Tubbs (as liquidator of Empress Abalone Ltd) v McKenzie HC Auckland CIV 2005-409-2588

[2010] NZHC 923

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2005-409-002588

BETWEEN  STEPHEN JOHN TUBBS AS LIQUIDATOR OF EMPRESS ABALONE LIMITED

Plaintiff

ANDELIZABETH JANET MCKENZIE First Defendant

ANDMICHAEL JOHN MCKENZIE Second Defendant

ANDCANTERBURY TRUSTEES LIMITED Third Defendant

Hearing:         10 June 2010

Appearances: D M Lester for Plaintiff

K W Clay for First Defendant

Judgment:      11 June 2010

INTERIM JUDGMENT OF ASSOCIATE JUDGE DOHERTY

[1]      On  10  June  2010  I heard  an  application  by  the  first  defendant  that  the plaintiff give security for costs.

[2]      The Notice of Opposition accepts the plaintiff sues personally.

[3]      In the course of argument, I discussed with plaintiff’s counsel the dearth of evidence from the plaintiff which could be applied to the threshold test under r5.45(1)(b) thus: “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”.

TUBBS V MCKENZIE AND ORS HC CHCH CIV-2005-409-002588  11 June 2010

[4]      I  was  advised  from  the  bar  that  the  plaintiff  is  a  partner  in  a  national accounting firm and is regularly appointed by the Court and others as liquidator of distressed companies.

[5]      There has been no evidence filed as to his personal ability to pay costs if he is unsuccessful.

[6]      I have been asked to draw an inference in his favour that he is able to pay because:

i)Costs awarded against him in this proceeding have already been paid;

ii)       He is proceeding with this proceeding;

iii)      He is a chartered accountant and partner in BDO Spicers. iv)  He is regularly appointed as liquidator

[7]      Against this background, there is evidence that:

i)Empress Abalone Limited (in receivership and liquidation) is insolvent and there will be no funds from that source which will enable the liquidator to pay costs.

ii)There is an unpaid Court order for costs against the plaintiff (personally in his capacity as liquidator of Empress Abalone Limited  (in  receivership  and  liquidation)  in  the  sum  of

$2193.40, arising from separate but related proceedings.

and there is no other evidence that he is in a position to pay if unsuccessful. [8]       Upon  reflection,  I  have  decided  that  the  plaintiff  should  be  given  an

opportunity to put evidence before the Court as to his ability to pay should he be unsuccessful.  I have taken this unusual step because at the timetabling of the hearing

of 10 June 2010 counsel for the plaintiff advised that because of the short notice of the fixture and his then current and unmoveable commitments he might have difficulty in preparing.  In recognition of those difficulties, I ordered affidavits and submissions  to  be  available  on  a  “best  endeavours”  basis.    I  regret  that  those pressures may not have enabled counsel to properly consider what ought to have been before the Court.

[9]      I am not prepared to draw adverse inferences against a professional liquidator in terms which may impinge upon his professional reputation or standing without giving a proper opportunity for this matter to be addressed.

[10]     I direct the plaintiff file an affidavit by 4 p.m., 18 June 2010 which:

i)directly discloses his abilities to pay the costs of the defendant if the plaintiff is unsuccessful in his claim; and,

ii)sets out any reason why an adverse inference should not be drawn upon his failure or neglect to pay the Court-ordered costs referred to above.

[11]     I do not seek further submissions from counsel.

Associate Judge Doherty

Solicitors:

Tomlinson Paull, Christchurch

(Counsel D Lester, Christchurch) KG Marshall, Christchurch

(Counsel KW Clay, Christchurch 8140)