Spark New Zealand Trading Limited v Lester

[2021] NZHC 454

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-2875

[2021] NZHC 454

BETWEEN

SPARK NEW ZEALAND TRADING LIMITED
Applicant

AND

SPUD CONSULTING LIMITED

First respondent

MARK LESTER

Second respondent

Hearing:

19 November 2020 (further memoranda: 26 and 27 November

2020, and 5 March 2021)

Appearances:

Z G Kennedy and Y Lee for the applicant

S M Kilian for the first and second respondent

Judgment:

10 March 2021

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 10 March 2021 at 2.00pm.

Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Counsel/Solicitors:

Z G Kennedy, Barrister, Auckland MinterEllisonRuddWatts, Auckland Kilian & Associates, Auckland

SPARK NEW ZEALAND TRADING LTD v SPUD CONSULTING LTD [2021] NZHC 454 [10 March 2021]

[1]                 This proceeding was brought to obtain the Court’s assistance in the taking of evidence in an arbitration between the applicant (“Spark”) and the respondents (together, “Spud”).

[2]Prior decisions of this Court:

(a)made discovery and costs orders against Spud;1

(b)required compliance with those unmet orders, while adjourning Spark’s claims for fines and increased costs against Spud;2

(c)ordered increased costs against Spud, for Spark’s subsequent quantification, while reserving leave for its continued pursuit of contempt and indemnity costs applications;3

(d)reinforced compliance with the still unmet costs order, and quantified those increased costs for payment, while continuing to reserve Spark leave for its continued pursuit of contempt and indemnity costs applications.4

[3]                 My prior judgments give necessary context to this judgment on those outstanding applications. In summary, my reservation of leave was because, although I considered the thresholds for holding Spud in contempt or liable for indemnity costs had not then been met, that was to disregard Spark’s apparent identification of further discoverable material until Spud had opportunity to respond.5

[4]                 On exercise of the leave reserved to Spark, I heard from counsel again. For Spark, in addition to Spud’s continuing failures formally to meet the discovery and costs orders by serving sworn affidavits and paying costs, Zane Kennedy demonstrated

1      Spark New Zealand Trading Ltd  v  Spud Consulting  Ltd HC Auckland  CIV-2018-404-2785,  14 February 2019 (Minute of Brewer J); Spark New Zealand Trading Ltd v Spud Consulting Ltd HC Auckland CIV-2018-404-2785, 6 June 2019 (Minute of Toogood J); and Spark New Zealand Trading Ltd v Spud Consulting Ltd HC Auckland CIV-2018-404-2785, 5 August 2019 (Minute of Palmer J).

2      Spark New Zealand Trading Ltd v Spud Consulting Ltd [2020] NZHC 515.

3      Spark New Zealand Trading Ltd v Spud Consulting Ltd [2020] NZHC 1957.

4      Spark New Zealand Trading Ltd v Spud Consulting Ltd [2020] NZHC 2294.

5      Spark New Zealand Trading Ltd v Spud Consulting Ltd [2020] NZHC 1957 at [5]–[6] and nn 5 and 10.

Spud’s incomplete informal discovery of payments between the respondents. For Spud, Shane Kilian asserted Spud had no further discovery to make, and Spark’s concerns as to its completeness could be allayed. And he contended Spud had met the costs orders by deducting their amounts from sums contended to be owing by Spark to Spud.

[5]                 I directed counsel liaise to track the payments. After the hearing, Mr Kilian provided Mr Kennedy with workings intended to demonstrate no further discovery remained to be made, which Mr Kennedy took to “further support the conclusion that there is at least one further account that was held or operated by the respondents”. Mr Kilian responded Spud intended to file and serve an affidavit, incorporating earlier unsworn content and resolution of the present issues (after further discussion between counsel, rather than return to Court). The earlier unsworn affidavits ultimately were served in sworn form on 5 February 2021.

[6]                 The essence of Spud’s opposition is identification of payments narrated in bank statements as being made to a ‘Mark Lester’, but without Spud’s discovery of any corresponding receipts, is  an  insufficient  basis  for  Mr  Kennedy’s  conclusion.  Mr Kilian says the onus is on Spark “to provide actual evidence of the accounts”.

[7]                 I was, and remain, clear the obligation to discover relevant documents is Spud’s.6 Mr Lester’s explanation he has no other accounts and cannot recall the transactions, “but they could have been one of paying a [mortgage], buying race horses or putting funds into a development project as an investment”, does not address my earlier observation “the sums are such as make it implausible the statements there record cash payments”.7 On their face, the disclosed payments, if not met by disclosed receipts, beg explanation in terms of the discovery orders’ clear and unambiguous specificity as addressed with Spud in my prior judgments. And the explanation is Spud’s to make.8 As is actual payment of costs as ordered. There can be no reasonable doubt Spud has not done so.9

6 At [4].

7      At n 5.

8      At n 10.

9      Contempt of Court Act 2019, s 16(3)(b). See also Smith v Smith [2020] NZCA 556 at [30]–[31], citing Siemer v Solicitor-General [2009] NZCA 62, [2009] 2 NZLR 556 at [62] and Solicitor- General v Krieger [2014] NZHC 17 at [24]–[26].

[8]                 The result is Spud knowingly and deliberately failed without reasonable excuse to comply with this Court’s orders. They were orders Spark sought to assist with the taking of evidence in an arbitration. Thus Spark required exercise of this Court’s enforceable powers. A penalty now is necessary, to incentivise compliance with them. Spud also persistently has ignored and disobeyed them in the more recent exchanges, to cross the threshold for indemnity costs on Spark’s further steps in prosecution of the present application. I therefore will make the orders sought.

[9]                 So far as a fine is concerned, Mr Kennedy urges I set it “at the top end” in the interests of deterrence. I take the view the fact of a material fine meets those interests, without needing additionally to be at an upper bound.10

[10]I order the respondents within ten working days of this judgment:

(a)serve on Spark a sworn supplementary affidavit of documents listing the further bank statements Spud informally has disclosed to Spark;

(b)pay a fine of $5,000 under s 16(4)(a)(ii) of the Contempt of Court Act 2019;

(c)pay Spark indemnity costs  on steps taken  in this proceeding since     4 September 2020;

(d)pay Spark interest on the 5 August 2019 costs and 4 September 2020 increased costs orders until paid, at rates calculated in accordance with the Interest on Money Claims Act 2016; and

(e)in terms of paragraph 10(a)–(c) inclusive of Spark’s memorandum dated 26 November 2020.

—Jagose J

10     Contempt of Court Act 2019, s 16(4)(a)(ii).