Tubbs v Urquhart HC Auckland CIV 2009-404-6951

[2010] NZHC 1674

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-404-6951

UNDER  Section 12 of the Receiverships Act 1993

IN THE MATTER OF     Part 19 of the High Court Rules

BETWEEN  STEPHEN JOHN TUBBS AND COLIN ANTHONY GOWER

Applicants

ANDCRAIG ALEXANDER URQUHART Respondent

Hearing:         By memoranda

Appearances: Mr M D Arthur for applicants

Respondent in person

Judgment:      20 September 2010 at 3.30 pm

JUDGMENT OF LANG J [in relation to costs]

This judgment was delivered by me on 20 September 2010 at 3.30 pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:
Chapman Tripp, Auckland

Rodney Lewis Law, Hamilton

TUBBS AND ANOR V URQUHART HC AK CIV-2009-404-6951  20 September 2010

[1]      The applicants in this proceeding are the receivers of FINCO Holdings Ltd. The respondent, Mr Urquhart, is a director and shareholder of that company.

[2]      On 9 December 2009 Heath J made orders directing Mr Urquhart to provide the receivers with hard copy loan files and electronic data belonging to the company. The Judge directed that Mr Urquhart was to make that material available to the receivers within three working days.

[3]      Mr  Urquhart  supplied  the  receivers  with  some  of  the  material  that  they required within the period that the Judge stipulated.  On 22 April 2010, however, the receivers filed an application to issue a writ of arrest against Mr Urquhart.  They did so on the basis that they were of the view that Mr Urquhart had failed to comply with the Court’s orders.

[4]      Mr  Urquhart  subsequently  supplied  the  receivers  with  further  material. Although the receivers do not necessarily accept that they have received all the material to which they were entitled, they have withdrawn their application for Mr Urquhart’s arrest.  They seek an order, however, that Mr Urquhart pay their costs on a solicitor/client basis.  These amount to $32,780.28.

[5]      Mr  Urquhart  resists  the  receivers’  application.    He  contends  that  he  has complied with the Court’s orders so far as he can and that it is inappropriate for any award of costs to be made against him.

The supply of material

[6]      On 14 December 2009 Mr Urquhart handed over a quantity of material to one of the receivers’ employees who had arrived at Mr Urquhart’s office to collect it. This was within the time frame that the Judge had imposed.   At that time Mr Urquhart advised the receivers’ employee that further material was off-site.   He wrote to the receivers on the same day pointing that fact out, and also requiring payment of the storage costs in respect of the material stored off-site.  He concluded his email by saying “I await your advices”.

[7]      Matters appear to have rested there until 23 March 2010, when the receivers’ solicitors wrote to Mr Urquhart’s solicitor pointing out that Mr Urquhart had not yet fully complied with the Court’s orders.  The receivers’ solicitors also said that, if Mr Urquhart did not fully comply with those directions, they had been instructed to apply for Mr Urquhart’s arrest.  This letter led to further correspondence preceding the application for Mr Urquhart’s arrest being filed on 22 April 2010.

Decision

[8]      I take the view that it was Mr Urquhart’s obligation, and not that of the receivers, to promptly identify and collate all of the material that was subject to the Judge’s directions.  It was then his obligation to ensure that he provided all of that material to the receivers within the period that the Judge had stipulated.   If he required further time within which to comply with the Judge’s directions, he should have sought an extension of time within which to comply with those directions.  He was not entitled to sit and wait for the receivers to respond to his request for reimbursement of the storage costs.

[9]      That being the case, I am satisfied that Mr Urquhart did not have reasonable grounds for failing to fully comply with the Court’s orders within the period that the Judge had stipulated.  I therefore accept that the receivers were entitled to file their application for an order that Mr Urquhart be arrested for failing to comply with the Court’s orders.   That application no doubt formed the backdrop against which Mr Urquhart provided further material to the receivers between April and August 2010.

[10]     Having said that, I do not consider that this is an appropriate case in which to order indemnity costs.   Mr Urquhart did not ignore the Court’s orders entirely. Instead, he provided the receivers with a reasonably significant quantity of material within the time stipulated by the Judge.  I also take into account the fact that at least some of the material was not readily to hand.

[11]     Importantly, however, Mr Urquhart did not provide the receivers with the relevant electronic communication files until 30 April 2010, just over a week after the receivers had filed their applications seeking Mr Urquhart’s arrest.  He did not

supply the closed loan files until 24 May 2010 and he did not supply a third batch of material until 23 July 2010.  By that stage he must have known that he was well and truly in breach of the Court’s orders.

[12]     I am therefore satisfied that the receivers’ application was necessary and that it prompted Mr Urquhart to comply with the Court’s orders.  An award of costs in favour of the receivers is therefore justified.

[13]     I consider that justice will be done in the present case by making an order that

Mr Urquhart pay the costs to the receivers on a Category 2B basis but, increased by

50 per cent to reflect the fact that he failed to comply promptly with the Court’s orders.  The receivers are also entitled to their disbursements.

[14]     I make orders accordingly.

Lang J