Costs awarded against Spring, Atkins in messy liquidation of Whale Oil

Costs have been awarded against Marc Spring, Juana Atkins, Brian Henry and Howard Taylor in what looks to me like an attempt to interfere in the liquidation of the Whale Oil company, Social Media Consultants Limited.

It seems to have been orchestrated by Spring. I suspect that Taylor and Henry won’t be pleased to be caught up in this but the High Court says they signed the court application for “a number of orders against the respondent as liquidator of Social Media Consultants Limited, including an order that she resign from that office effective immediately”.

The application was discontinued, but costs have been awarded for what the court described as:

The proceedings were vexatious and improperly brought in the form they were commenced. They wrongly alleged fraud, criminal harassment and blackmail without any proper basis for such scandalous allegations.

In February 2019 the company running the Whale Oil blog site, Social Media Consultants Limited, was put into voluntary liquidation. At that time the sole director and shareholder was Juana Atkins, wife of Cameron Slater. At about the same time Slater declared himself bankrupt and has since then unsuccessfully tried to claim bankruptcy exempted him from ongoing defamation actions against him.

Whale Oil was moved to a new site, The BFD, which continues to operate. The new site is registered to Suva Media Company Limited, with Atkins sole director and shareholder. Howard Taylor was the founding director and shareholder but handed over to Atkins in March last year.

March 2019: Liquidated Whale Oil company owes more than half a million dollars

In August 2019: Liquidator message on Whale Oil

It is the liquidator’s opinion that the director of Social Media Consultants Limited, Juana Atkins or someone directed by her has illegally used the customer database for the benefit of another business entity.

The Six Monthly Liquidators Report for Social media Consultants Limited in October 2019 showed there were issues with assets related to the blog:

The Six Monthly Liquidators Report in June 2020 repeated the above statement and also included:

This has now been dealt with further in High Court.

On 13 November 2019 the applicants issued an originating application seeking a number of orders against the respondent as liquidator of Social Media Consultants Limited, including an order that she resign from that office effective immediately.

On 16 March 2020 the applicants discontinued the application. The respondent now seeks costs.

The proceedings were misconceived from the outset. The applicants are stated to be Frog Rock Trust and four named persons. The trustees of the Frog Rock Trust were not identified. It is now accepted that the Frog Rock Trust is not a legal entity.

It may not be a coincidence that a company FROG ROCK MANAGEMENT LIMITED has Atkins as the sole director and shareholder (Slater was also a shareholder up to 2005).

The four other named applicants all signed the application, which was stated to be made under s 284 of the Companies Act 1993 for urgent emergency orders.

The four are named as BRIAN HENRY, HOWARD TAYLOR, JUANA ATKINS and MARC SPRING.

Henry is well known as friend and lawyer of Winston Peters, a trustee of the NZ First Trust, and has represented Slater in defamation proceedings (not any more).

It seems remarkable that an experienced lawyer would sign an application with a lay litigant trying to represent him, this just doesn’t make sense to me.

The application came before Associate Judge Andrew on 13 December 2019. Mr Spring, one of the named applicants, sought to appear on behalf of all the applicants. The Judge recorded that Mr Spring had no authority to represent parties in this Court and it would be necessary for the applicants to obtain proper legal representation. The Judge also noted there were issues as to whether the respondent Ms Toon had been properly served with the proceedings. She had only obtained copies of the relevant documents by picking up copies from the Registry.

Spring has been associated with Slater and Dermot Nottingham in a number of failed legal actions, including against myself. He has not properly served proceedings before, including to me.

It’s basic that a lay litigant cannot represent others in court. Nottingham has had similar difficulties so Spring should be aware of that.

By the time the matter next came before Associate Judge Sargisson on 6 March 2020 Mr Nicholls had been instructed by the applicants. Mr Nicholls …had some difficulty to support the standing of the remaining applicants except for Ms Atkins (who was a director and shareholder of the company in liquidation). Judge Sargisson directed further steps be taken in relation to the standing of Mr Henry, Mr Taylor and Mr Spring if the matter was to be pursued. As noted, shortly afterwards, on 16 March, the proceeding was discontinued.

But costs were sought.

The application contained a number of extreme allegations against the
respondent.

That sounds typical of Spring, Slater, Nottingham et al.

The allegations were purportedly supported by affidavits from Mr Spring, Ms Atkins and Mr Cunliffe. The allegations are serious, particularly when made against a professional person such as Ms Toon acting in the course of her profession. If made publicly and found to be wrong they would support a claim in defamation. Allegations made in Court proceedings are privileged. With that privilege comes a responsibility to ensure that allegations of fraud or dishonest behaviour have a proper basis.

A solicitor associated with such pleadings or allegations has an additional
responsibility and can be the subject of disciplinary proceedings if the allegations are made without a substantive basis. Quite apart from the solicitor’s responsibility, a party who wrongfully makes such allegations is at risk of sanction by an adverse costs award.

Mr Nicholls submitted that the situation fundamentally arose from lay people attempting to avert what they honestly believed to be an injustice. The application was not intentionally vexatious.

My response based on past experience with Spring to “honestly believed to be an injustice” and “not intentionally vexatious” is ‘yeah right’.

I am satisfied that the criteria for indemnity costs is made out in this case.

The proceedings were vexatious and improperly brought in the form they were commenced. They wrongly alleged fraud, criminal harassment and blackmail without any proper basis for such scandalous allegations. Such serious allegations against a professional person in the role of liquidator required a serious and detailed response.

In bringing the proceedings the applicants acted improperly and unreasonably. To exacerbate matters, it appears the proceedings were brought with the intention of preventing Ms Toon from carrying out her proper functions as liquidator. The proceedings were hopeless and on the information before the Court would never have succeeded.

Not only hopeless. Spring, like his associate Nottingham, has a record of making accusations and claims in courts unsupported by evidence or facts.

So far Spring has managed to avoid being held to account (while Slater and Nottingham have both been convicted, bankrupted and having their reputations publicly damaged by their own actions.

But in this case Spring and Atkins have been to the fore in proceedings and there will be a financial cost.

The respondent is to have costs against the applicants Brian Henry, Howard Taylor, Juana Atkins and Marc Spring, jointly and severally, in the sum of $15,983.15.

Compared to costs incurred by Slater and Nottingham that isn’t a lot, but at least Spring and Atkins are being held to account for some of their actions. I can only guess why Spring has involved himself in this.

Atkins is deep in it due to taking on the legal and financial responsibility of Whale Oil. This may just be the start of the financial repercussions for her.

Judgment: FROG ROCK TRUST v TOON (as liquidator of Social Media Consultants Ltd) [2020] NZHC 1407 [22 June 2020]

Liquidator message on Whale Oil

Posted on the Whale Oil website tonight:


CRL Logo

It is the liquidator’s opinion that the director of Social Media Consultants Limited, Juana Atkins or someone directed by her has illegally used the customer database for the benefit of another business entity.

This appears on the face of it to have been done for the purpose of misappropriating the company’s goodwill and causing the company loss, therefore breaching the duties as a director to preserve the assets of the company for the benefit of creditors.

The Whale Oil blog and everything associated to the blog remains the property of Social Media Consultants Limited (in liquidation).

If you have any questions please contact info@restructuring.co.nz

 

 

High Court awards more costs against Slater, SMCL

Legal costs continue to mount for Cameron Slater and the company that ran Whale Oil, Social Media Consultants Limited. Slater has already filed for bankruptcy, and the company is in liquidation.

The latest costs of $59,000 are for pre-trial proceedings and do not include preparing for and conducting the trial held last October, nor damages, neither of which will be determined until next year.

Judgment: BLOMFIELD v SLATER COSTS JUDGMENT [2019] NZHC 1203 [29 May 2019]

[1] By memorandum dated 23 November 2018, Mr Blomfield (the plaintiff), seeks an award of costs against Mr Slater and Social Media Consultants Limited (collectively “the defendants”), in relation to several interlocutory matters.

[4] Following two results judgments on 27 September and 16 October 2018,2 on 26 October 2018, I released a judgment detailing my reasons for ruling in favour of the plaintiff on several interlocutory matters. The interlocutory matters dealt with in those judgments were:

(a) the defendants’ application for security for costs;

(b) the defendants’ application for leave to file a fourth amended statement of defence;

(c) the defendants’ application for leave to file a fifth amended statement of defence;

(d) the defendants’ application for an adjournment of the trial for a day to enable counsel to prepare the fifth amended statement of defence; and

(e) the plaintiff’s application challenging the admissibility of evidence proposed to be adduced by the defendants.

It was Slater’s fourth failed application for security of costs.

Blomfield’s lawyer Felix Geiringer has pointed out that the it was actually Slater’s ninth statement of defence document in the lengthy (over 6 years) lead up to the trial. From the book Whale Oil:

Not withstanding (Judge) Laang’s orders for timetabling – all pleadings by 13 July; all briefs of evidence by 13 August – throughout September Slater embarks on a massive exercise, filing enormous quantities of paperwork, including a new statement of defence, with dozens of amendments and additions, making it substantially different to the document around which Matt and Geiringer have been preparing for trial. It even includes a new defence of public interest; that Slater was doing important civic duty in exposing Matt’s activities.

The material flooding in is overwhelmingly dense, and it’s now two months after the date that wss to have been Slater’s last chance to file his defence.

From the judgment:

[21] The trial was originally due to start on 8 October 2018, and the defendants’ evidence was originally to be filed by 13 August 2018. Two briefs were filed on 21 September 2018, following an unless order made by Wylie J in a Minute issued on 13 September 2018. A notice under r 9.7(6) of the High Court Rules 2016 was also filed by the defendants to the effect that they intended to call 27 witnesses who had not provided briefs of evidence. That notice did not contain the necessary information required by r 9.7(6). The defendants also did not finalise their list of documents to be included in the common bundle until 6 October 2018, two days before the trial was due to commence.

[22] The plaintiff’s counsel says that he urgently assembled a team of five lawyers, who worked extensive hours in an effort to try and preserve the trial fixture. In addition to responding to the defendants’ interlocutory applications, they assembled an electronic casebook ready for a delayed start of the trial scheduled for 23 October
2018. They also prepared reply evidence, submissions and cross examination materials.

[25] For those reasons, I have decided to allow the plaintiff to recover the full amount of costs it seeks on a mixed 3A/3B/3C basis, except for the amount claimed for wasted preparation for trial.

[26] Having considered the disbursements the plaintiff also seeks, I have decided to allow the full amount of $10,160.29.

Result

[27] The plaintiff is entitled to costs and disbursements of $59,000.29 as set out in the annexed schedule.

That adds to the already substantial debts in Slater’s bankruptcy and Social media Consultant’s liquidation.

The only significant assets disclosed so far are the value of the Whale Oil website (whatever that may be), and several hundred thousand dollars of costs awarded to Slater and Social media Consultants – see Slater awarded costs v Craig, but well short of actual costs (with Slater’s legal bills in that proceeding far in excess of costs awarded).

This will take some time to work through, as the damages award is still pending, as is another defamation case Slater (and others) still face versus Sellman, Swinburn and Bradbrook – latest public judgment: SELLMAN v SLATER NO 7 [2019] NZHC 467 [18 March 2019]