Action Media Limited (in liquidation) v Mitchell

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-1314 [2016] NZHC 2555

UNDER the Companies Act 1993

IN THE MATTER

of Action Media Limited (In Liquidation)

BETWEEN

ACTION MEDIA LIMITED (IN LIQUIDATION)

First Plaintiff

AND

HENRY DAVID LEVIN AND VIVIEN JUDITH MADSEN-RIES AS LIQUIDATORS OF ACTION MEDIA LIMITED (IN LIQUIDATION)

Second Plaintiffs

AND

SEAN WESLEY MITCHELL First Defendant

AND

FARRY & CO TRUSTEES LIMITED Second Defendant

On the papers

Appearances:

P Murray and P Shackleton for the Plaintiffs
P R Cogswell for the Defendants

Judgment:

26 October 2016

JUDGMENT AS TO COSTS OF THOMAS J

This judgment was delivered by me on 26 October 2016 at 3pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:………………………….

Solicitors:

Meredith Connell, Auckland. Cogswell Law, Auckland.

ACTION MEDIA LIMITED (IN LIQUIDATION) v LEVIN AND MADSEN-RIES AS LIQUIDATORS OF ACTION MEDIA LIMITED (IN LIQUIDATION) [2016] NZHC 2555 [26 October 2016]

Introduction

[1]      The parties have filed applications for costs following judgments I issued on

9 December 2015, regarding the defendants’ omnibus interlocutory application; and

28 January 2016, regarding the defendants’ application for an adjournment.  There are eight matters which might give rise to costs’ liability:

Judgment date Matter “Successful” parties
Discontinued Defendants’ application for strike- out Plaintiffs
9 December 2015 Discovery of s 261 notices Plaintiffs
9 December 2015

Discovery     of     correspondence

regarding creditor’s compromise

Defendants
9 December 2015 Discovery of correspondence regarding Mr Mitchell’s personal compromise Plaintiffs
9 December 2015 Discovery of IRD case notes Plaintiffs
9 December 2015 Directions under s 286 of the Act Plaintiffs
9 December 2015 Mode of discovery and inspection Defendants
28 January 2015 Adjournment Defendants

Factual background

[2]      The  following  summary  of  the  factual  background  is  taken  from  my

December judgment:

[1]       The first plaintiff, Action Media Ltd (in liquidation) (the Company), was incorporated in 2006.  It carried on business as a publisher.  It ceased trading on 4 May 2010 and was placed into liquidation by special resolution of its shareholders the same day.  The second plaintiffs are the liquidators of the Company (the Liquidators).

[2]       The first defendant, Sean Mitchell, was a director of the Company and its sole director from 3 January 2007.   Together with the second defendant, Farry & Co Trustees Ltd, which is a solicitor’s trustee company, he jointly held shares in the Company.

[3]       Unsecured creditors’ claims in the liquidation total $1,172,802.93. There are five creditors, the Inland Revenue (the IRD) being by far the largest creditor. All other creditors are related in some way to the Company.

[4]       The amounts owed to the IRD include sums for PAYE, goods and services tax (GST), Kiwisaver employee deductions, Kiwisaver employer contributions, student loan employer deductions and interest and penalties.

[5]       The Liquidators say that the Company was unable to pay its due debts from at least 31 July 2007 and was balance sheet insolvent from at least 31 March 2008.

[6]       The  Company  pleads  three  causes  of  action,  in  the  alternative, against  Mr  Mitchell,  in  respect  of  recovery  of…

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Details
Case
[2016] NZHC 2555
Decision Date

CaseChat Overview and Summary

Action Media Limited (in liquidation) and its liquidators brought a claim against Sean Mitchell and Farry & Co Trustees Limited, a solicitor's trustee company, alleging breaches of directors' duties and seeking compensation for the company's loss. The case involved multiple applications for costs following interlocutory decisions, including a discontinued strike-out application and an application for an adjournment. The plaintiffs sought costs in relation to the defendants' omnibus interlocutory application and opposed the adjournment application, arguing that they were not at fault for the delay in providing relevant documents. The defendants sought costs for their successful adjournment application, arguing that the plaintiffs should have obtained the necessary documents earlier. The court considered the principles regarding costs, including the general rule that costs should follow the event, and the appropriate approach to costs in relation to discontinued applications and partial success. The court awarded costs of $1,338 to the plaintiffs in respect of the discontinued strike-out application, costs to lie where they fall for the December judgment, and costs of $2,899 to the defendants in respect of their successful application for adjournment. The court set off the plaintiffs' award against the defendants' costs, resulting in a net award of $1,561 to the defendants. The court did not address allegations of failure to comply with supplementary discovery obligations as neither party requested orders or directions from the court in relation to this issue.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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