Sanson v Blackwells HC Auckland CIV 2010-404-218

[2010] NZHC 1068

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2010-404-000218

IN THE MATTER OF     an appeal from the judgment of Judge N Mathers of 23 December 2009 pursuant to s

72 District Courts Act 1947

BETWEEN  CHRIS ALEXANDER SANSON AND UNIQUE DRINKS OF NEW ZEALAND LIMITED

Appellants

ANDBLACKWELLS Respondent

Hearing:         12 May 2010

Appearances: C A Sanson in person and on behalf of the appellands

M Phillips for the Respondent

Judgment:      22 June 2010 at 10:00 a.m.

JUDGMENT OF WOODHOUSE J

This judgment was delivered by me on 22 June 2010 at 10:00 a.m. pursuant to r 11.5 of the High Court Rules 1985.

Registrar/Deputy Registrar

……………………………………

Solicitors / Counsel / Parties: Mr C A Sanson, Auckland

Mr M Phillips, Barrister, Auckland

Blackwells, Solicitors, Newmarket, Auckland

SANSON AND UNIQUE DRINKS OF NEW ZEALAND LIMITED V BLACKWELLS HC AK CIV 2010-404-

000218  22 June 2010

[1]      This is an appeal from a summary judgment for legal fees entered in the District Court on 23 December 2009.   The legal fees were the costs of Mr Brian Rooney, a barrister, for services provided by him to the first appellant, Mr Sanson. Judgment was entered against the second defendant, as well as Mr Sanson, on the basis that a sum to meet Mr Rooney’s fees had been wrongfully diverted by Mr Sanson to the second appellant (Unique Drinks).

The facts

[2]      What is recorded in this section are facts that were not in dispute together with findings based on evidence that was not disputed.

[3]      Mr  Rooney first  acted  for  Mr  Sanson  in  2004.    Mr  Sanson  advised Mr Rooney, in writing, that he preferred to receive bills direct from Mr Rooney, rather than through solicitors.  Mr Sanson said he “would be paying [Mr Rooney] direct”. Mr Sanson did make payment direct to Mr Rooney, as he did on later occasions when Mr Rooney acted for Mr Sanson.

[4]      In  November  2006  Mr  Sanson  settled  a  claim  he  had  brought  against National Beverages Limited.  Mr Rooney was not involved in that proceeding.  The settlement required, amongst other things, payments to be made by National Beverages to Mr Sanson.

[5]      In November 2007 Mr Sanson contacted Mr Rooney and asked Mr Rooney to act in respect of difficulties Mr Sanson said he was having in recovering payments from National Beverages.  Mr Rooney had undertaken some work when Mr Sanson asked him to stop.  Mr Rooney sent an invoice direct to Mr Sanson, for $1,750 plus GST.  It was paid immediately.

[6]      In  March  2008  Mr  Rooney  received  further  direct  instructions  from  Mr Sanson in respect of the impending liquidation of National Beverages.   National Beverages was placed in liquidation on 7 April 2008.  Mr Rooney received direct instructions from Mr Sanson to commence proceedings against the liquidator.

[7]      On 18 April 2008 Mr Rooney filed an application in the High Court on behalf of Mr Sanson seeking leave to apply for directions against the liquidator under the Companies Act 1993.  This was supported by an affidavit sworn by Mr Sanson.  The solicitors for Mr Sanson, recorded on the cover sheet of the affidavit signed by Mr Sanson, are the present respondents, Blackwells.  Mr Rooney is recorded as counsel instructed.   Blackwells had been Mr Sanson’s solicitors in the 2006 proceeding against National Beverages and acted for Mr Sanson in other respects, one of which is noted below.

[8]      Mr Sanson’s application to the High Court was opposed by the liquidator. Mr Rooney then took a number of steps on behalf of Mr Sanson, including preparation and filing of further documents  and court appearances, followed by negotiations with the solicitors for the liquidator.   The negotiations resulted in settlement on or about 9 May 2008.

[9]      The settlement included the liquidator’s agreeing to pay Mr Sanson’s legal costs, in a sum of $16,000.  Payment of this sum was negotiated by Mr Rooney.  It was calculated by direct reference to Mr Sanson’s actual costs incurred with Mr Rooney.  In an e-mail of 6 May 2008 Mr Rooney advised the liquidator’s solicitors that Mr Rooney’s legal costs were, “with an allowance for a little time to see matters concluded … $14,437.50 (excluding GST) plus court filing fees of $800”.

[10]     On 13 May 2008 Mr Rooney sent an invoice, direct to Mr Sanson, in a total sum of $15,264.06.   This sum was less than the estimate given to the liquidator’s solicitors because, in the event, Mr Rooney spent less time in completing the settlement than he had anticipated would be required.  Mr Rooney also charged at an hourly rate of $350, being the same rate quoted and applied in calculating the bill in November 2007.

[11]     On or about 21 May 2008 Mr Sanson paid Mr Rooney $5,000.  In an e-mail of 21 May 2008 Mr Sanson said that the payment was made “as a sign of good faith”.    There  was  no  suggestion  that  Mr  Sanson  did  not  have  liability,  made apparent by the payment of $5,000 on account.

[12]     On or about 3 June 2008 Mr Sanson paid a further $3,750.  In an e-mail of 3

June 2008 from Mr Sanson to Mr Rooney, advising Mr Rooney that the $3,750 had been paid, Mr Sanson said: “At no stage did I expect you to work free or mega cheap”.

[13]     On 5 June 2008 Mr Sanson sent an e-mail to Mr Simon Blackwell, a principal of the respondent firm.   The recorded subject of the e-mail is “Gate Trust No 2 and/or a new company and wills”.  The message includes the following:

Simon as you know my ban from management or directing a Co ends at the end of the 4th of August.   I attach the warrant of commitment for imprisonment and the first two pages of the Judge’s sentencing notes.  Para 3 says the month but not the day.   The Act states it’s five years from the conviction.   If you think a family trust gives the same protection I am all ears. I would rather do something sooner than later.

I want to protect my family by ensuring the business and it’s [sic] assets aren’t mine and are for the sole benefit of the Gate family.  Hopefully that includes me.  I will set out how I see that happening and obviously I would welcome any suggestion on your part.

Unique Drinks of NZ Limited (UD)

I want to form a company with the above name … I would rather that happen sooner rather than later, as I will need to arrange stationary, new trade accounts etc.  I want to be up and trucking (including the execution of any documentation) on the 6th or sooner with a trust.

Mr Sanson’s e-mail continued with a list of assets which he said he wanted “to somehow transfer/put into either” Unique Drinks or a trust.  This included “stocks up to $50,000” and “cash up to $500,000”.

[14]     This e-mail was put in evidence by Mr Sanson.  His reference in the e-mail to his ban from being a director or manager of a company and to a conviction, related to a conviction for fraud resulting in a sentence of two years imprisonment and, as a consequence, being barred from managing or directing a company for five years.  In civil proceedings relating to the fraud, the High Court had found that an insurance claim by Mr Sanson for loss of a luxury launch was fraudulent.  Mr Sanson’s letter refers to “the Gate family”.  The surname “Gate” is Mr Sanson’s former surname.

[15]     Unique Drinks of New Zealand Limited (Unique Drinks) was incorporated on 20 June 2008.   The shareholders and directors were Mr Sanson’s wife, Mary Dawn Gate, and a friend of Mr Sanson, a Mr Isaac Prince, who lives in Australia.

[16]     There was further correspondence in June 2008 between Mr Rooney and Mr Sanson about the outstanding balance on Mr Rooney’s invoice.  On 17 June 2008 Mr Rooney sent Mr Sanson a three page e-mail containing a detailed description of the work undertaken.  He attached to the e-mail a print-out of his time and cost record. Mr Rooney discovered that Mr Sanson had by this time blocked e-mails from Mr Rooney.   On 8 July 2008 Mr Rooney therefore sent a copy of the e-mail to Mr Sanson by fax.

[17]     On 9 July 2008 Mr Sanson sent a fax to Mr Rooney, on the letterhead “Chris

Sanson and Unique Drinks”.  It includes the following:

Your fax dated 8/7 refers.  I have only had a cursory read of the six page hard copy of the bounced email dated 17/6 and your hieroglyphics.  In the brief time I have had to look at your workings, I can only say there appears to be a few areas you ventured into that I did not request.  For example I did not ask you arrange the swearing of my affidavits.  I’ve done many.  I don’t and didn’t need to pay anyone.

If need be I will elaborate on the rest, in due course.

Bottom line is, at the end of this month, as you know, a payment is due from Du Preez (or whatever his name is).  I believe that payment (or lack of it), may make my attitude … constructive/decisive.  I note that in the meantime you have been paid handsomely ($8750?) anyway.

I will respond fully early next month.

The  name  “Du  Preez”  in  this  fax  is  the  surname  of  the  liquidator  of  National

Beverages.  The payment “due from Du Preez” was the $16,000.

[18]     On 1 July 2008 – that is to say, eight days before Mr Sanson’s fax to Mr Rooney –  Mr  Sanson  had  sent  to  the  liquidator  a  document  headed  “notice  of assignment”.  It is dated 1 July 2008.  The notice is as follows:

You are hereby notified that on the 28th  of June, 2008, I have assigned and transferred to Unique Drinks of NZ Limited all rights in the following:

THE WRITTEN AND VERBAL AGREEMENTS BETWEEN YOURSELF AS THE LIQUIDATOR FOR National Beverages Limited (In Liquidation) AND CHRIS ALEXANDER SANSON or HIS COUNSEL.

Please direct any further correspondence (or payments if applicable) to them at the following address;

The Manager

Unique Drinks of NZ Limited

PO Box 39435
Howick

PC 2145

AUCKLAND

Please contact me should you have any questions, and I thank you for your cooperation.

Yours faithfully

C.A. SANSON

[19]     As is readily apparent from the terms of this notice, what Mr Sanson was purporting to assign was the benefit of the agreement negotiated by Mr Rooney with the liquidator which agreement included the payment of $16,000 to cover Mr Rooney’s costs.  As will be noted, the notice refers expressly not only to Mr Sanson but to “his counsel”.

[20]     Also on 1 July 2008 a notice of assignment of the settlement agreement reached by Mr Sanson with National Beverages in November 2006 was given by Mr Sanson to National Beverages Limited (in liquidation) and the liquidator.   The purported assignment was to Unique Drinks.

[21]     On 5 November 2008 an agreement was made between National Beverages Limited (in liquidation), the liquidator of National Beverages and a company called Shot Energy Australasia Pty Limited (Shot Energy).  This involved the sale to Shot Energy of assets owned by National Beverages, including energy drinks with the brand name “shot” which had been central to the earlier proceedings brought by Mr Sanson, in respect of intellectual property.  Clause 4.5 of the agreement is as follows, with “the Seller” being National Beverages and “the Buyer” being Shot Energy:

On the Settlement Date the Seller will deliver to the Buyer a written undertaking  from  the  Solicitor  for  the  Liquidator  of  the  Seller  that  the amount of $NZ16,000.00 (inclusive of GST, if any) has been received by it and will be promptly transferred without deduction, lien or retention of any type (except required pursuant to any Court Order obtained) to the bank account of Unique Drinks of NZ Limited (Account No. 030166 0434239 00 (Westpac, Howick)) in cleared funds and without deduction immediately upon receipt by the Solicitor for the Liquidator of the Seller of an original copy of the release referred to in Clause 4.6.

[22]     A related agreement was entered into between Shot Energy, Unique Drinks and Mr Sanson.   Clause 5.2(e) of this agreement mirrors clause 4.5 of the other agreement.  It is as follows:

Shot Australasia will also provide to Unique Drinks a written undertaking from the solicitor for the liquidator of NBL that the amount of NZ$16,000 (inclusive of GST, if any) has been received by it and will be promptly transferred without deduction, lien or retention of any type, to the bank account of Unique Drinks (account number 030166 0434239 00 (Westpac, Howick) in clear funds and without deduction immediately upon receipt by the solicitor for the liquidator of NBL of an original copy of the release referred to in clause 5.2(d); …

“NBL” referred to in this clause is National Beverages.   This agreement provides addresses for notices.  In Mr Sanson’s case notices were to be sent by facsimile to 09

5708543 for the attention of Mr Sanson.  In Unique Drinks’ case notices were to be sent to the same facsimile number for the attention of Mr Sanson’s wife Mary Gate.

[23]     On 7 November 2008 the solicitors for the liquidator paid the agreed sum of

$16,000 to Unique Drinks.

[24]     Mr Rooney pursued Mr Sanson for the balance of the fee.   This led to Mr Sanson’s filing a claim in the Disputes Tribunal on 29 May 2009.   Mr Sanson’s objective appears, from the document he filed, to have been to prevent a claim being made against him in the District Court.   That was unsuccessful.   What is relevant about Mr Sanson’s claim in the Disputes Tribunal is a statement made in writing by Mr Sanson to the Disputes Tribunal.  After reference to the proceedings in which Mr Rooney acted, Mr Sanson said:

For  this  Mr  Rooney  billed  me  $15,264.06.     In  July  we  came  to  a compromise.  I paid him $8,750, and I agreed to look at paying more if the liquidator paid me, the compensation, Mr Rooney assured me I would get,

by the end of July 2008.   I did not get that compensation, or any compensation, in July, or any month.  I thought that was the end of it.

[25]     Although this is an appeal on a summary judgment proceeding, I am able to conclude, on the basis of the undisputed evidence, that this was a patently misleading statement.  That conclusion is relevant to some of the issues on this appeal.  And it is consistent with a conclusion on Mr Sanson’s integrity generally reached by Fisher J in Gate v Sun Alliance Insurance Ltd.[1] This is the proceeding referred to at [14]. The plaintiffs in this case were Mr Gate and his wife. Mr Sanson had made an insurance claim for the loss of a large launch, claiming that it had been stolen and then sunk in the Hauraki Gulf. The insurer refused to pay. Mr Sanson and his wife

sued.  In finding for the insurer Fisher J said:

In this case I had the opportunity to observe and listen to Mr Gate as he gave evidence over a period of three days.   His demeanour, his preposterous explanations, and the internal and external consistencies in his evidence, point unmistakably in one direction.  One cannot escape the conclusion that over a period of three days (of giving evidence) he lied as a matter of course upon every conceivable subject.  And what is distinctive in his case is that he is not merely an inveterate liar.    His efforts in creating fictional correspondence and personal notes, tampering with prospective exhibits, manipulating witnesses and forging documents, can only be described as indefatigable.  He is a man obsessed with imaginative illusion.  His future might well lie in writing novels or directing films.  It certainly does not lie in giving evidence.   I decline to take at face value any exhibit, document or evidence which he had anything to do with in this case.  He is not a man to be believed when he says something on oath.   I am not the first judge to come to that view but I have reached it independently of others.

[1] HC Auckland, CP1218/92, 17 December 1993.

[26]     Mr Sanson appeared on the appeal for himself and on behalf of Unique Drinks.  Leave had earlier been granted to Mr Sanson to represent Unique Drinks. Leave was granted by Venning J in exercise of the Court’s discretion to allow a company to be represented by someone other than a solicitor.  Venning J had regard to an affidavit from Mr Sanson’s wife, Mrs Gate, provided by her as one of the two directors of Unique Drinks.  Mrs Gate said, amongst other things:

Unique Drinks of New Zealand Limited is one of my family businesses that I direct with the general management assistance of the 1st  appellant [i.e. Mr Sanson] who runs the day to day operations …  We are dependent upon the

1st appellant both in these proceedings and in this family business.

The liability of Mr Sanson

[27]   It is convenient to consider Mr Sanson’s arguments on appeal, without separately summarising  the  reasons  for  the  District  Court  judgment,  because  in considerable measure the arguments on appeal were the same as those advanced in the District Court.

[28]     Mr Sanson’s first point was that “neither appellant ‘instructed’ the respondent to  do  anything”.    In  the  District  Court  Mr  Sanson  contended  that  he  had  not instructed Mr Rooney or Blackwells.

[29]     The contention that Mr Sanson had not instructed Mr Rooney is untenable, as Judge Mathers readily found.   Judge Mathers also held that it was clear that Blackwells had been effectively instructed by Mr Sanson to act as the solicitors on the record.   I am also satisfied that that is clearly established.   The precise circumstances leading to Blackwells acting as the solicitors are not recorded, but from the evidence as a whole it is clear that Mr Rooney had ample authority, express or implied, from Mr Sanson to arrange to have Blackwells act in this way.  And, as earlier  recorded,  Blackwells  had  earlier  acted  as  Mr  Sanson’s  solicitors  in proceedings against National Beverages and Mr Sanson directly engaged Mr Blackwell to incorporate Unique Drinks in June 2008.  There is no factual dispute of any merit which would justify declining summary judgment on this ground.

[30]     On appeal Mr Sanson expanded the argument to contend that there were no instructions to Blackwells to act on behalf of the second appellant, Unique Drinks. In respect of the proceedings against the liquidator, commenced by Mr Rooney on behalf of Mr Sanson, the point is factually correct but not relevant to the matters at issue.  The claim against Unique Drinks, to which I will come, is not founded on a contention that there were instructions to act for Unique Drinks.

[31]     Related to the question whether Blackwells had been properly instructed was a submission that a “solicitor cannot sue for barrister’s fees when he had no instruction from client to hire that barrister”.   In support of the legal proposition contained  in  that  submission  Mr  Sanson  sought  to  distinguish  an  unreported

judgment of Robertson J in Findlay v Webb Morice & Partners.[2]   It is unnecessary to consider the applicability of that judgment to Mr Sanson’s submission because the factual foundation for the submission was not established.

[2] HC Auckland, AP82-SW99, 6 September 1999

[32]     Mr  Sanson’s  second  point  was  that  Blackwells  “had  not  demanded  any payment, for anything’.  That contention is not sustainable as a matter of fact.  There was demand when Blackwells served the proceeding on Mr Sanson and Unique Drinks.

[33]     Mr Sanson’s third and fifth points were essentially the same.  He submitted: “As a matter of law remuneration agreements made directly between barristers and client cannot be binding.”   The fifth point was that Mr Sanson’s “employment of Rooney conferred on Rooney no legal right to remuneration for his services”.

[34]     In support of these propositions Mr Sanson referred to Atkinson v Pengelly.[3]

In that case Tipping J affirmed the old rule that a barrister cannot sue the instructing solicitor or the lay client for his or her fees.  The rule is part of a broader rule that an enforceable agreement could not be entered into between a barrister and a lay client in respect of legal services.

[3] [1995] 3 NZLR 104

[35]     Whether these rules still apply in New Zealand may be open to reasonable argument.[4]   However, the issues do not need to be explored on this appeal.   The question of law as to whether a barrister can sue for the barrister’s fee does not arise in this case as a matter of fact; the barrister is not suing for his fee.  Blackwells, as the instructing solicitor, is suing for the fee.   Subject to a specific point of form, Blackwells’ entitlement to sue to recover Mr Rooney’s fee, and Mr Sanson’s liability

if the claim is successful, is long established as a matter of law.  This also disposes of the broader contention, in the fifth ground, which amounted to a proposition that Mr Rooney was not entitled to be paid.

[4] One reason for the decision in Atkinson v Pengelly was that under s 61 of the Law Practitioners Act 1982 a barrister was declared to have the powers of a barrister in England, which did not include the power to sue for fees.  Another reason was that allowing barristers to sue for fees could undermine barristers’ immunity from suit for matters connected to litigation. Section 61 of the Law Practitioners Act 1982 has been replaced by s 117 of the Lawyers and Conveyances Act 2006 which provides: “Subject  to  this  Act,  barristers of  the  High  Court  have  all  the  powers,  privileges,  duties,  and responsibilities that barrister have at law.”  The reference to the powers (and rights and privileges) of a barrister in England has gone.   So too has barristers’ immunity from suit: Lai v Chamberlains [2007] 2 NZLR 7. See also Duncan Webb Ethics, Professional Responsibility and the Lawyer (2nd ed, Lexis Nexis, 2006), pp 515-516.

[36] Mr Sanson referred to s 140 of the Law Practitioners Act 1982, which made provision for a solicitor to sue a lay client to recover a barrister’s fees. The provision has no application because the Law Practitioners Act was repealed by the Lawyers and Conveyancers Act 2006. A similar provision was not re-enacted in the Lawyers and Conveyancers Act. In the ponderously worded Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 there is the following:

Fees of other lawyers

10.7A lawyer who, acting in a professional capacity, instructs another lawyer, must pay the other lawyer’s account promptly and in full unless agreement to the contrary is reached, or the fee is promptly disputed through proper professional channels.  This rule applies to the accounts of barristers sole and foreign lawyers.

10.7.1 Where the instructing lawyer and the lawyer undertaking the work have agreed that the instructing lawyer’s client is to be solely responsible for paying the lawyer’s account then (unless agreed otherwise) the instructing lawyer must use all reasonable endeavours to ensure the client pays the account. The instructing lawyer must promptly inform the instructed lawyer if it appears that the client will be unable or unwilling to pay the account.

10.7.2 A  lawyer  with  a  practising  certificate  as  a  barrister  and solicitor may sue for and recover from the party chargeable any fees paid or payable by the lawyer to a barrister sole for work done or to be done on the instructions of the lawyer in relation to a client’s affairs, if those fees are shown as a disbursement in a bill of costs rendered by the lawyer to the party chargeable.

[37]     Rule 10.7.2 is essentially the same as s 140 in the Law Practitioners Act. Rule 10.7.1 is new.  I am satisfied that r 10.7.1 in particular entitled Blackwells to proceed as they have proceeded; that is to say, to issue proceedings for recovery of the balance of Mr Rooney’s fee.  Proceeding in this way is not precluded by r 10.7.2. This conclusion is consistent with the judgment of Robertson J in Findlay v Webb, Morice & Partners when dealing with arguments founded on s 140 of the Law Practitioners Act broadly similar to Mr Sanson’s arguments.

[38]     Mr Sanson submitted in respect of the quantum of Mr Rooney’s bill that an “hourly rate was never unconditionally accepted”.  It is unnecessary to determine the question of fact raised by the submission.   The material point is that there is no evidence to suggest that the hourly rate was unreasonable.  It was the rate that Mr Sanson had accepted when Mr Rooney acted for Mr Sanson in 2007, leading to the bill in November 2007 of $1,750.   I am satisfied that the amount charged by Mr Rooney for the work in 2008 is reasonable.  Mr Sanson did not raise any reasonably arguable points in relation to quantum.  Against that there is the undisputed fact that the quantum was accepted by the liquidator who had been on the other side of the proceeding giving rise to Mr Rooney’s fee.

[39]     For these reasons I am satisfied that the Judge was entirely correct in entering judgment against Mr Sanson.

The liability of Unique Drinks

[40]     In respect of the claim against the second appellant, Unique Drinks, the Judge said:

[25]      I turn to the position of the second defendant.  If I find, which I do, that the first defendant is liable for payment of the balance of counsel’s fee as  claimed  through  his  instructing  solicitors  then  can  I  enter  judgment against the second defendant company?  The second defendant company is clearly controlled by the first defendant, and the first defendant specifically directed the liquidator to divert the payment, which in my view was clearly destined for payment of counsel’s fee in relation to the then current proceedings.   Therefore the payment should have gone, not to the second defendant, but in payment of legal fees.

[26]     I have not received much help as to whether I may enter judgment against the defendant in these circumstances.  Bearing in mind the amount in dispute, and calling in aid equitable principles, it would be unconscionable for the first defendant to simply avoid payment of counsel’s fee by directing the money to a company that he controls.  In my view, therefore, it is a case of money had and received and I consider that judgment can be entered against the second defendant for payment to the plaintiff of the amount in dispute.

[41]     I am satisfied that there was no error by the Judge in entering judgment against Unique Drinks.   I would put the legal foundation for the remedy a little differently,  but  it  is  unnecessary to  discuss  legal principles  in  any detail.    The

foundation for Unique Drinks’ liability will be reasonably apparent from the facts, which is why I set the facts out in reasonable detail.  These facts are, in particular: the quantification of the payment by the liquidator of $16,000, based directly on Mr Rooney’s fee; the fact that the payment was expressly agreed by the liquidator as a payment for costs; the events that followed with Mr Sanson’s incorporating Unique Drinks and the diversion of the $16,000 to Unique Drinks; the relationship between Mr Sanson and Unique Drinks; the fact, in consequence, that Unique Drinks received the $16,000 with full knowledge that it was a sum obtained to meet Mr Rooney’s costs to the extent that Mr Rooney had not already been paid; and Mr Sanson’s established and well documented history of dishonesty which bears on the integrity of the dealings with the $16,000.

[42]     I am in no doubt that it would be unconscionable for Unique Drinks not to account for that portion of the $16,000 it received which represents the unpaid balance of Mr Rooney’s fees.  A requirement that Unique Drinks account in this way does not give rise to any concerns in respect of competing interests, such as secured

creditors.[5]

[5] Compare the circumstances discussed by the Court of Appeal in Fortex Group Ltd v MacIntosh

[1998] 3 NZLR 171.

[43]     Mr Sanson argued that the $16,000 that was received by Unique Drinks “had nothing to do with Rooney works”.  By this he meant that the payment had nothing to do with the agreement negotiated by Mr Rooney.  The contention is unsustainable.

[44]     Mr Sanson raised one further issue relating to interest if judgment for costs is entered.   Mr Sanson contended that Blackwells was not entitled to interest on the judgment for any period after Blackwells was notified by Mr Sanson of the assignments because no action was taken to challenge the assignments.   I am uncertain whether there is any evidence that Blackwells was given notice of the assignments, but assuming that they were, I am satisfied there is nothing in this point.

Result

[45]     The appeal is dismissed.

[46]     The  respondent  is  entitled  to  costs  fixed  on  a  2B  basis  together  with reasonable disbursements.

[47]     The sum of $800 paid into this Court by the appellants as security for costs, together with any interest accrued, is to be paid to the respondent in partial satisfaction of the order of this Court for costs.

[48]     The appellants deposited the sum of $11,857.90 with the Registrar of the

District Court at Auckland pursuant to s 84 of the District Courts Act 1947.  I direct that that sum, and interest accrued on it, be paid forthwith to the respondent.

Peter Woodhouse J