Hubbard's posthumous victory

Two days before his death in a car crash, financier Alan Hubbard secured a courtroom victory that loosened the shackles of statuory managment and will cost the taxpayer nearly $1 million.

The High Court in Timaru heard a case brought by statutory managers claiming the assets of Mr Hubbard and his wife Jean should cover $891,127 in Grant Thornton’s costs associated with managing their personal affairs.

These costs to the more than $4 million spent so far by Grant Thornton in managing Mr Hubbard’s Aorangi Securities and Hubbard Management Fund.

Statutory manager Richard Simpson’s affidavit, quoted in Judge Lester Chisholm’s August 29 ruling, says Mr Hubbard’s financial affairs are “confused and very complicated”.

“He claims that the statutory manager’s understanding of the financial position of the various entities under statutory managers changes daily and a large volume of information 'is yet to be unraveled,'" the ruling says.

Mr Simpson sought costs to assist in “sorting out this enormous and confused muddle.”

Butler goes into bat
Russell McVeagh’s Andrew Butler, acting for Mr and Mrs Hubbard, “strongly and utterly” rejected the claimed shortcomings in account-keeping.

Mr Butler argued in submissions Mr and Mrs Hubbard were only placed into statutory management personally because they were “associated persons” with Aorangi and HMF, and statutory managers powers were limited to claims involving those two entities.

Justice Chisholm found in favour of Mr Butler and dismissed the claim from Grant Thornton, ruling that: “On my analysis the statutory costs regime does not authorise statutory managers to levy costs against the assets of ‘associated persons’ in the situation under consideration.”

It would appear this ruling requires statutory managers to exercise their Crown indemnity, meaning the government now needs to carry the costs of Mr and Mrs Hubbard's statutory management.

Question of costs
In an earlier ruling Justice Chisholm directed statutory managers to pay the reasonable costs of Russell McVeagh.

The August 29 ruling notes Russell McVeagh were claiming $178,059 in costs for representing Mr and Mrs Hubbard in the three months to March 24. The National Business Review understands the firm has billed more than $2.5 million for multiple actions taken on behalf of Mr Hubbard.

Justice Chisholm leaned towards awarding costs to Mr and Mrs Hubbard and urged parties to come to an out-of-court settlement. The ruling hinted that submissions on this case to date had been voluminous:

“Memoranda should be submitted if agreement cannot be reached. Any such memoranda should not exceed three pages.”