The importance of complying with court orders

Introduction and summary When a court makes an order, the party or parties against whom those orders are made may well query what will happen if they do not comply with those orders. The recent decision of Palmer J in Zhang v King David Investments Ltd (in Liq) [2016] NZHC 3018 provides an example of the adverse consequences which can occur.

Ms Hsiang-Fen Ying was fined $10,000 as a result of "blatant contravention" of court orders (at [2]). Palmer J held that Ms Ying came close to being imprisoned, but in the end the fine was sufficient in the prevailing circumstances. If the payment of $10,000 was not made within 10 working days, his Honour noted she would be imprisoned for 20 days, or until payment was made, whichever comes first.

The decision also addressed the issue of setting aside orders obtained by consent. However, as that is not the focus of this brief article, it will not be discussed further.

Background Ms Ying and her husband, Mr Jinyue Young are from Taiwan. Ms Ying was the sole director and shareholder of King David Investments Limited (King David). In March and April 2013, King David agreed to sell certain property to Ms Zie Zhang. The purchase price was $399,000 and Ms Zhang paid a deposit of $30,000.

Settlement did not occur and ultimately Ms Zhang lodged a caveat over the property and filed proceedings seeking specific performance of the contract and damages. On the morning of the second day of the trial, the parties agreed to settle and signed a settlement agreement recording as follows:

King David would specifically perform the sale and purchase agreement by transferring the property by 13 September 2016; King David would pay $220,000 to Ms Zhang by way of a set off from the sale price on settlement; and the proceedings against Mr Young would be discontinued and the costs would lie where they fell. By a Minute of the same day, Duffy J made consent orders giving effect to the agreement. By the terms of the Minute, leave was reserved to the parties to come back to the court for any further matter in relation to the proceeding, should the need to do so arise.

In the days after the consent orders were made, Ms Ying and Mr Young made several attempts to withdraw their consent to the agreement. For various reasons, the application to set aside the consent orders failed.

On 26 July 2016, King David applied for Ms Zhang's caveat over its property to lapse. Ms Zhang took no steps to defend that application so the caveat lapsed...