HANNAY v MOUNT [2013] NZHC 2011

HANNAY v MOUNT [2013] NZHC 2011 [9 August 2013]ORDER PROHIBITING PUBLICATION OF THE JUDGMENT IN NEWSMEDIA OR ON THE INTERNET OR OTHER PUBLICLY AVAILABLEDATABASE UNTIL FINAL DISPOSITION OF CRIMINAL PROCEEDINGSAGAINST THE FIRST NAMED FIRST DEFENDANT.ORDER THAT COURT FILE NOT TO BE SEARCHED WITHOUT THEAPPROVAL OF A JUDGEIN THE HIGH COURT OF NEW ZEALANDNELSON REGISTRYCIV-2010-442-507[2013] NZHC 2011BETWEEN ELEANOR MARGARETTA HANNAYand othersPlaintiffsAND ANTHONY PAUL MOUNT and KAYEPAMELA MOUNTFirst DefendantsINDEPENDENT FINANCIALCONSULTANTS LIMITEDSecond DefendantOn papers: ﷢﷢﷢﷢﷢Judgment: 9 August 2013JUDGMENT OF DOBSON J(Defendants' further request to vary freezing orders)[1] The scope of exemptions from freezing orders made in these proceedings inrespect of the first defendants' assets was considered in my judgment of 8 May 2013.I made orders authorising the application of funds otherwise subject to freezing orders,in defined amounts for defined purposes.[2] More recently, I have had referred to me a memorandum of counsel for thedefendants dated 29 July 2013 seeking orders for the release of further funds, twomemoranda in response filed on behalf of the plaintiffs dated 7 August 2013, and amemorandum on behalf of the defendants in response to those, dated 8 August 2013.I am invited by those memoranda to address changes in circumstances since my 8 May2013 judgment, and the urgency involved confirms my provisional view that I shoulddo so on the papers.[3] The defendants' request is not made on the explicit basis that they haveexhausted all unfrozen assets that they could call on. Rather, it is on the basis that theyare entitled to have excluded from the freezing orders amounts required for thepayment of ordinary living expenses, legal expenses properly incurred in the courseof criminal and civil litigation, and payments made in the ordinary course of business.[4] The present issue is therefore the extent to which the further requests comereasonably within categories that are indeed entitled to be excluded from the scope ofthe freezing orders. I deal with each component of the request as follows.Living expenses[5] The existing order granted an exemption at the rate of $4,000 per calendarmonth for living expenses incurred by Mr and Mrs Mount and their family. That is tocontinue until further order of the Court, with leave reserved to the plaintiffs to applyfor variation on a material change in circumstances.Forensic accounting fees[6] I ordered an exemption for a sum of up to $15,000 for accounting fees as theywere incurred. The Mounts have "overspent" by $3,472.45 and permission to unfreezefunds to the extent needed to pay the balance is sought.[7] I did not contemplate that the limit I stipulated was able to be unilaterallyexceeded. Limits on that and other items imposed were on the expectation that theMounts may have to supplement payments from the unfrozen sources by calling onsupport from others.[8] In the circumstances, I grant an exemption for the further sum of $3,472.45 forthe accounting fees, but am unlikely to take the same approach to any additionalexpenditure which has not been explained and justified in advance.Legal fees for criminal trial[9] Despite invoices being annexed to Mr Downing's memorandum, scoperemains for the plaintiffs' criticism of the extent and apparent timing of the incurringof very substantial fees. As the memorandum from counsel for the plaintiffs pointsout, in terms of criminal and civil legal expenses, in the space of a few months theMounts have apparently accepted liability for fees in excess of $200,000.[10] Nothing in the materials supporting the most recent memorandum assuages theconcerns that I alluded to at [23] of my 8 May 2013 judgment. I am not seized of thescope of the criminal proceeding, but there is clearly scope for concern that thecombined projections of a Queen's Counsel and senior junior at $500 and $300 perhour respectively reflect a very high quality defence that Mr Mount is now expectingto fund out of assets which the plaintiffs are entitled to have frozen, except (in thisregard) to the extent of reasonable legal expenses.[11] The memorandum seeks the unfreezing of sums totalling $33,048.12 whichrepresent the balance of one significant fee note from Mr Eaton, as well as more recentfee notes all issued in July by Messrs Eaton and Sandston, and accounts rendered toMr Eaton by NZ Forensics.[12] I can understand that the last category of expenditure was unforeseen andaccept that should be permitted as reasonable.[13] For the component of criminal barristers' fees beyond the level contemplatedin May, I have reservations as to their reasonableness. The plaintiffs can legitimatelycomplain that this request represents a variant on earlier tactics on behalf of thedefendants that present the Court and the plaintiffs with a fait accompli. It does notreflect well on the defendants, and is the antithesis of their adapting their conduct toreflect the predicament they are in. However, I am not in a position to declare theexisting unpaid fee notes unreasonable. I therefore authorise payment out of the frozenassets of the total of $33,0348.12. There is most unlikely to be any further indulgenceon requests presented in these circumstances.[14] I am similarly sceptical as to the projections for remaining fees to the end ofMr Mount's trial. I am conscious also that whilst it would be a matter for the trialjudge on any application by counsel to withdraw at this stage, that is hardly a realisticprospect from any perspective.[15] Balancing the interests as best I can in light of the position adopted in May,and what I can glean of developments since then, I am not persuaded that reasonablelegal expenses for further attendances in the criminal proceedings extend beyond anamount of $40,000 for Mr Eaton QC, and $12,000 for Mr Sandston. There will be afurther exclusion from the frozen assets for those sums, subject to presentation ofinvoices for components of those amounts after the requisite work has been done bythose barristers.[16] The plaintiffs conceded in their first 7 August 2013 memorandum that releaseof fees for Mr Chappell, an IT expert, totalling $7,762.50 was appropriate. If it isincurred, I treat that sum as being on top of the amounts I have ordered.Civil litigation costs[17] Payments for civil legal fees totalling just short of $40,000 have been made forinvoices dated in May, June and July 2013. There is presently an unpaid account ofsome $9,400 and consent is sought to pay for the next five months at the rate of$10,000 per month.[18] Again, I am not in a position to declare the account already renderedunreasonable. Authority for payment of the sum of $9,434.70 is granted. Theconcerns expressed in [13] above apply equally to the manner in which that liabilityhas been incurred.[19] I am not persuaded that sums in excess of $4,000 per month on civil legal feesare warranted, from now until the end of this year. If, indeed, substantial work leadingto fees beyond that level is required, then the Mounts will have to make arrangementsfor third parties or their solicitors to cover them.[20] The competing interests here produce invidious positions for all involved.Professional attitudes by all involved should be brought to bear to facilitate completionof the criminal proceedings, and focus constructively on an efficient resolution of thecivil proceedings.Dobson JSolicitors:C & F Legal Limited, Nelson for plaintiffsMcFadden McMeeken Phillips, Nelson for defendants