SPARK NEW ZEALAND TRADING LTD v SPUD CONSULTING LTD [2021] NZHC 454

SPARK NEW ZEALAND TRADING LTD v SPUD CONSULTING LTD [2021] NZHC 454 [10 March 2021]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2018-404-2875[2021] NZHC 454BETWEEN SPARK NEW ZEALAND TRADINGLIMITEDApplicantAND SPUD CONSULTING LIMITEDFirst respondentMARK LESTERSecond respondentHearing: 19 November 2020 (further memoranda: 26 and 27 November2020, and 5 March 2021)Appearances: Z G Kennedy and Y Lee for the applicantS M Kilian for the first and second respondentJudgment: 10 March 2021JUDGMENT OF JAGOSE JThis judgment was delivered by me on 10 March 2021 at 2.00pm.Pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarCounsel/Solicitors:Z G Kennedy, Barrister, AucklandMinterEllisonRuddWatts, AucklandKilian & Associates, Auckland[1] This proceeding was brought to obtain the Court's assistance in the taking ofevidence in an arbitration between the applicant ("Spark") and the respondents(together, "Spud").[2] Prior decisions of this Court:(a) made discovery and costs orders against Spud;1(b) required compliance with those unmet orders, while adjourning Spark'sclaims for fines and increased costs against Spud;2(c) ordered increased costs against Spud, for Spark's subsequentquantification, while reserving leave for its continued pursuit ofcontempt and indemnity costs applications;3(d) reinforced compliance with the still unmet costs order, and quantifiedthose increased costs for payment, while continuing to reserve Sparkleave for its continued pursuit of contempt and indemnity costsapplications.4[3] My prior judgments give necessary context to this judgment on thoseoutstanding applications. In summary, my reservation of leave was because, althoughI considered the thresholds for holding Spud in contempt or liable for indemnity costshad not then been met, that was to disregard Spark's apparent identification of furtherdiscoverable material until Spud had opportunity to respond.5[4] On exercise of the leave reserved to Spark, I heard from counsel again. ForSpark, in addition to Spud's continuing failures formally to meet the discovery andcosts orders by serving sworn affidavits and paying costs, Zane Kennedy demonstrated1 Spark New Zealand Trading Ltd v Spud Consulting Ltd HC Auckland CIV-2018-404-2785,14 February 2019 (Minute of Brewer J); Spark New Zealand Trading Ltd v Spud Consulting LtdHC Auckland CIV-2018-404-2785, 6 June 2019 (Minute of Toogood J); and Spark New ZealandTrading Ltd v Spud Consulting Ltd HC Auckland CIV-2018-404-2785, 5 August 2019 (Minute ofPalmer J).2 Spark New Zealand Trading Ltd v Spud Consulting Ltd [2020] NZHC 515.3 Spark New Zealand Trading Ltd v Spud Consulting Ltd [2020] NZHC 1957.4 Spark New Zealand Trading Ltd v Spud Consulting Ltd [2020] NZHC 2294.5 Spark New Zealand Trading Ltd v Spud Consulting Ltd [2020] NZHC 1957 at [5]–[6] and nn 5and 10.Spud's incomplete informal discovery of payments between the respondents. ForSpud, Shane Kilian asserted Spud had no further discovery to make, and Spark'sconcerns as to its completeness could be allayed. And he contended Spud had met thecosts orders by deducting their amounts from sums contended to be owing by Sparkto Spud.[5] I directed counsel liaise to track the payments. After the hearing, Mr Kilianprovided Mr Kennedy with workings intended to demonstrate no further discoveryremained to be made, which Mr Kennedy took to "further support the conclusion thatthere is at least one further account that was held or operated by the respondents".Mr Kilian responded Spud intended to file and serve an affidavit, incorporating earlierunsworn content and resolution of the present issues (after further discussion betweencounsel, rather than return to Court). The earlier unsworn affidavits ultimately wereserved in sworn form on 5 February 2021.[6] The essence of Spud's opposition is identification of payments narrated in bankstatements as being made to a 'Mark Lester', but without Spud's discovery of anycorresponding receipts, is an insufficient basis for Mr Kennedy's conclusion.Mr Kilian says the onus is on Spark "to provide actual evidence of the accounts".[7] I was, and remain, clear the obligation to discover relevant documents isSpud's.6 Mr Lester's explanation he has no other accounts and cannot recall thetransactions, "but they could have been one of paying a [mortgage], buying race horsesor putting funds into a development project as an investment", does not address myearlier observation "the sums are such as make it implausible the statements thererecord cash payments".7 On their face, the disclosed payments, if not met by disclosedreceipts, beg explanation in terms of the discovery orders' clear and unambiguousspecificity as addressed with Spud in my prior judgments. And the explanation isSpud's to make.8 As is actual payment of costs as ordered. There can be no reasonabledoubt Spud has not done so.96 At [4].7 At n 5.8 At n 10.9 Contempt of Court Act 2019, s 16(3)(b). See also Smith v Smith [2020] NZCA 556 at [30]–[31],citing Siemer v Solicitor-General [2009] NZCA 62, [2009] 2 NZLR 556 at [62] and Solicitor-General v Krieger [2014] NZHC 17 at [24]–[26].[8] The result is Spud knowingly and deliberately failed without reasonable excuseto comply with this Court's orders. They were orders Spark sought to assist with thetaking of evidence in an arbitration. Thus Spark required exercise of this Court'senforceable powers. A penalty now is necessary, to incentivise compliance with them.Spud also persistently has ignored and disobeyed them in the more recent exchanges,to cross the threshold for indemnity costs on Spark's further steps in prosecution ofthe present application. I therefore will make the orders sought.[9] So far as a fine is concerned, Mr Kennedy urges I set it "at the top end" in theinterests of deterrence. I take the view the fact of a material fine meets those interests,without needing additionally to be at an upper bound.10[10] I order the respondents within ten working days of this judgment:(a) serve on Spark a sworn supplementary affidavit of documents listingthe further bank statements Spud informally has disclosed to Spark;(b) pay a fine of $5,000 under s 16(4)(a)(ii) of the Contempt of Court Act2019;(c) pay Spark indemnity costs on steps taken in this proceeding since4 September 2020;(d) pay Spark interest on the 5 August 2019 costs and 4 September 2020increased costs orders until paid, at rates calculated in accordance withthe Interest on Money Claims Act 2016; and(e) in terms of paragraph 10(a)–(c) inclusive of Spark's memorandumdated 26 November 2020.—Jagose J10 Contempt of Court Act 2019, s 16(4)(a)(ii).