge Sussock the following day, 23 April 2024, Ms Dunstan initially appeared with Mr Nicolson. The Judge’s minute records that she confirmed, as discussed at the previous chambers list call, that she was exercising her discretion to decline to allow Ms Dunstan to remain as a McKenzie friend. The Judge also noted that Ms Dunstan’s appointment was likely to obstruct the efficient administration of justice from steps that had been taken in the proceeding to that date. Ms Dunstan was asked to leave the conference.
[15] The minute of another Judge following a chambers mention on 28 August 2024 records that Ms Dunstan sought to make submissions in Mr Nicolson’s support from her place in the public gallery. The Judge refused to hear from her. When she continued to make submissions the Judge directed she leave the Court, which she did.
[16] Ms Dunstan has returned to the proceedings in another way, by signing an “affidavit” which was filed by Mr Nicolson. The affidavit was represented to be that of an expert witness on accounting matters. I will discuss the affidavit later in this judgment. Ms Dunstan’s involvement is also apparent in that she has sworn an affidavit of service which records that she served witness subpoenas the day before the hearing on the defendants and to others in relation to the applications for contempt orders. I will return those subpoenas in due course.
Defendants’ application
[17]The defendants seek the following orders:
(a)that Mr Nicolson pay security for costs in respect of all steps in this proceeding;
(b)that all steps in this proceeding, including interlocutory applications, be stayed until security for costs is paid;
(c)leave of the Court to seek further security from Mr Nicolson; and
(d)that Mr Nicolson pay the defendants’ costs on the application for security for costs.
Rule 5.45
[18] Rule 5.45 of the High Court Rules 2016 (HCR) provides the jurisdiction for a judge to order the giving of security for costs if a judge is satisfied that there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the plaintiff’s proceeding.2 Once that threshold is passed a judge may order the giving of security for costs if the judge thinks it is just in all the circumstances.3 There is discretion both as to whether to order the giving of security, and how much security to order.
Threshold
[19] Where a person has obtained a grant of legal aid it can be presumed that the fact of the grant indicates an inability to pay legal costs and therefore indicates impecuniosity.4
[20] The position as regards legal aid for Mr Nicolson is not entirely clear. A Judge’s minute of 15 July 2024 records that Mr Nicolson advised that he had obtained a legal aid solicitor but that Mr Nicolson represented himself that day. The Judge’s minute further records that Mr Nicolson told him he had parted company with the original legal aid solicitor but he continued to be in receipt of legal aid and intended to engage a new legal aid solicitor.
[21] However, there is a letter from the Legal Services Commissioner dated 23 July 2024 to Mr Nicolson which advises that legal aid was withdrawn on 19 July 2024. The letter does not state the reason for the withdrawal. The letter is attached to what
2 Rule 5.45(1)(b).
3 Rule 5.45(2).
4 Amev Life Assurance Co Ltd v Dixon-McIver [1993] 1 NZLR 733 (HC) at 738; Apatu v Apatu HC Napier CIV-2010-441-195, 19 December 2011 at [7]; and Almarzooqi v Salih [2020] NZHC 1049, [2020] NZFLR 251 at [11].
is said to be an updating affidavit from Mr Nicolson which was sworn on 10 September 2024. The Court infers that had there been a change of position as regards legal aid at the date of that affidavit, Mr Nicolson would have referred to that in his affidavit.5
[22] Whether or not legal aid remains approved, and even if there has been a withdrawal I proceed on the basis that Mr Nicolson, having been a recipient of legal aid at least at an earlier date in the course of this proceeding, that is sufficient to meet the threshold.
Discretion
[23] The Court of Appeal has cautioned against “constructing “principles” from the facts of previous cases”.6 Nevertheless factors which the Court has previously considered in exercising this discretion are:
(a)The balancing of the interests of the parties. Security for costs should not be used to prevent a plaintiff of limited means from bringing a genuine claim, nor should an impecunious plaintiff place unfair pressure on a defendant.7
(b)The merits of the claim and defence. If there are dubious prospects of success, then the chances of the plaintiff having to pay security for costs is greater.8
(c)Whether the plaintiff’s impecuniosity has been caused by the
defendant.
(d)Whether there has been a delay in making an application for security for costs.
5 Mr Nicolson, without leave to file documents after the hearing and without the defendants having an opportunity to respond, filed an affidavit dated 21 October 2024. In that affidavit he asserts that legal aid remains approved. Apart from mentioning this point I do not take the affidavit into account. Nor do I take into account the “urgent” email from Mr Nicolson to the Court sent on Saturday 12 October 2024 attaching an affidavit dated 14 October 2024, mostly complaining about the conduct of the hearing on 10 October 2024.
6 McLachlan v MEL Network Ltd (2002) 16 PRNZ 747 (CA) at [13].
7 Bell-Booth Group Ltd v Attorney-General (1986) 1 PRNZ 457 (HC) at 461.
8 Attorney-General v Transport Control Systems (NZ) Ltd [1982] 2 NZLR 19 (CA) at [20].
(e)The conduct of the parties to the litigation, such as a refusal of a reasonable offer of settlement.9
Balancing the interests of the parties
[24] The defendants as liquidators of Blue Bins have statutory obligations to call in the assets of Blue Bins and distribute them to creditors of the company in accordance with s 312 and sch 7 of the Companies Act.
[25] Mr Khov’s evidence is that Blue Bins is “clearly insolvent”. The evidence filed by and on behalf of Mr Nicolson does not detract from that evidence (as discussed below in relation to Mr Nicolson’s application under s 250 of the Companies Act). Given the insolvency there will be a shortfall to creditors. The more that is spent by the liquidators in this litigation, the greater the shortfall. The costs associated with the litigation are therefore being unduly carried by the creditors of Blue Bins.
[26] By contrast, as discussed below and also in the context of the application under s 250 of the Companies Act, Mr Nicolson’s substantive claim lacks merit.
[27] Balancing those interests, I consider Mr Nicolson’s asserted impecuniosity should not negatively affect the creditors of Blue Bins.
Merits of the claim
[28] The Court, so far as possible, should endeavour to assess the merits of the claim and defence and endeavour to form some view as to their prospects of success. Master Williams QC in Nikau Holdings Ltd v Bank of New Zealand put it this way:10
If the claim appears weak, that may increase the likelihood of an application for security for costs being successful so as to avoid the prospect of a plaintiff of limited means bringing a weak claim, persisting with it, and so exerting pressure on a defendant either to offer settlement or to incur the cost of trial when such cost cannot be recouped if the plaintiff is unsuccessful.
9 Chin v Ghana HC Wellington CIV-2000-485-881, 13 August 2003 at [32].
10 Nikau Holdings Ltd v Bank of New Zealand (1992) 5 PRNZ 430 (HC) at 437.
[29]There are essentially two parts to Mr Nicolson’s claim:
(a)he seeks an order to terminate the liquidation of Blue Bins; and
(b)he makes attacks on the liquidators and their employees.
[30] As Mr Puddle points out, if Mr Nicolson wished to bring the liquidation to an end, it would have been a relatively simple process for him to agree to pay Blue Bin’s creditors in full and the liquidators’ costs to date and then follow a relatively straightforward procedure of having the liquidation brought to an end.11
[31] Mr Nicolson has not attempted to meet the costs of bringing Blue Bins out of liquidation. He has also taken steps to prevent the liquidators from being able to respond to his applications or to have the evidence they have filed struck out.12 Nor has Mr Nicolson made any offer to pay Blue Bins’ creditors. This aspect of Mr Nicolson’s substantive claim is discussed later in this judgment in relation to the s 250 application.
[32] In relation to the attacks on the liquidators and their employees personally, they do not appear to have merit. The parts of his claim and the Court’s responses follow:
(a)Mr Lowther is in breach of r 8 of the Insolvency Regulators Act 2019. That cannot succeed as Mr Lowther is an employee of Khov Jones Ltd, not a liquidator.
(b)Mr Khov and Mr Jones breached s 241(3)(a) and (b) of the Companies Act. That is not logical as Mr Khov and Mr Jones were appointed by special resolution of shareholders under s 241(2)(a).
(c)Mr Khov and Mr Jones have breached s 255(c)(ii) of the Companies Act by failing to notify Miniskips Ltd (Miniskips),13 as a
11 Re Bell Block Lumber Ltd (in Liq) (1992) 5 PRNZ 642 (HC) at 643.
12 For example, filing an interlocutory application for a decision to be made in chambers due to no opposition by defence on 31 May 2024.
13 Mr Nicolson is the sole director of Miniskips Ltd. Miniskips appears to provide similar rubbish skip hire and rubbish disposal services as Blue Bins.
creditor of Blue Bins. That is not logical as Blue Bins’ records held by the liquidator show that Miniskips is a debtor of Blue Bins.
(d)That the defendants “fraudulently uploaded knowingly false documents to the business directory”. I agree with Mr Puddle that this is an inflammatory pleading given Mr Khov’s evidence that there was a clerical slip which was promptly rectified and that no harm would have ever resulted from it.
(e)That a prohibition order be made under s 286(5) of the Companies Act against the defendants on the basis that they are unfit to act as liquidators. There does not appear to be an evidential foundation for such an order, as I will discuss below in relation to the applications for contempt orders.
(f)That the liquidators have breached s 242 of the Companies Act by not acting jointly. However, the liquidators have been appointed on a joint and several basis.
(g)A claim for breach of agreement with the liquidators based on an alleged misrepresentation by omission or a conflict of interest. There is lack of clarity as regards any misrepresentation and there is no apparent conflict of interest.
[33]In short, at this stage at least, Mr Nicolson’s claim is weak.
Impecuniosity
[34] Mr Nicolson’s impecuniosity has not been caused by the defendants. Blue Bins was in financial difficulty before the defendants were appointed as liquidators.
Delay
[35] There has been no delay on the part of the liquidators in filing an application for security for costs. That application was filed on 9 May 2024, before a statement of defence was filed on 29 May 2024.
Conduct of the parties to the litigation
[36] I accept Mr Puddle’s submission that the defendants have been following due process even in the face of claims that appear to lack merit and where allegations of impropriety have been made against them.
[37] I further accept Mr Puddle’s submission that Mr Nicolson’s conduct has contributed to an increase in costs and delays. Instead of allowing litigation to follow a standard course, Mr Nicolson has filed a stream of interlocutory applications and has appealed decisions up to the Supreme Court.14 Further, the applications are repetitive. For example, Mr Nicolson has made three applications under s 250 of the Companies Act. He has also made unwarranted allegations against counsel for the defendants.
[38] Offers have been made to Mr Nicolson to try and resolve matters outside the litigation but the defendants’ meeting with Mr Nicolson for this purpose was unsuccessful. Part of Mr Nicolson’s conduct, as referred to in [12] above, appears to be driven by his apparent misunderstandings and misconceptions regarding a liquidator. Those include some of the allegations referred to in [32] above. As well there are the following:
(a)An apparent view that a liquidation is closer to a bankruptcy in that at the end of the bankruptcy, qualifying debts are written off and then the solvent individual continues on.
(b)A potential lack of understanding as to the nature of “accounts receivable” having regard to Mr Nicolson’s questioning as to why accounts receivable has not been used to pay staff.
14 Nicolson v Lowther [2024] NZSC 135.
(c)An apparent lack of appreciation of the difference between a debtor and creditor. For example, Mr Nicolson has repeatedly claimed that his other company, Miniskips, is a creditor of Blue Bins. However the financial accounts of Blue Bins, which Mr Nicolson oversaw as director, refers to Miniskips as a debtor of Blue Bins.
[39] Having regard to all of that background, the liquidators are understandably concerned that the proceedings will continue until the very end and that if that is the case the cost of their defence will unfairly fall upon the creditors of Blue Bins.
Other matters relating to exercise of discretion
[40] Mr Jindal submits the Court should pause before making an order for security for costs. He says that Mr Nicolson is still looking for a solicitor and emphasises that he was only instructed for this hearing.
[41] Mr Jindal refers to Mr Nicolson being stressed and anxious and that there is a mismatch about what Mr Nicolson thinks about the liquidation process and the reality of that process.
[42] I do not consider the Court should defer a decision on security for costs in case Mr Nicolson does engage a solicitor. As already noted, there is a lack of clarity over the legal aid position. Second, even if Mr Nicolson does have legal representation, the Court questions how long that will last.
[43] On a related but separate point, the grant of legal aid does not prevent the Court from ordering security for costs.15 Nor does s 45 of the Legal Services Act 2011 act as an impediment. I note that s 45(2) of that Act provides that no order for costs may be made against an aided person in a civil proceeding unless the Court is satisfied that there are exceptional circumstances. Section 45(3) then sets out the matters the Court may take into account when considering whether there are exceptional circumstances. Matters include but are not limited to: any conduct that causes the other party to incur unnecessary cost; any failure to comply with the procedural rules and orders of the
15 Farmer v Donald [2024] NZHC 2308 at [33] and [42].
Court; any misleading or deceitful conduct; any unreasonable pursuit of one or more issues on which the aided person fails; any unreasonable refusal to negotiate a settlement or participate in alternative dispute resolution; and any other conduct that abuses the processes of the Court.
[44] To date Mr Nicolson has conducted the litigation in a way that involves aggressive communications with the liquidators. This adds to the time taken unproductively with the proceedings. That in turn increases the costs involved. Other factors in s 45(3) are also arguably engaged. In short the proceeding is not being prosecuted in a diligent and composed fashion.
[45] Balancing all the above factors I am satisfied that it is just in all the circumstances to order the giving of security for costs.
Quantum
[46] As discussed above, the amount of security is in the Court’s discretion and not necessarily fixed by reference to the likely costs award. However there must be some correspondence between them.16 There are two subsidiary issues I address first: the steps for which security should be ordered and whether any order should be staged.
[47] Mr Puddle submits that while there is a loose principle that security for costs should not be granted for steps that have already been taken in a proceeding, this is not a principle that is universally applied. Nevertheless, Mr Puddle says that the defendants only seek security for costs for each step taken after the application for security was filed, which Mr Puddle submits was done at the earliest opportunity. Mr Puddle notes that while the application was not heard until 10 October 2024, the date should run from the date of filing the application.
[48] On occasion the courts have ordered security for costs in relation to sunk costs (namely costs incurred before the application is filed), but as such costs are not sought, it is not necessary to address this issue.17
16 Jindal v Jarden Securities Ltd [2022] NZHC 572 at [15].
17 See for example White v James Hardie New Zealand Ltd [2019] NZHC 188 at [19].
[49] Although an application for security for costs is addressed on a forward-looking basis, the assessment is made as at the date of filing the application, not the date upon which it is heard.18 Accordingly, I make the assessment as at 9 May 2024.
[50] As to whether the security should be considered in tranches, namely on a staged basis, I have regard to what I have found to be a lack of merit in the claim. It also seems unlikely that the position will improve for Mr Nicolson after discovery is completed. Accordingly, I do not adopt a staged approach.
Amounts sought
[51] Mr Puddle annexed to his submissions a schedule setting out the amount of security sought. For ease of discussion I annex a copy of that schedule to this judgment (Appendix A). The defendants accept, as recorded above, that the first four items would not be included, those items being sunk costs incurred before the application was filed.
[52] In support of the quantum Mr Puddle submits that given the high probability that increased or indemnity costs could be awarded against Mr Nicolson, the defendants seek that the amount of security reflect a 50 per cent increase in scale 2B costs. Mr Puddle further notes that the defendants have assumed that a four day trial is likely but says if Mr Nicolson seeks to call every possible person as a witness, then this could be an underestimate. The amount without the first four items in the schedule and not including an uplift is $76,719. The amount without the first four items and including the 50 per cent uplift is $115,078.50. Mr Puddle says the maximum is sought so that the creditors of Blue Bins are not disadvantaged by the litigation.
[53] Mr Jindal submits that the numbers in the table are inflated. He submits, for example, that 2.5 days (item 20) is too much for discovery. He also says that at most, a substantive hearing of one day would be required.
18 Jindal v Jarden Securities Ltd, above n 16, at [23].
[54] First, I do not consider that the estimate for the substantive hearing is an overestimate having regard to Mr Nicolson’s approach to the hearing today. He arranged for service of subpoenas on five witnesses in relation to the contempt applications. I refer to those subpoenas further when I consider the contempt applications. There is nothing to suggest that Mr Nicolson’s approach will be different at the substantive hearing. As well, I note that the interlocutory applications occupied close to a full court day. I consider four days is a realistic estimate for the substantive hearing.
[55] Second, in relation to discovery, although there is not a lengthy history, I consider the estimate is realistic.
[56] As regards increased or indemnity costs, that will be an issue for the Judge at the time of any costs application, if such an application is made by the defendants. However, what the Court can say at this stage, is that Mr Nicolson’s conduct in the litigation to date may well contribute towards a foundation for such a claim. A court may take this into account when setting the amount of security.19 The amount of security is what the Court considers fit in all the circumstances.20
[57] I note that Mr Puddle’s schedule of anticipated expenses includes only the orthodox steps towards a hearing. There is no allowance for further interlocutory applications by Mr Nicolson. Based on past performance there are likely to be more such applications. In other words the annexed schedule is an underestimate of the likely amount of scale costs.
[58] I consider an increase of 30 per cent on scale costs (rather than the 50 per cent sought) is the appropriate amount of security for present purposes.
[59]Accordingly, I fix the quantum of security for costs at $99,734.70.
[60] As to the other orders sought by the defendants on this application, although discretionary, the general practice is for the Court to order a stay of proceedings until
19 Farmer v Donald, above n 15, at [37] and [47].
20 Lau v Osborne [2017] NZHC 2874 at [86] citing McLachlan v MEL Network Ltd, above n 6, at [27].
the security ordered is given.21 In the circumstances, I can see no principled reason which might justify a departure from the usual course. I will accordingly order a stay (including a stay of interlocutory applications) until security as ordered is given.
[61] I will also give the defendants leave to seek further security from Mr Nicolson. I will address the issue of costs on this application at the end of the judgment.
Consolidation
[62] Mr Nicolson made an application by way of memorandum dated 4 June 2024 under r 10.12 of the HCR for consolidation of the 678 and 1090 proceedings. A Judge’s minute dated 10 June 2024 records that while the Court had not made an order for consolidation of the two sets of proceedings, the Judge directed that they be managed together. As the Judge further noted, the hearing on 10 October 2024 would cover applications in both sets of proceedings in any event.
[63] The Court put to Mr Jindal in the course of his oral submissions the proposition that there was no need for consolidation as the originating application in the 1090 proceeding was being heard at the same time as the interlocutory applications in the 678 proceeding.
[64] Mr Jindal accepted that and agreed there was no basis for a consolidation order. That was a proper acknowledgment. There is no need for the proceedings to be consolidated as the 1090 proceeding will be determined in this judgment.
[65]Accordingly, I refuse the application for consolidation.
21 High Court Rules 2016, r 5.45(34)(b). See also Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR5.45.11].
Contempt applications
[66] Mr Nicolson says that the liquidators are in breach of orders of this Court made by Associate Judge Sussock on 22 April 2024 and recorded in her minute of 23 April 2024 by allegedly removing Miniskips’ bins and other assets in dispute:
(a)from 44 Patiki Road (the trading premises of Blue Bins) on 24, 27 and 29 April;22 and
(b)from the Avondale Jockey Club on 8 May 2024.23
[67] The orders of Associate Judge Sussock made on 22 April 2024 included the following:
[17]I confirm the orders and directions made as follows:
(a)…
(b)the liquidators are not, until further order of the Court:
(i)to enter into any agreement or to sell the assets of Blue Bins Limited (in liquidation);
(ii)to enter into any agreement or take any steps to empty bins that are currently full;
(iii)to treat assets that may be the subject of a dispute with Mr Nicolson as to ownership between Miniskips Limited (in liq) and Blue Bins Limited (in liq).
[68] As part of the foundation for contempt orders Mr Nicolson says that the Agreement for Sale and Purchase (SPA) between the liquidators and a third party, Phoenix Metal Recyclers NZ Ltd (Phoenix), for the sale of Blue Bins’ assets was not made on 10 April 2024 as recorded on the SPA and as referred to in Mr Khov’s sworn evidence, but was in fact made after Associate Judge Sussock’s orders. He alleges it was backdated to make it appear that the SPA was entered into before the orders made on 22 April 2024.
22 Originating application in 1090 proceeding.
23 Interlocutory application in 678 proceeding.
[69] In pursuit of this proposition subpoenas were served by Ms Dunstan on 9 October 2024, the day before the hearing, on; Mr Khov and Mr Jones (who both signed the SPA); Farhana Nisha, an employee of Khov Jones Ltd (who witnessed Mr Khov’s and Mr Jones’ signatures); the first defendant, Mr Lowther; and Julian O’Connell (who appears to be connected with Phoenix, having signed the SPA for Phoenix).24
[70] In a memorandum dated 9 October 2024 Mr Nicolson says the reason for the witnesses to provide evidence was to test the validity of the SPA.
[71] Despite the eleventh hour service of the subpoenas I was not minded to adjourn the hearing of the applications given that Court time had been allocated and an adjournment would require another judge to familiarise themselves with the background and the issues. The Court was told that Mr Khov and Mr Jones had responded to their subpoenas and were present in the courtroom. Mr Jindal initially agreed the applications could proceed with oral evidence from just those two witnesses. On further instructions from Mr Nicolson, Mr Jindal submitted that Ms Nisha should also give oral evidence. Given that Ms Nisha was also present in court, with the agreement of both counsel, the Court then proceeded to hear oral evidence from those three witnesses.
[72]I will return to their evidence but first some background.
[73] Mr Khov says in his affidavit of 29 April 2024 that the appointment of liquidators to Blue Bins was precipitated by Enviro Waste, a key supplier to Blue Bins which processed the disposal of the waste contained in its bins, placing Blue Bins on stock credit. This meant that Blue Bins was unable to empty its bins, which meant that it could not trade its business. As a result the full bins were being stored in the yard Blue Bins was occupying due to the inability to empty the bins.
[74] Mr Khov says as well there were a number of disgruntled customers that had full bins at their sites that had not been picked up.
24 In her affidavit of service Ms Dunstan says she served Mr O’Connell electronically on an email listed on his LinkedIn account and that she provided his payment to Mr Puddle’s law firm’s trust account.
[75] The liquidators considered they had to move quickly to sell the assets of Blue Bins with a complication that the bins were filled with rubbish. Any payment for the assets had to take account of the cost of disposing of the rubbish in the bins.
[76] As a result, the liquidators’ assessment of Blue Bins’ position was that a sale of assets would need to occur quickly or the company would be required to incur the cost to vacate the trading premises, including the assets and sell the assets on a piecemeal basis. The liquidators obtained an offer on the assets of Blue Bins as a package. Mr Khov says this was to ensure that the maximum realisable value of Blue Bins’ assets was obtained.
[77] As regards the liquidators’ knowledge of the 678 proceeding, on 3 April 2024 Mr Nicolson commenced that proceeding. At the same time he made an application that his claim proceed without notice. The Court declined to allow the proceeding to continue on a without notice basis. However, instead of serving the proceeding on the liquidators, Mr Nicolson appealed that order. Mr Nicolson did not advise the liquidators that litigation had been commenced.
[78] The SPA on its face records that on 10 April 2024 Blue Bins, the liquidators and Phoenix entered into the SPA for the majority of the assets of Blue Bins. Clauses of note are as follows:
(a)Phoenix took title to and operating control of the assets on the date of the agreement (cls 4.4, 4.6 and 1.1);
(b)assets that may be owned by third parties are expressly excluded and Phoenix agreed to make those assets available for collection by the third party (cl 5.11); and
(c)the parties are prevented from making any disclosure regarding the agreement or its subject matter except as required by law (cl 10.2).
[79] Mr Khov says that it was not until 12 April 2024 that the liquidators were served by email and had any knowledge of the proceeding. Given the email contained
incomplete and confused documents, personal service was required and that was effected on 23 April 2024. Mr Khov says that had the liquidators known about the proceeding prior to entering into the SPA, then they would have sought advice about the effect of the proceeding on the sale.
[80] The orders on 22 April 2024 were made without the defendants having been able to file any documents in the proceeding. Mr Puddle says there was limited opportunity for him to obtain instructions for the conference.
[81] In the afternoon, after the orders referred to in [67] above were made by Associate Judge Sussock, the liquidators by way of a memorandum of counsel, advised the Court that a sale of the majority of Blue Bins’ assets had already occurred. The Judge in her minute of 23 April 2024 stated that:
The liquidators however cannot be in breach of the interim orders themselves for actions before the interim orders were made yesterday morning.
[82] The Court notes that the SPA covered only those assets contained in Blue Bins’ depreciation schedule, and expressly excluded any assets owned by third parties. The liquidators say that in the interests of not incurring unnecessary costs, they decided not to seek to overturn the interim orders with respect to the remaining assets of Blue Bins.
[83] Over the coming weeks Phoenix then began collecting the assets it had purchased.
Contempt of court statutory provisions
[84] Section 16 of the Contempt of Court Act governs contempt of court applications in relation to court orders. Section 16(3) relevantly provides:
(3)The court—
(a)must not proceed further under this section unless it is satisfied that other methods of enforcing the court order or undertaking have been considered and are inappropriate or have been tried unsuccessfully; and
(b)if so satisfied, must make a finding as to whether it is proved beyond reasonable doubt that—
(i)the court order or undertaking being enforced has been made in clear and unambiguous terms and is clearly binding on the person; and
(ii)the person had knowledge or proper notice of the terms of the court order or undertaking being enforced; and
(iii)the person has, without reasonable excuse, knowingly failed to comply with the court order or undertaking being enforced.
Date of SPA
[85] There is no substance in Mr Nicolson’s case that the SPA was signed on a date after 10 April 2024 and backdated to that date.
[86] Not only was there sworn affidavit evidence from Mr Khov to that effect, he, Mr Jones and Ms Nisha all gave oral evidence that the SPA was signed on 10 April 2024. Mr Khov produced two exhibits that supported the evidence as to the date. The first was an email dated 10 April 2024 at 4.44 pm. The subject line reads:
RE: signed agreement
[87]The attachments are recorded as:
Blue Bins Limited – SPA (signed).pdf; Khov Jones – Trust Account Deposit Slip.pdf
[88]The email reads:
Hi Eldon
Please see attached the fully executed agreement.
I also attach our trust account deposit slip for payment. …
[89] From an email in the trail below the email referred to above, Eldon is identified as Eldon Reeve, the CEO and director of Phoenix.
[90] The second document is an extract from the Khov Jones Ltd Trust Account which records a deposit from Phoenix in accordance with the SPA that was made into the Khov Jones Trust Account on 11 April 2024.
[91] The oral evidence supports the sworn evidence from Mr Khov already filed that the SPA was dated 10 April 2024. It was not backdated. After the oral evidence had concluded Mr Jindal acknowledged that.
[92] Accordingly, the sale of Blue Bins’ assets to Phoenix occurred before the orders made by Associate Judge Sussock. As a consequence this issue does not provide a foundation for either of the contempt orders sought.
Dealings with allegedly disputed assets
[93] As to dealings with allegedly disputed assets, Mr Jindal refers first to an affidavit of Mary Nicolson in relation to the Patiki Road site filed on 29 April 2024. Mrs Nicolson says that she attended the Patiki Road site on Saturday 27 April 2024 and saw a driver from “Metal man” removing assets from the yard including Miniskips’ bins. Mrs Nicolson attaches three photographs to her affidavit. She says the first shows the driver removing assets from the Patiki Road site on 27 April 2024. The second, she says shows Miniskips’ bins as well as Blue Bins’ bins in the Patiki Road yard on the morning of 27 April 2024. She then attaches a third photograph which she says shows the state of the yard in the afternoon on that day. Items that were visible earlier were not present.
[94] I refer to each of the photographs in turn. The first of the three photographs shows a truck with the word “METALMAN” on the driver’s door and a blue-coloured bin on the tray of the truck with the words “BLUEBINS.CO.NZ” on the side of the bin. The second photograph appears to show the yard with blue-coloured bins. In the background, mostly obscured by a blue bin is a reddish-orange coloured item. In the mid-ground, largely obscured by a blue bin is an orange-coloured piece of equipment. The third photograph is again a photograph of the yard which shows that some of the blue-coloured bins in the previous photograph have been removed. There is a reddish-coloured item in the background which may or may not be the reddish-orange coloured item in the background of the second photograph. The piece of orange equipment in the mid-ground is no longer present. There are, however, a number of blue-coloured bins still present with a red-coloured bin.
[95] Mr Nicolson endorses Mrs Nicolson’s evidence. Mr Nicolson attaches three photographs to his affidavit. The first is attached to an email sent to Mr Puddle on Saturday 27 April 2024. The photograph shows a truck from the rear with a blue-coloured bin on the tray. The bin is partially obscured. The part of the wording that is visible appears to be the word “BLUE”. Mr Nicolson says that the property from their yard had been relocated to the address of Metalman and Phoenix. The second photograph shows the word “Metalman” and “Phoenix” seemingly on the side of a building. There are two bins in front of the building, each with the words “BLUEBINS.CO.NZ” on the end of the bins. There is a third bin to the left of those two bins. It is dark in colour and no wording is discernible. The third photo Mr Nicolson describes as showing the last remaining assets at 44 Patiki Road. They all are marked with the words “BLUEBINS.CO.NZ”.
[96] In relation to the Avondale Jockey Club, Mr Jindal refers the Court to an affidavit of Mr Nicolson dated 10 May 2024 in which Mr Nicolson asserts that Miniskips’ bins were being removed from the Avondale Jockey Club on 8 May 2024. He annexes an email to Mr Puddle making that assertion. Mr Jindal acknowledged there was no separate evidential basis to support Mr Nicolson’s assertion.
[97] First, I consider it is not clear that the assets being moved were in fact Miniskips’ bins and other assets rather than the Blue Bins’ assets that had been sold to Phoenix under the SPA.
[98] As to Miniskips’ assets, Mr Khov’s evidence in his affidavit of 24 May 2024 is that the liquidators have not knowingly dealt with any assets owned by Miniskips. He says the liquidators only sold those assets which were set out in Blue Bins’ depreciation schedule. He states that Mr Nicolson, as the director of Blue Bins, was responsible for ensuring that Blue Bins kept accurate financial records, which include an accurate depreciation schedule.
[99] Mr Khov also notes that the bins did not have serial numbers on them or other individually identifying features that allowed for easy identification. He says the only way to identify the difference between Blue Bins’ bins and Miniskips’ bins were that Blue Bins’ bins were coloured blue and marked with “Blue Bins” and/or
“BlueBins.co.nz”. Miniskips’ bins were red in colour and marked with “0508 Mini Skips”. He says the liquidators did not sell any red bins.
[100] Second, after the SPA had been executed, the liquidators took no further steps in relation to the assets that had been sold under that agreement. While the affidavits for Mr Nicolson annex photographs of trucks removing skips, there is no evidence as to who was driving the trucks and on whose instructions. It does seem likely that it was Phoenix removing the skips as it was entitled to do under the SPA and in circumstances where no court order prevented them from doing so.
[101] The status quo that was preserved under the orders was one where Blue Bins’ assets had already been sold, and an agreement had already been entered into for the bins to be emptied. The SPA expressly excluded any assets owned by third parties.
[102] I note there is no allegation that the liquidators have sold any of the remaining assets of Blue Bins after the order was made.
Merits of contempt of court applications
[103] The onus of proving a contempt is on Mr Nicolson. There is no merit in Mr Nicolson’s claim that the SPA was backdated. His photographic evidence does not prove that Miniskips’ assets were relocated. Even assuming in Mr Nicolson’s favour that some of the assets moved belonged to Miniskips, his case for contempt does not get over the high bar in the Contempt of Court Act for reasons that follow.
[104] The first consideration is the threshold under s 16(3)(a). I have noted above that soon after orders were made by Associate Judge Sussock, the liquidators advised the Court and the plaintiff that Blue Bins’ assets had been sold. The Judge’s minute of 23 April 2024 records that. The defendants provided the name of the purchaser. That would have enabled Mr Nicolson to seek orders for an injunction preventing implementation of the SPA. I accept Mr Puddle’s submission that such an order may well have been appropriate and also proportionate. So long as Mr Nicolson would have been prepared to pay for any costs associated with the delay that would have resulted, the position of the creditors of Blue Bins would have been the same.
Mr Nicolson, however, did not take that step. I consider the two contempt applications fail at the threshold under s 16(3)(a).
[105] However, for completeness I go on to consider whether Mr Nicolson has proved beyond reasonable doubt that the liquidators, without reasonable excuse, knowingly failed to comply with the Court order or undertaking being enforced. Having regard to the evidence and matters referred to in [98]–[102] above, in relation to the ground that the liquidators had continued to remove Miniskips’ bins and other assets from the two sites, Mr Nicolson has failed to discharge the onus on him under s 16(3)(b) of the Contempt of Court Act.
[106] The 30 April 2024 contempt application also seeks a declaration that the liquidators have breached another order of Associate Judge Sussock made on 24 April 2024 that they were to file “any notice of opposition and affidavits in support (in draft if necessary) by 5 pm today”.
[107] The draft affidavit, clearly identified as a draft, was filed by 4.58 pm on 24 April 2024. In his affidavit of 24 May 2024 Mr Khov says he was overseas on 24 April 2024 and was uncontactable during the extremely limited time in which the draft affidavit had to be prepared. He says Mr Jones liaised with their legal counsel to get a draft affidavit prepared. But Mr Khov says as he was the individual with personal knowledge of the steps taken in the liquidation, Mr Jones wanted him to check the draft and swear it when he returned from overseas. Mr Khov says when he came back to New Zealand he worked through the weekend to finalise the affidavit so it could be sworn as soon as possible. Mr Khov reviewed and edited the draft affidavit.
[108] The filing of the draft affidavit complied with the order of Associate Judge Sussock. There was no breach. On 26 April 2024 another Judge directed that Mr Khov swear and file the original of his affidavit as soon as reasonably practicable. It was sworn on 29 April 2024. That was in compliance with the Court order.
[109] There is no basis for a contempt order in respect of this allegation regarding filing.
[110] Having determined that Mr Nicolson has not satisfied the test under s 16(3) of the Contempt of Court Act, it is not strictly necessary to consider the relief sought. But I mention it in passing as it illustrates the approach of Mr Nicolson to this litigation which I have already referred to. For example, in the 30 April 2024 application he seeks the following from the Court:
(a)that the defendants are fined $15,000 for their failure to comply with orders and directions with the Court “on multiple occasions”;
(b)a fine of $20,000 against Mr Puddle for obstruction of justice and referral to the Solicitor-General to investigate his civil breaches;
(c)referral of Mr Puddle to the Solicitor-General “for investigation and suitable redress”;
(d)an order that the Court refuse to accept the affidavit of Mr Khov dated 29 April 2024; and
(e)to dismiss the notice of opposition dated 24 April 2024 “as it is not in acceptable format and without a valid affidavit MUST NOT be accepted for filing”.
[111]Both applications for contempt orders are refused.
Section 250 application
[112] Mr Nicolson has made an application under s 250 of the Companies Act dated 17 April 2024 for orders:
(a)that the liquidation of Blue Bins and the involvement of Khov Jones Ltd as liquidators be terminated immediately; and
(b)that Blue Bins is reinstated on the “business directory”.
[113] There is another application under s 250 which is undated and which (as with the 17 April 2024 application) was made without notice. It seems to have been filed on 3 April 2024 according to Court records. This earlier application seeks the same two orders under s 250 as appear in the 17 April 2024 application. The earlier application also seeks other orders against the liquidators, repeating parts of the statement of claim.
[114] In a minute of 5 April 2024 a Judge directed that Mr Nicolson serve the defendants and that the matter be placed in the Associate Judge’s List on 12 April 2024. The minute of Associate Judge Sussock dated 12 April 2024, which records an appearance by Mr Nicolson but no appearance by or on behalf of the liquidators, states that Mr Nicolson intended to take advice to assist and determine whether to serve the current proceedings or to amend them before he did so. There then follows a minute from Associate Judge Sussock dated 18 April 2024 which records that Mr Nicolson had that day filed a further without notice application again seeking orders under s 250 of the Companies Act.
[115] Counsel were agreed that it was the 17 April 2024 application that was for determination. Having regard to the sequence referred to above, it appears that the 17 April 2024 application was intended to overtake the earlier undated application. Accordingly, I proceeded to hear the 17 April 2024 application as counsel proposed.25
[116]The defendants oppose the application.
[117] Under s 250(1) of the Companies Act the Court may, at any time after the appointment of a liquidator of a company, if it is satisfied that it is just and equitable to do so, make an order terminating the liquidation of the company.
25 For completeness I note that Mr Nicolson has filed a third application under s 250 dated 29 April 2024. The Court understood Mr Jindal’s position to be that he was not instructed on the 29 April 2024 application but depending upon the outcome of the 17 April 2024 application it could possibly be withdrawn.
[118] The discretion is a broad one and the factors that the Court considers are well settled. In Re Bell Block Lumber Ltd (in liq) Tipping J held that the discretion to order the stay of a liquidation should not be exercised unless:26
(a)all creditors have been paid in full or satisfactory provision has been made for them to be paid in full or they consent to the application; and
(b)the liquidators costs have been fully paid or secured; and
(c)all shareholders consent, or will be no worse off than if the liquidation proceeded to its conclusion.
[119] A fourth factor, namely the public interest, in that the public should not have insolvent companies foisted upon them or allowed to operate in such a way that members of the public may be put at risk, was identified in Canterbury Squid Co Ltd v Southwest Fishery Ltd.27
[120] In short, the evidence of the liquidators is that the creditors of Blue Bins have not been repaid in full. There has not been any provision for their payment in full. There is no evidence before the Court that they all consent to the application. The liquidators’ costs have not been fully paid or secured.
[121] Mr Nicolson’s argument seems to be: despite his resolution as a director and his separate resolution as a shareholder, that by reason of its liabilities Blue Bins could not continue its business, Blue Bins was in fact solvent at the time of the liquidation.
[122] Mr Nicolson relies on an “affidavit” of Ms Dunstan filed in support of that proposition. There are a number of issues with Ms Dunstan’s document. First, as to form: it is not sworn or affirmed; and it does not comply with sch 4 of the HCR.
26 Re Bell Block Lumber Ltd (in liq), above n 11, at 643.
27 Canterbury Squid Co Ltd v Southwest Fishery Ltd HC Whanganui M31/93, 24 August 1993 at 6.
[123] Next, Ms Dunstan does not appear to be qualified to give the evidence she purports to give. She says she was:
… contracted by Grant Nicolson, as an expert witness to provide my expertise as a business professional to prepare a business valuation and overall assessment of his companies [sic] viability and worth at the time of liquidation dated 28 February 2024.
[124] Ms Dunstan annexes a certificate from the Australian Careers College Pty Ltd dated 9 June 2017 which states she has fulfilled the requirements for “Advanced Diploma of Business”. The transcript of results which follows the certificate do not include any courses in accounting. Mr Jindal accepted that Ms Dunstan does not have accounting qualifications. For all the above reasons I put her evidence to one side and do not consider it.
[125] For completeness I note that one of the annexures to Ms Dunstan’s document is a memorandum from a chartered accountant, Dr Angela Andersen, to Ms Dunstan dated 23 August 2024. The memorandum is not sworn. Ms Andersen says she has reviewed certain documents which she lists. One of those is said to be a financial summary that includes three calculations of Blue Bins’ solvency for the purposes of meeting the solvency test. That summary is not annexed to Dr Andersen’s memorandum. Dr Andersen expresses her view that based on the assumption that Blue Bins can access required funds through shareholder contributions (shareholders’ private assets are said to be $1,112,552 as stated in the absent summary) then the company is able to repay total liabilities of $481,351 with this cashflow.
[126] Given the absence of the financial summary, the assumption made by Dr Andersen, the lack of compliance with form and the fact that the memorandum is a hearsay document, the Court also puts this memorandum to one side and does not consider it.
[127]The Court returns to the evidence of Mr Khov updated as at 3 October 2024.
[128] He says at the time of liquidation there were numerous unpaid debts to trade creditors totalling $255,606.95 (being unsecured creditors).
[129] At the time of the liquidation Blue Bins had no cash in the bank to pay its debts. It was approximately $42,501.24 in overdraft. It also had a company visa card that was owing $3,000. Mr Khov notes there was 6 cents in another separate bank account but he refers to that only to be accurate. In addition, Mr Khov says the IRD debt is
$135,998.12 (of which $101,872.03 is preferential) comprised of $17,171.80 of PAYE,
$98,808.13 of GST and $20,018.19 of the Small Business Cashflow Scheme.
[130] Mr Khov says the employees’ preferential claims total at least $41,716.57. The exact amount is yet to be determined as Mr Khov says Blue Bins’ records seem to be inaccurate at the time of liquidation. The outstanding total owed to creditors at the time of liquidation is $478,822.88. He says it is beyond doubt that Blue Bins was insolvent at the time Mr Nicolson put it into liquidation as it was in no position to pay its debts as they fell due in the ordinary course of business.
[131] Mr Nicolson makes the further argument that there is nothing to stop the liquidators from applying to the Court for their reappointment. However, there is no provision under s 241(2)(c) of the Companies Act for a liquidator to apply to the Court to be appointed as liquidator of a company.
[132] Neither of Mr Nicolson’s arguments address the need for creditors to be paid or provision to be made for their payment, or the liquidator’s costs to be paid or secured before the liquidation is brought to an end under s 250.
[133] Mr Nicolson’s application also seeks an order terminating “the involvement of Khov Jones as liquidators”. There is nothing in the evidence in relation to the contempt applications or other evidence that would support such removal.
[134] Finally, there is no need for an order reinstating Blue Bins “on the business directory”. Blue Bins is still a registered company.
[135] For all the above reasons Mr Nicolson’s application dated 17 April 2024 under s 250 of the Companies Act is refused.
Senior Courts Act 2016, s 166
[136] Mr Puddle suggested in his written submissions that the Court might consider making an extended order on its own motion under s 169(3) of the Senior Courts Act. Mr Puddle submits that Mr Nicolson has embarked upon a course of action that amounts to harassment of the defendants, and their counsel, by Court proceedings. He submits that the course of action appears to be led, or at least encouraged, by Ms Dunstan.
[137]The Court did not hear oral submissions on the issue.
[138] Mr Puddle submits the two contempt proceedings satisfy the threshold test in s 167 of the Senior Courts Act.
[139] Mr Puddle also refers to a possible third contempt application made by Mr Nicolson dated 30 September 2024. As counsel were made aware at the hearing, the Court will be considering that application under r 5.35B of the HCR.28 I therefore put the third application to one side and proceed on the basis of the two contempt applications (30 April and 10 May 2024).
[140] Under s 166 of the Senior Courts Act a Judge of the High Court may make an order restricting a person from commencing or continuing a civil proceeding.29 There are three kinds of orders, including an “extended order”.30 Such an order restrains a party from commencing or continuing civil proceedings on a particular or related matter in a senior court, another court or a tribunal.31
[141] Under s 167(2) a Judge may make an extended order under s 166 if, in at least two proceedings about any matter in any court or tribunal, the Judge considers that the proceedings are or were totally without merit.
28 Rule 5.35B applies if a Judge to whom a Registrar refers a proceeding under r 5.35A is satisfied that the proceeding is plainly an abuse of the process of the Court.
29 Senior Courts Act 2016, s 166(1).
30 Section 166(2).
31 Section 166(4).
[142] In Khatri v Tomar Downs J held that there must be at least two proceedings commenced or continued by a person that are or were totally without merit, and these proceedings cannot be interlocutory applications (or High Court appeals).32
[143] In the present case one of the contempt applications is an originating application (1090 proceeding) but the other is an interlocutory application (in the 678 proceeding). Accordingly, adopting the reasoning of Downs J which, with respect I accept is correct, there is no jurisdiction to make an extended order as suggested by Mr Puddle. There are not “at least two proceedings” as required by s 147(2) of the Senior Courts Act.
Results and orders
[144] The application by the defendants for security for costs dated 9 May 2024 in the 678 proceeding is granted and the following orders are made:
(a)the plaintiff is to pay $99,734.70 as security for costs;
(b)the proceeding (including interlocutory applications) is stayed until the security ordered, is given;
(c)the defendants have leave to seek further security from Mr Nicolson.
[145] The plaintiff’s application by way of a memorandum dated 4 June 2024 for consolidation of the 678 and 1090 proceedings is refused.
[146] The plaintiff’s two applications for contempt orders dated 30 April 2024 in the 1090 proceeding and 10 May 2024 in the 678 proceeding are refused.
[147] The plaintiff’s interlocutory application dated 17 April 2024 seeking an order for the immediate termination of the liquidation of Blue Bins and the involvement of Khov Jones Ltd as liquidators and reinstatement of Blue Bins on the business directory is refused.
32 Khatri v Tomar [2021] NZHC 3091 at [34].
Costs
[148]I did not hear submissions on costs. Accordingly, costs are reserved.
[149] The defendants may file and serve a memorandum on costs within 10 working days of the date of this judgment.
[150] Any response by the plaintiff is to be filed and served within 10 working days after service of the defendants’ costs memorandum.
[151] Any reply on behalf of the defendants is to be filed and served within five working days of the date of service of the plaintiff’s memorandum.
[152]Costs memoranda should not exceed five pages (excluding attachments).
[153]I will determine costs on the papers.
Gordon J
Appendix A
1
9
0