Re AWS Legal Solicitors

The case involves an application by AWS Legal Solicitors to be released from an undertaking given on 8 July 2008. The application was brought before the High Court of New Zealand, Invercargill Registry, and was heard on the papers. The applicant seeks to be released from its undertaking to hold $80,000.00 deposited by Roger Kidd, a shareholder of Hokonui Shearing Ltd (HSL), in its trust account until the current accounts are finalised and agreed upon by the shareholders. The undertaking was provided to Smith, Wood and Woods, the solicitors acting for the other shareholder, Terrence Pohatu, to facilitate the sale of HSL's assets to a new company established by Kidd.

The central legal issue in the case was whether AWS Legal could be released from its undertaking, given that over six years had passed since the funds were deposited and the current accounts were not finalised. The applicant argued that both potential claimants, Pohatu and HSL, were now statute-barred from making a claim due to the passage of time. The applicant also highlighted that HSL had been struck off the Companies Register for failing to file an annual return since 2010. Furthermore, AWS Legal contended that the intended purpose of the undertaking had been frustrated by the effluxion of time, as there had been no attempt to finalise the current accounts or make any claim within the six-year period.

The court considered the purpose of the undertaking, which was to provide assurance to Pohatu that there were funds to satisfy any required balancing of current accounts in HSL. The court found that the intended purpose of the undertaking had been frustrated by the passage of time, as there had been no attempt to finalise the current accounts or make a claim within six years for any adjustment. The court also acknowledged that the situation appeared to have arisen through no fault of Kidd, and there was no reason why he should be kept out of these funds any longer because AWS Legal remained bound by its undertaking. Additionally, Pohatu, having been notified of the proceedings, had taken no steps to oppose the making of an order discharging AWS Legal from its undertaking.

Based on these findings, the court ordered that AWS Legal be released from its undertaking given in the letter dated 8 July 2008. This decision allows AWS Legal to distribute the funds held in its trust account to Kidd, as the intended purpose of the undertaking had been frustrated by the passage of time and lack of any attempt to finalise the current accounts.