Queensland Maintenance Services (NZ) Limited (in liquidation) v Zullo Property Group (NZ) Limited

[2016] NZHC 2857

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-003177

CIV-2016-404-000981 [2016] NZHC 2857

BETWEEN

QUEENSLAND MAINTENANCE

SERVICES (NZ) LIMITED (IN LIQUIDATION)

First Plaintiff

GARETH RUSSEL HOOLE AND CLIVE ROBERT BISH

Second Plaintiffs

AND

ZULLO PROPERTY GROUP (NZ) LIMITED

First Defendant

ZULLO HOLDINGS (NZ) LIMITED Second Defendant

BRIGHT HORIZONS NEW ZEALAND CHILDCARE LIMITED

Third Defendant

FRANK ZULLO Fourth Defendant

On the papers
Judgment:	29 November 2016

JUDGMENT OF HINTON J [FREEZING ORDER AND COSTS]

This judgment was delivered by me on 29 November 2016 at 2.15 pm pursuant to Rule 11.5 of the High Court Rules

Solicitors:

……………………………………………………………………

Registrar/Deputy Registrar

Martelli McKegg, Auckland

Lee Salmon Long, Auckland

QUEENSLAND MAINTENANCE SERVICES (NZ) LIMITED (IN LIQUIDATION) v ZULLO PROPERTY GROUP (NZ) LIMITED [2016] NZHC 2857 [29 November 2016]

[1]      On 29 July 2016, I issued a judgment granting a freezing order.  I requested memoranda as to the form of the order.  Interim orders were to remain in place until the final order issued.

[2]      On 5 August 2016, the plaintiffs filed a memorandum as to the proposed form of order.

[3]      On 11 August 2016, the defendants sought an extension of time to enable them to make further enquiries into the appropriate form of order.

[4]      On 1 September 2016, the defendants filed a memorandum as to the form of the freezing order and costs and, on 7 September 2016, the plaintiffs filed a further memorandum as to the freezing order and also as to costs.

[5]      There seems, in the end, to be only one issue between the parties as to the form of the freezing order, and that is whether or not it should include paragraph 6 of form G38, which stipulates that “a freezing order does not prohibit dealing with assets covered by the order for purpose of paying ordinary living expenses, paying legal expenses, or disposing of assets in the ordinary course of business.”

[6]      I agree with the plaintiffs that it is not appropriate in this case for such a provision to be included, given that the freezing order is limited to $1 million in value, and there are other assets available to meet the defendants’ expenses.  Also, a provision  for  disposal  of  the  asset  in  the  ordinary  course  of  business,  is  not applicable where the freezing order is over a property which does not appear to be a trading asset, and for that matter, is one of a number of properties.  There is also ability to seek a variation, if for some reason it were considered necessary to sell the property while the freezing order was still in place.

[7]      The parties have agreed to an additional clause relating to the way in which any request for variation should be dealt with.

[8]      I therefore grant the freezing order in the form attached to the plaintiffs’

memorandum dated 5 August 2016, but with an additional provision as follows:

10In the event that the defendants request a variation of the freezing order, then:

(a) the plaintiffs are to consider and (if necessary) negotiate over that request in good faith and under urgency, if urgency is requested by the defendants;

(b) the parties and counsel are to make all reasonable efforts to reach a  consent position  on the variation request,  bearing in  mind  the matters in the judgment of 29 July 2016; and

(c) in the event that the variation request cannot be dealt with by consent, an application for variation can be made by memorandum;

(d) the Registry is to deal with any variation application as an urgent matter, if urgency is requested by the defendants.

[9]      I record that the defendants’ undertaking not to sell, encumber or otherwise

dispose of the assets listed at (a) to (e) of paragraph [4] of Lang J’s Minute dated

18 May 2016, has now lapsed and is no longer in force.

Costs

[10]     In my judgment of 29 July 2016, I expressed the tentative view that there should be no order as to costs, as both parties had a measure of success.  I said that if either party took a different view, they should file a memorandum within seven days.

[11]     Neither party filed a memorandum seeking costs within seven days, but the defendants filed a memorandum seeking costs on 1 September 2016.

[12]     I am not going to preclude the defendants from seeking costs just because they are outside the seven-day time period, although it does make it difficult when costs applications are made at any distance from the hearing.

[13]     I have carefully considered the submissions filed.

[14]     The key point arising from the defendants’ submissions, of which I was not of course  aware  when   I  expressed  my  tentative  view,  was  the  Calderbank correspondence.  The defendants contend that an offer they made regarding freezing orders was at least close to the value or benefit of the judgment obtained.  However, in one respect, the offer was better, but in a significant respect, it was worse.  The

defendants’ offer required an undertaking from both parties, which was unacceptable to  the  liquidators  and  I  decided,  albeit  with  reluctance,  that  there  were  special reasons to not require the liquidators’ undertaking.  I cannot fairly compare the offer with the order made.  In those circumstances, the plaintiffs have to be said to have had a modest win on the application for a freezing order.  The plaintiffs have clearly lost on their other two applications, but the additional time on these was less than the time spent on the freezing order application.  I therefore remain of the view that both parties have had a measure of success and I make no order as to costs.

---------------------------------------------------------- Hinton  J