Described by Judge Lester as an attempted ‘gotcha’ moment in highly charged pre-trial challenges to document discovery, Arrowtown hoteliers Rob and Kerry Andrews allege Auckland publican Paul Lomax is falsifying evidence in a dispute over management fees charged their joint venture company.
In 2018, Rob and Kerry Andrews joined with Paul Lomax in leasing Arrowtown’s New Orleans Hotel. It has not been plain sailing. Associate judge Lester was moved to remark that litigation between two sides has become acrimonious. There is a complete lack of trust, he said.
This lack of trust was underscored in a pre-trial discovery dispute. Discovery procedures are intended to have each side disclose in advance all relevant documentary evidence they hold, supposedly sharpening the issues in dispute and reducing court hearing time.
The Andrews asked for disclosure of specific accounting information relating to management costs for their joint venture company Arrow Hospitality Ltd, including employee names and remuneration, cash distributions made and all documents relating to covid-19 wage subsidies. Also requested was email correspondence between Paul Lomax and management staff.
The Andrews pounced after sighting the information provided. Apparently unbeknown to Paul Lomax, Kerry Andrews still had access to Dropbox subfolders storing employment files. She alleges some files have been deleted and others altered before disclosure. Paul Lomax countered that the Andrews themselves were in breach of rules for discovery; they did not disclose that documents under their control included their access to the Dropbox files.
Judge Lester ordered a forensic examination of the disputed files by an independent IT specialist. If the Andrews allegations are proved to be true, Mr Lomax is liable for investigation costs. If a reasonable explanation is found for the file changes, the Andrews pay.
Also in dispute is: release of accounting records for Arrow Hospitality held by the company’s former accountants; and what the Andrews complain is a paucity of disclosed email traffic between Mr Lomax and his staff relating to management services they provided to Arrow. Mr Lomax says much of this communication was verbal; there is no written record.
Andrews v. Lomax – High Court (5.09.22)
22.157