U LEASE NZ LIMITED (STRUCK OFF AND IN LIQUIDATION) AND ANOR V G D ASHLEY HC AK CIV 2008-404-000095 [2009] NZHC 180 (19 February 2009)

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
                                                                  CIV 2008-404-000095



                BETWEEN                     U LEASE NZ LIMITED (STRUCK OFF
                                            AND IN
LIQUIDATION)
                                            G D ASHLEY
                                            Plaintiffs

    
           AND                         G D ASHLEY
                                            Defendant


Hearing:        19 February
2009

Appearances: C J Orton for Plaintiff
             No Appearance of Defendant

Judgment:       19 February 2009


         
    ORAL JUDGMENT OF ASSOCIATE JUDGE ROBINSON




Solicitors:     Martelli McKegg Wells & Cormack, PO Box 5745, Wellesley St, Auckland
                G Bogiattto, Barrister, PO Box 106-120, Auckland


U LEASE NZ LIMITED (STRUCK OFF AND IN LIQUIDATION) AND ANOR V
G D ASHLEY HC AK CIV
2008-404-000095 19 February 2009

[1]    The plaintiffs application for summary judgment being opposed by the
defendant was set down for hearing on 9 September 2008. At that hearing the
defendant appeared. His counsel applied for and obtained
leave to withdraw. The
defendant sought and obtained an adjournment. On adjourning the proceedings, an
order was made requiring the
defendant to pay the plaintiff's costs on a 2B basis.
Those costs including six hours preparation and an hour and a half for the
hearing.


[2]    When the matter came on for hearing before me on 19 November 2008 I
made certain directions. Included in those
directions I recorded the defendant had
undertaken to pay the costs owing to the plaintiff in terms of the order of
9 September 2008
amounting to $2,320 prior to the end of 2008. When making that
comment, I granted leave to the plaintiff to apply for any further
directions should
the defendant be in default of this undertaking. As the defendant is in default of the
undertaking he gave to pay
the costs ordered against him, the plaintiff now applies
for orders that the defendant's defence be struck out and judgment entered
for the
plaintiff. The application has been duly served and there is no appearance at today's
hearing on behalf of the defendant.
The plaintiff accordingly seeks judgment and the
order preventing the defendant from proceeding with his defence.


[3]    Rule 7.48(1)
provides:

       If a party (the party in default) fails to comply with an interlocutory order, a
       Judge may, subject to any
express provision of these rules make any order
       that the Judge thinks just.

[4]    One of the orders contemplated by the
rule is contained in r 7.48(2). That
provides:

       The Judge may for example order:

       a)      That any pleading of the
party in default be struck out in whole or in
               part.

       b)      That the judgment be sealed.

[5]    In Kidd
v Van Heeren HC Auck, 16 November 2006, judgment of Cooper J,
the Court concluded an order for costs on an interlocutory application
was an order
within the ambit of r 258 (which is now r 7.48) and referred to with approval the
decision of Asher J in Ebbitt v Jaffey
where the Judge ordered the plaintiffs to pay
costs and in default that the proceedings be stayed. In the course of that judgment
Cooper J was of the view that the powers given to the Court under r 258 (now r 7.48)
are wide ranging and as he said, "have teeth".
That must reflect the intention that
interlocutory orders must be complied with and the importance of such orders for the
just and
efficient determination before the Court.


[6]    In these circumstances, there is no explanation from the defendant as to the
reasons
for failing to comply with his undertaking to comply with the Court's order
for payment of costs. He has been served with an application
which would have
brought to his attention the intention of the plaintiff to seek these orders.
Consequently, as he has chosen not
to appear or to advance any notice in opposition,
I conclude that the plaintiff is entitled to the orders being sought and accordingly I
direct that the defendant's defence to
this application for summary judgment shall be
struck out.


[7]    Dealing with the application, the plaintiff has been put into
liquidation by
order of this Court of 5 July 2007 and Henry David Levin has been appointed one of
the liquidators. Mr Levin has sworn
a comprehensive affidavit in support of the
application. That affidavit establishes evidence as to the records of the plaintiff.
According to Mr Levin, those records disclose a significant number of payments to
the defendant. The defendant was at all material
times the sole director of the
plaintiff. According to Mr Levin between May 2003 and March 2005 the plaintiff
made payments either
to the defendant or that do not on their face appear to be
business related. Those payments total $486,673.84.


[8]    Mr Levin
has also obtained PAYE summaries filed by the plaintiff which
disclose that the plaintiff paid the defendant gross wages of $59,060
with PAYE
deductions of $12,535.84 paid to the Inland Revenue Department. Consequently,
those summaries establish the defendant was
entitled to receive net wages of
$46,524,16 from the plaintiff. When that amount is deducted from the $486,673.84

there is a balance
of $444,149.68. According to Mr Levin the defendant did not keep
proper accounting records and in particular there were no financial
statements
prepared under the defendant's directorship. Mr Levin is relying on the plaintiff's
bank accounts from the date the defendant
purchased shares in the plaintiff in April
2003 to the date of liquidation to ascertain what funds were taken from the company.
He
has produced as evidence copies of extracts from those accounts. He has analysed
those extracts and made a schedule of payments which
he considers are payments
that have been made to or to the benefit of the defendant.


[9]     By way of example, there was a payment
in May 2003 cheque 1422 for
birthday cards of $660 which Mr Levin concludes is not for the company and
consequently must have been
for the defendant who was the sole director. Similarly
payments for Beachcomber Motel, chocolates and sports resources would fall
within
that category. There are a number of payments to Mr G Bogiatto a solicitor of
Auckland. According to Mr Levin, Mr Bogiatto
was at no times the solicitor for the
plaintiff. At one stage Mr Bogiatto represented the defendant in these proceedings.
Consequently,
it is a reasonable inference that if those payments recorded as being to
Mr Bogiatto were payments on behalf of the plaintiff this
evidence would have been
produced. There is no evidence to show that the plaintiff instructed Mr Bogiatto with
regard to its affairs.


[10]    There are however three payments to NZ Rafting Association which total
$8,000. The defendant in his affidavit in reply
claimed those payments to have been
genuine payments by the plaintiff for promotion. At this stage I simply cannot
resolve that issue.
Certainly the evidence adduced by the defendant would support a
defence and consequently I will not enter summary judgment that includes
those
amounts. I am however entitled to enter summary judgment for part of the amount
claimed and what I will do is deduct the $8,000
from the amount claimed on the
basis that if the plaintiff wishes to proceed and obtain judgment for that additional
amount then
the plaintiff would need to move for a full hearing. The plaintiff may
decide of course that the costs involved do not justify the
time and trouble in
obtaining judgment for the extra amount and choose to discontinue.

[11]   The defendant in his affidavit in
reply endeavoured to claim a defence with
regard to some of the other payments on the basis that cheques written to Gary were
not
to him but to an employee. He also tried to suggest that some of the other
payments listed by him or at his instruction as being
payments to him were in fact
genuine payments on behalf of the company.


[12]   When I have regard to principles applying to applications for summary
judgment, I am satisfied
that subject to the payments to NZ Rafting Association, the
defendant does not have a defence. His explanations are simply inconsistent
with the
documentary evidence produced. He did seek to adjourn the proceedings to obtain
further documents. It must be borne in mind
that the documents he is seeking relate
to documents that would have been generated when he was a director of this
company. I take
into account Mr Levin's evidence as to the state of the company's
records. The defendant was clearly responsible for that situation
as the director. In
the circumstances therefore I conclude that the defendant does not have a defence to
all but $8,000 of the amount
being claimed.


[13]   For the reasons I have given therefore I will enter judgment against the
defendant in favour of the plaintiff
for $436,149.62. The plaintiff is also entitled to
interest in the amount specified in the Judicature Act together with costs to
be
assessed on a 2B basis with disbursements as fixed by the registrar. I invite counsel
for the plaintiff to submit a memorandum
as to the interest and costs for the purpose
of assessing the amount for which judgment is to be entered.



                   
                                 _______________________
                                                     Associate Judge Robinson