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High Court knocks back statutory managers' bid to tap private Hubbard funds

Monday 12th September 2011

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The High Court knocked back a bid by the statutory managers of Allan Hubbard’s affairs to use his personal funds to meet their fees just two days before the Timaru businessman’s death.

Judge Lester Chisholm threw out an application by Richard Simpson, Trevor Thornton and Graeme Carson of Grant Thornton to claim some of their $891,127.07 in costs from the Hubbards’ personal assets, in the High Court in Timaru. The judge said Parliament was explicit in the way statutory managers could recover costs, rejecting the attempt.

“The application by the statutory managers for an order that they be permitted to take the costs of managing Mr and Mrs Hubbard’s personal assets out of those assets is dismissed,” Chisholm said.

The statutory manager went to the courts after acknowledging the provisions didn’t expressly authorise them to take their costs from the Hubbards’ assets.

A decision on costs was put off after the statutory manager’s objected to the $178,059 bill claimed by the Hubbards’ lawyers, Russell McVeagh. The statutory managers were forced to meet the Hubbards’ legal fees by a judgement in March, though the size of the bill hadn’t been agreed.

In an affidavit, Simpson claimed a “vast amount” of their work was “attributable to the manner in which Mr Hubbard conducted his affairs and that the costs incurred in ‘sorting out this enormous and confused muddle’ should be met from the Hubbard assets,” the judgement said.

Hubbard rejected the claims, saying “he cannot understand why the statutory managers are looking to his assets when they have recourse to a Crown indemnity as well as the corporate assets under management.”

The Aug. 31 judgement was published on the Ministry of Justice’s website.

Hubbard died in a car accident on Sept. 2, prompting the Serious Fraud Office to withdraw some 50 fraud charges relating to his management of Aorangi Securities. and Hubbard Managed Funds, two entities put into statutory management last year.

The future of the statutory management is uncertain, with Companies Registrar Neville Harris expected to make a decision this week on whether to release Jean Hubbard.

He’s been sitting on a report into the order since July after commissioning former National Bank head John Anderson and Deloitte insolvency specialist Rod Pardington to investigate its progress.

The Hubbards were set to challenge the freezing order in the High Court last week, though that hearing was adjourned.

(BusinessDesk)

BusinessDesk.co.nz



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