Hansa Limited (in liquidation) v Hibbs [2018] NZHC 1036 (11 May 2018)

Last Updated: 25 May 2018

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2016-409-001214 [2018] NZHC 1036

BETWEEN	HANSA LIMITED (IN LIQUIDATION) First Plaintiff
AND	DAMIEN GRANT AND STEVEN KHOV as liquidators of Hansa Limited (In Liquidation) Second Plaintiff
AND	PAUL CLIFFORD HIBBS First Defendant
AND	CAMERON GLADSTONE INVESTMENTS LIMITED Second Defendant
AND	HALDON RANGE VINEYARDS LIMITED Third Defendant
AND	CONTAINERS DIRECT LEASING LIMITED Fourth Defendant

Hearing:	24 April 2018
Appearances:	A S Botterill and J Wong for the Plaintiffs C Whitnall QC and R Kay for the Third Defendant
Judgment:	11 May 2018

JUDGMENT OF DUNNINGHAM J

HANSA LIMITED (IN LIQUIDATION) v HIBBS [2018] NZHC 1036 [11 May 2018]

[1] This is an application to set aside a judgment obtained by default. The judgment was obtained by Hansa Ltd (in liquidation) (Hansa), and its liquidators, as one of various steps taken to unravel the affairs of companies related to Paul Clifford Hibbs, and to recoup funds that had been misappropriated by Mr Hibbs.

[2] Mr Hibbs purportedly carried on an investment business through Hansa, taking funds from clients and managing their investments. However, he operated Hansa as a Ponzi scheme and defrauded investors. He has now pleaded guilty to charges laid by the Serious Fraud Office, including false statement by promoter, theft by person in special relationship, using forged documents, and forgery, and has been sentenced to eight years’ imprisonment.

[3] On 12 December 2016, the first and second plaintiffs filed a proceeding against Mr Hibbs and three of his companies, claiming repayment of monies “had and received”. The third defendant was the applicant in this case, Haldon Range Vineyards Ltd (Haldon). The liquidator sought repayment of $167,914.33 from Haldon, as monies had and received over the period 9 April 2009 to 21 January 2015.

[4] Haldon did not file a statement of defence and judgment by default was sought and entered shortly after the time for filing the statement of defence had expired.

[5] Haldon now applies to set aside that judgment. The grounds of the application are:

(a) the judgment was irregularly obtained as the claim was not in respect of a liquidated sum;

(b) Haldon acted reasonably in failing to file a statement of defence in time;

(c) Haldon has a good arguable defence of the claim; and

(d) there has been a miscarriage of justice.
[6] Hansa and its liquidators oppose the application challenging each ground advanced by Haldon. In addition they say Hansa, and its creditors, will suffer irreparable harm if the judgment is set aside.

[7] The issue for determination is whether Haldon has demonstrated there has been, or may have been, a miscarriage of justice such as would warrant this Court setting aside the judgment obtained by default.

Background

[8] It is necessary to explain in some more detail the relationship between Mr Hibbs and Haldon, as Haldon says this sets it aside from the other two companies that the liquidators made claims against these same proceedings. It also assists in explaining why Haldon has a good defence to the claim and why there has been a miscarriage of justice.

[9] This background is set out in the affidavit of Richard Stanley John Bell, a director of Haldon, filed in support of the application to set aside the default judgment. Mr Bell explains that Mr Hibbs was recommended to him as a financial adviser in 2003. At the time, Mr Bell was a trustee of Haldon’s Trust (a trust for the Bell family), which owned a farming property in Marlborough known as Haldon Range. A 25 per cent share of Haldon Range was sold at that time to a company owned by Mr and Mrs Hibbs, Cameron Gladstone Partnership Limited (CGPL). Mr Bell and Mr Hibbs decided to develop a vineyard on part of the Haldon Range property and Haldon was incorporated in 2007 to carry out that development.

[10] Mr Bell explains that the shareholding in Haldon was structured to reflect land ownership. Haldon’s Trust held 75 per cent and the other 25 per cent, that had initially been held by CGPL, was transferred to a trust established by Mr Hibbs (the Hibbs Trust). Thus, Mr Bell, along with Haldon’s Trustee Ltd, of which Mr Bell was the director and shareholder, held 75 per cent of the shares in Haldon and the remaining 25 per cent was held by Hamish Rose, Lisa Hibbs and Mr Hibbs. Importantly, he notes that while Mr Hibbs was at all times the sole director and majority shareholder of the other two companies from whom judgment was sought, Haldon was not beneficially owned or controlled by Mr Hibbs.
[11] The development proposed by Haldon was an ambitious development requiring resource consents and a construction of a dam to provide water for irrigation. No income from it would be available until at least four years after development. The dam was constructed in 2007 and 2008, but even before it was finished, there were concerns about its construction and resulting safety. Litigation was commenced against the engineers who designed and supervised the project, and further development of the vineyard was not possible without a secure supply of irrigation water from the dam.

[12] When the Seddon earthquakes struck in July and August 2013, the dam was damaged and rendered sufficiently unsafe that the Marlborough District Council exercised its emergency powers under the Building Act 2004 requiring the dam to be emptied. This was to reduce the risk of the dam failing and inundating the town of Seddon downstream.

[13] Eventually, the litigation settled but it did not result in the immediate release of funds because it was a term of settlement that funds would only be released as certain stages of the remediation work were reached. Mr Bell explains that significant financial contributions were required from Haldon to fund the litigation and this came partly from borrowings from the bank and partly from contributions from its shareholders. The contribution made by Haldon’s Trust totalled $2,898,376 over the relevant period, whereas up to 22 January 2015, when the agreement settling the litigation was signed, Haldon had only received contributions by way of shareholder advances through Mr Hibbs of $167,914.33, which was well short of the 25 per cent contribution which should have been made.

[14] Mr Bell says that he was responsible for the day to day management of the project, including the litigation, and Mr Hibbs had no real involvement in it. Indeed, Mr Hibbs visited the property only a couple of times during the project and failed to attend many meetings relating to the project. Furthermore, when Mr Bell requested contributions from Mr Hibbs to meet the Hibbs Trust’s share of the costs, not all requests made were met and there was reluctance from Mr Hibbs to make payments.
[15] Mr Bell says the money Haldon received was only paid when requested and was applied by him, with the oversight of the bank, to meet Haldon’s debts and obligations. He says “I had no knowledge whatsoever that the money paid to [Haldon] had been, as the plaintiff alleges, misappropriated by Mr Hibbs”. He says he “accepted the advances in utterly good faith, and dealt with them appropriately by applying the money in good faith to pay [Haldon’s] legitimate development costs (including repayment of borrowings from the BNZ)”.

[16] Mr Bell’s affidavit also explains the reason for not filing a defence in time. He acknowledges that the documents were served on Haldon by delivering them to Haldon’s registered office on 19 January 2017. He says the documents were then forwarded to Haldon’s barrister. He says that having discussed the position with his lawyers, “I took the view that there was nothing to support the claim by the plaintiff against [Haldon]” and anticipated that his lawyers would communicate with the liquidators, rather than incur the expense of filing a statement of defence. He expected that the communication with the liquidators would take place in a timely manner, and he was “therefore surprised when the plaintiff subsequently obtained judgment by default”.

[17] On 27 March 2017, his lawyer wrote to the liquidators explaining that:

(a) the plaintiffs’ claim against Haldon did not satisfy the necessary legal criteria for a liquidated demand;

(b) the judgment was therefore improperly obtained and there were grounds to set it aside; and

(c) in any event, there was little point in the plaintiffs indulging in litigation because Haldon had no assets.

[18] He says that, having sent this letter, he did not expect the plaintiffs to take any further action. However, despite the advice of his lawyers that there were a number of defects with the plaintiffs’ claim against Haldon, and his expectation that the plaintiffs would take no further steps in reliance on their judgment, the plaintiffs
subsequently filed documents in the High Court in Nelson to put Haldon into liquidation. That action prompted the present application.

The claim against Haldon

[19] The claim made against Haldon (and two other companies) was described as a claim for money had and received. The pleadings explain that approximately
$8,500,000 was transferred by investors to Hansa, pursuant to various investment agreements, but a significant portion of investor funds was misappropriated including, allegedly, the sum of $167,914.33 paid to Haldon. Although some investors received payments from Hansa, as at the date of liquidation, Hansa was indebted to the investors in the sum of more than $4,500,000.

[20] In respect of the funds paid to Haldon, the pleadings state that Haldon received
$167,914.33 (the sum) from Hansa but provided no consideration for this sum. The pleadings go on to allege that “[Haldon] received the [sum] as a result of the advantage taken by [Mr Hibbs] of the [position of Hansa]” and it is “unconscionable for [Haldon] to retain the benefit of [the sum] as against the investors”. The particulars of unconscionability pleaded are that:

(a) Haldon received an undue advantage by receiving the sum ahead of the investors;

(b) at the time the sum was received by Haldon, Hansa was insolvent;

(c) Haldon knew or should have known that Hansa held the sum on trust for the investors and that Hansa was in breach of trust as a result of transferring the sum;

(d) Haldon knew or should have known that some or all of the investors would be unpaid as a result of receiving the sum.

The pleadings conclude by saying that Haldon “is obliged by natural justice and equity to refund the [sum]”.
[21] As Haldon pointed out, the claim is expressed as a claim for monies had and received but then, confusingly, pleads unconscionability, and goes on to give particulars that effectively allege dishonest assistance or knowing receipt.

[22] I accept that the plaintiffs’ pleading confuses at least two distinct causes of action, namely the common law action for money had and received and an equitable claim of dishonest assistance or knowing receipt, and attempts to combine elements of both. However, Mr Botterill confirmed at the hearing that the claim was solely for monies had and received, and I proceed on that basis.

Legal principles applying to an application to set aside default judgment

[23] High Court r 15.10 provides that:

Any judgment obtained by default ... may be set aside or varied by the court on such terms as it thinks just, if it appears to the court that there has been, or may have been, a miscarriage of justice.

[24] As all parties accepted, the Court’s discretion is unrestricted. However, relevant factors in determining whether it is just, in all the circumstances, to set aside the judgment include whether:

(a) there was a substantial ground of defence;

(b) the party’s failure to appear was excusable; and

(c) irreparable injury to the party that obtained the judgment would result if the judgment was set aside.¹

[25] In this case though, Haldon also relies on a claim that the judgment was irregularly obtained and points out that the usual position is that the defendant is entitled to have it set aside as of right.² This proposition was discussed in more detail in Korochine 15 Ltd v R P Charans Investments Ltd, where it was explained that:³

¹ Russell v Cox [1983] NZLR 654 (CA) at 659, Smith v Penney [2013] NZHC 2988 at [37].

² O’Shannessy v Dasun Hair Designers Ltd [1980] 2 NZLR 652 (HC) at 654.

3. Korochine 15 Ltd v R P Charans Investments Ltd HC Hamilton M338/94, 13 December 1994 at 6.

... if a default judgment is not entered strictly in accordance with the rules of Court, it is then said to be irregular. If a judgment is irregular then, as a general proposition, a defendant may have it set aside as of right, regardless of a defence on the merits.

[26] However, that general proposition does not defeat the Court’s overall discretion and, even where there has been an irregular judgment, the Court could make an order validating what had been done.⁴ However, I consider such circumstances would be unusual, and only likely to arise where it is clear there is no substantial ground of defence and where to set aside the judgment would be to simply stave off the inevitable.

Was the judgment irregularly obtained?

[27] On the seventh working day after the time for filing a statement of defence expired, the plaintiffs entered judgment against Haldon and the other defendants using the default judgment procedure under r 15.7 of the High Court Rules. The relevant parts of that rule provide:

15.7 Liquidated demand

(1) If the relief claimed by the plaintiff is payment of a liquidated demand in money and the defendant does not file a statement of defence within the number of working days required by the notice of proceeding, the plaintiff may seal judgment in accordance with this rule for a sum not exceeding the sum claimed in the statement of claim and—

(a) interest (if any) payable as of right calculated up to the date of judgment (if interest has been specifically claimed in the statement of claim); and

(b) costs and disbursements as fixed by the Registrar.

...

(3) A Judge or a Registrar may authorise the sealing of a judgment under subclause (1) if satisfied that the relief claimed by the plaintiff falls within this rule.

...

(5) For the purpose of this rule ... liquidated demand means a sum that—

⁴ Korochine 15 Ltd v R P Charans Investments Ltd, above n 3, at 6.

(a) has been quantified in, or can be precisely calculated on the basis of, a contract relied on by the plaintiff; or

(ab) is quantified in, or can be precisely calculated on the basis of, or by reference to, an enactment relied on by the plaintiff; or

(b) has been determined by agreement, mediation, arbitration, or previous litigation between the same parties; or

(c) is a reasonable price for goods supplied or services rendered (when no contract quantifies the price).

[28] Haldon argues that the claim against it does not meet any of the criteria in r 15.7(5) and therefore there was no jurisdiction to use the default judgment procedure. Instead the judgment should have proceeded by way of a formal proof hearing.

[29] Specifically, Haldon says that the claim, as pleaded, is a claim in equity, alleging it is unconscionable for Haldon to retain the funds when Haldon knew or should have known that Hansa held the funds on trust for the investors and the payments were made in breach of trust. In any event, Haldon says the claim against it is not:

(a) a claim in contract;

(b) a claim which relies on an enactment to quantify or to precisely calculate the sum in question;

(c) a claim based on an agreement, or the resulted mediation, arbitration or litigation between the parties which has determined the sum in question; or

(d) a claim based on a supply of goods or services for which a reasonable price could be fixed.

[30] Haldon submits that as r 15.7 defines the term “liquidated demand” by reference to a closed set of categories, which do not encompass the claim in the plaintiffs’ pleadings, there was no jurisdiction to seek judgment by default in reliance on this rule. While the sum claimed was quantified precisely through the simple process of adding all the amounts that Mr Hibbs had directed from Hansa to Haldon,
and might meet the definition of a liquidated demand discussed in case law generally, it could not meet the precise and limited definition given to it in the High Court Rules.

[31] The plaintiffs, however, submit that the overarching principle that defines a liquidated demand is that the amount in dispute is able to be properly and accurately determined. That is the case in respect of the amount claimed here. The plaintiffs also submit that the decision in Byrne v Rose supports its view that a liquidated sum under r 15.7 may be able to fall outside the specific wording of the rules, as long as the claim is “capable of arithmetical calculation without investigation of the amount claimed beyond inquiry into well-established criteria, such as, for example, scale fees, it would comprise a liquidated demand”.⁵

[32] However, I accept Haldon’s submission that Byrne v Rose did not consider the meaning of a liquidated demand for the purposes of r 15.7. Prior to February 2013, the term “liquidated demand” was not defined in the rule. However, since that date the rule clearly sets out an exhaustive list of circumstances that will comprise a liquidated demand for the purpose of the rule. That list does not encompass the circumstances giving rise to the sum claimed in the present case.

[33] While I accept this means the judgment was irregularly obtained, had that been the only issue in dispute, I would not necessarily have set aside the judgment. This is because the purpose of confining the default judgment procedure to liquidated claims is to avoid the requirement to prove the amount for which judgment should be entered through adducing further evidence. That is not the case here, where the sum claimed is simply the total of the funds advanced by Hansa to Haldon. Accordingly, the usual considerations that dictate the need for a formal proof hearing would not have been relevant in this case, and no injustice would have been done by using the default judgment procedure if irregularity was the only ground of opposition raised.

[34] However, that is not the only ground relied on to set aside the judgment and so I go on to consider the balance of Haldon’s arguments.

⁵ Byrne v Rose [2015] NZHC 3148 at [28].

Does Haldon have a substantial ground of defence?

[35] Haldon submits, and I accept, that this consideration is perhaps the most significant in determining how I exercise my discretion. If there is no substantial ground of defence, then setting aside the judgment would put the parties to significant expense for no good reason.

[36] The plaintiffs point out that the defendant carries the onus of establishing that it has a substantial ground of defence which ought now to be heard.⁶ Here, the plaintiffs are critical of Haldon for failing to provide any compelling evidence other than Mr Bell’s assertions to show that:

(a) the advances totalling $167,914.33 were in fact shareholder advances from the Hibbs Trust;

(b) Mr Bell ought not to have enquired about the source of the funds; and

(c) Mr Bell was unaware that the funds actually came from investor funds.

[37] The alleged defences, say the plaintiffs, are not the type of defences that can be resolved on Mr Bell’s statements alone. There should have been some supporting documentation disclosed to substantiate them.

[38] In any event, the plaintiffs say that Mr Bell and Haldon knew that the monies were not entirely shareholder advances and that investor money was involved. In this regard, they rely on an email communication between Mr Bell and an accountant at the firm Staples Rodway. On 25 November 2011, Mr Bell says “As per conversation today had meeting with bank and Hibbs told bank (after they asked) said [sic] that he had investors involved in his 25% shareholding of the Haldons”. The accountant replies saying “We can only speculate on the capacity in which [the Hibbs trustees] hold the land. That is, did it borrow from investors to acquire the interest ... in which case it is akin to Haldon’s Trust borrowing from the bank”. The plaintiffs say, this demonstrates that Mr Bell was aware as early as 25 November 2011 that money from

⁶ Pioneer Farms Ltd v Stoddart [2012] NZHC 3114 at [24].

outside investors was being applied to the vineyard project and this communication is in direct contradiction to Mr Bell’s evidence that he had no knowledge that the monies paid to Haldon may have been misappropriated.

[39] Notwithstanding these submissions, the plaintiffs say they agree with Haldon’s submission that a claim for money had and received does not depend on proof of wrongdoing or impropriety on the part of the recipient but simply that the money was paid under a mistake of fact. On that issue, the plaintiffs submit that a mistake of fact was made when Mr Hibbs, through Hansa, misappropriated investors’ funds and applied them in “an uncontrolled manner for his own benefit”. The plaintiffs rely on the decision in Napier v Torbay Holdings Ltd, a claim for money had and received, to suggest the mistake could be on the part of a separate party from the plaintiffs. In that case, Asher J stated:⁷

...this cause of action is about recovering money from a defendant who has received it from the plaintiff when there was no intention on the part of the owner of the money, Torbay, to transfer it to the recipient.

[40] In this case, the plaintiffs submit that, as the investors in Hansa retained ownership of the funds invested and did not intend their investments be transferred to the third defendant, a mistake of fact has been made and the claim for money had and received can proceed.

Discussion

[41] To understand whether there is a good arguable defence it is important to identify what needs to be proved in a claim for monies had and received. The elements of the claim are simple. The plaintiff must have paid money to the defendant under the influence of a mistake of fact made by the plaintiff.⁸ The cause of action is complete when the money is received.⁹ The action does not depend on proof of any wrongdoing or fault on the part of the recipient.¹⁰ The onus is on the plaintiff to prove

⁷ Napier v Torbay Holdings Ltd [2016] NZCA 608, [2017] NZAR 108 at [26].

⁸ Thomas v Houston Corbett and Co [1969] NZLR 151 (CA).

⁹ Nimmo v Westpac Banking Corporation [1993] 3 NZLR 218 (HC) at 238.

¹⁰ Nimmo, above n 9, at 238.

that he or she would not have made the payment but for the mistake.¹¹ Money paid voluntarily with full knowledge of the facts and without fraud can not be recovered.¹²

[42] In the present case, monies were paid from Hansa, through Mr Hibbs, to Haldon in order to meet part of the 25 per cent share of development and litigation costs payable by the Hibbs’ interests’ shareholding.

[43] Mr Hibbs, as the sole director of Hansa, was the directing and controlling will and mind of that company. It seems he knew what sum of money was being paid, who it was being paid to, and why it was being paid. It is clearly arguable, therefore, that the payments were made by Hansa knowing and intending that Haldon would use them to meet its liabilities, which it did. If so, Hansa made no mistake of fact.

[44] The fact that investors were unaware of how Hansa was using the money is immaterial to the claim by Hansa for monies had and received. The plaintiffs’ reliance on Torbay is misplaced.¹³ Torbay is not authority for the proposition that the lack of intention to part with the money and transfer it to the recipient relates to any party other than the plaintiff. In other words, the fact that the investors placing their money with Hansa did not intend those funds to be transferred to Haldon, is irrelevant to a claim by Hansa against Haldon for monies had and received.

[45] I therefore consider that Haldon has a good arguable defence to the claim, on the basis that the first element of a claim for monies had and received, being a mistake of fact by the plaintiff, has not been established in this case.

[46] Although submissions were made on whether Mr Bell could demonstrate that he did not know, nor ought he have known, that the money he was receiving was misappropriated investor money, I do not consider that relevant to the pleaded claim, which is not dependent on fault of the defendant.

¹¹ McClenaghan v Bank of New Zealand [1978] 2 NZLR 528 (SC) at 543.

¹² McClenaghan, above n 11, at 543.

¹³ Napier v Torbay Holdings Ltd, above n 7.

[47] Even if it was relevant, I do not consider that the email between Mr Bell and Staples Rodway removes Haldon’s ability to argue that it did not know the money received was held on trust for the investors. Mr Bell says he had no knowledge the payments were made from money Hansa held in trust for investors. The email relied on by the plaintiffs is insufficient to demonstrate actual knowledge or even constructive knowledge by Haldon, that investor funds were being misapplied. While it raises the possibility that there were investors behind the Hibbs’ shareholding it assumes that they are lenders. Nothing in the text of the email suggests misapplication of investor funds.

Was the delay reasonably explained?

[48] I have already touched on Mr Bell’s explanation for why Haldon did not file a statement of defence in time. In summary, he understood from his lawyers that the claim had no merit and he assumed that this was being communicated to the liquidators of Hansa and there would be no need to incur the expense of filing a statement of defence. In addition, he points out that on 13 December 2016, the liquidators explained in a memorandum that their claims against related entities were “based on limited information” and that there could be “further information/documentation which could establish that the related entities provided goods or services in exchange for payments”. Haldon said that it did not expect that the liquidators would proceed to judgment on claims while those investigations were still ongoing.

[49] The plaintiffs claim that the reasons provided are not meritorious and do not adequately explain why Haldon only communicated with them after the judgment was obtained, despite its intention to resolve the matter by discussion.

[50] Haldon says, however, that the relevant delay is not very long. Judgment was entered on 27 February 2017, only seven working days after the time expired for filing the statement of defence and the judgment, and demand for payment, was served on Haldon on 13 March 2017. Once Haldon discovered the plaintiffs had entered judgment, Haldon attempted to initiate discussions, which have proved fruitless, resulting in the need for this application.
[51] I accept that Haldon’s explanation for the delay is not particularly meritorious, but it is, nevertheless, understandable. While Haldon knew of the timeframes for filing a statement of defence, I consider it relied on its lawyer’s advice and genuinely believed that this step could be deferred, and judgment would not be entered, while the liquidators’ investigations continued.

Will there be irreparable harm if the judgment is set aside?

[52] The plaintiffs say that if the application is granted, it will continue to cause further delay and unnecessary costs which will increase the liquidator’s fees and this will result in irreparable prejudice to Hansa and its creditors, who have yet to receive any recovery. When weighed against the plaintiffs’ view that Haldon has not provided an arguable defence against liquidator’s claim, the Court should exercise its discretion against granting the application to set aside judgment.

[53] Haldon, however, has disputed the claim that there is no arguable defence, and I have agreed. Furthermore, it says that the only asset of value in Haldon is the tax losses it has incurred in the abortive vineyard venture and those are only of value to those related entities that are entitled to the benefit of them under tax laws. That excludes the plaintiffs and, unfortunately, the investors.

[54] In my view, the primary consideration is whether there is an arguable defence to the claim. It would not be often that considerations of delay, and extra costs, would tell against setting aside judgment when there is a good arguable defence to the claim and where there is an adequate explanation for failing to file a statement of defence in time. In this case, too, it seems unlikely that leaving the judgment in place would necessarily benefit investors if Haldon’s assertions as to its financial state are correct. In short, I am not satisfied that investors will be irreparably prejudiced by setting aside judgment. Even though there will be a cost involved for the liquidators in reviving the claim against Haldon, I consider that is warranted in all the circumstances to ensure the interests of justice are met.

Conclusion

[55] I am satisfied that in all the circumstances, including in particular that Haldon has a substantiated defence to the claim, there is, or may have been, a miscarriage of justice. Accordingly, the judgment obtained on 27 February 2017 by the plaintiffs against the third defendant in these proceedings, is set aside.

Costs

[56] Counsel for the plaintiffs submitted that if the default judgment was set aside, costs should be awarded in their favour because the third defendant was seeking a form of indulgence.

[57] Haldon, however, said that, if it is accepted that the plaintiffs were not entitled to seal judgment using the default judgment procedure in the High Court Rules, then it is not seeking an indulgence, but rather to have its position addressed and corrected.

[58] In my view, the defendant must share some of the burden and blame for the present circumstances because it failed to file a statement of defence in circumstances when it had been served with the claim, and knew it had a defence. That said, the plaintiffs have not succeeded in their opposition to this application, and must share some responsibilities for it because it used the default judgment procedure when this was not a liquidated demand as defined in High Court r 15.7. Furthermore, it has complicated the matter by incorporating pleadings which relate to equitable claims into a claim for monies had and received.

[59] As a result, my initial view is that costs should lie where they fall. However, the parties did not address me in any detail on costs and so, in fairness, that issue is reserved. If costs cannot be agreed then:

(a) any claim for costs must be filed and served within 20 working days of the date of this decision; and

(b) any reply is to be filed and served within a further five working days of the date of this decision.
[60] Costs will be determined on the papers unless I decide I need to hear from counsel.

Solicitors:

C Whitnall QC

Copy To:

Waterstone Insolvency, Auckland