Allott v Mark

[2021] NZHC 1917

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WAIHARAKEKE ROHE

CIV-2018-406-000010

CIV-2021-406-000013 [2021] NZHC 1917

UNDER

the Companies Act 1993

IN THE MATTER OF

an application by the Liquidator for declarations against Directors

BETWEEN

MURRAY GEORGE ALLOTT AS

LIQUIDATOR OF PMT 2010 LIMITED (IN LIQUIDATION)
Plaintiff

AND

PETER MARK AND JEANETTE PATRICIA MARK

First Defendants

AND

WISHEART MACNAB & PARTNERS TRUSTEE COMPANY LIMITED and

DAVID JOHN PAUL as Trustees of the Mark Family Trust

Second Defendants

On the Papers

Counsel:

A J Davis for the Plaintiff

P Morten for the Defendants

Judgment:

28 July 2021

JUDGMENT OF GWYN J

(Costs on application to consolidate proceeding and adjourn fixture)

Introduction

[1]                  The claim made under CIV-2018-406-000010 by PMT 2010 Limited (in liquidation) (PMT) against Mr and Mrs Mark (the 2018 proceeding) was set down for hearing on 19 and 20 May 2021.

ALLOTT v MARK [2021] NZHC 1917 [28 July 2021]

[2]                  On 28 April 2021, PMT served a second proceeding on Mr and Mrs Mark and the trustees of the Mark Family Trust (the new proceeding).

[3]                  The defendants applied for consolidation of the 2018 proceeding with the new proceeding and for the fixture set down for 19 and 20 May 2021 to be vacated. The plaintiff opposed the application. After hearing from the parties I vacated the fixture, on the basis that the parties agreed to a new fixture on 20 September 2021.1 In my judgment I directed that costs were payable to the defendants on the application on a 2B basis, pursuant to r 14.8 of the High Court Rules 2016. I invited counsel to file memoranda sequentially if there were any reason why that standard approach should not apply.

[4]                  In response, Mr Morten for the defendants has filed a memorandum which seeks, in addition to standard 2B costs, the defendants’ costs for wasted expenditure arising from the late adjournment of the fixture.

Defendants’ position

[5]                  Mr Morten submits that the defendants’ application for consolidation and adjournment arose because of the plaintiff’s decision to issue the new proceeding some six years after being appointed the liquidator of PMT. The defendants say it is unclear why the plaintiff chose to issue the new proceedings in 2021, when the liquidator was appointed in March 2015.

[6]                  The defendants acknowledged that there is no express  provision  in  the  High Court Rules for wasted expenditure arising from a fixture being vacated, but say there is clear jurisdiction to award costs in that event. Mr Morten refers particularly to Jeffreys v Morgenstern,2 and Marley New Zealand Limited v Skellerup Rubber Services Limited.3 In Jeffreys Venning J referred to work done in terms of preparation of briefs, issues, and the common bundle for trial as being trial focused; and associated

1      Allott v Mark [2021] NZHC 1100.

2      Jeffreys v Morgenstern [2013] NZHC 1361.

3      Marley New Zealand Ltd v Skellerup Rubber Services Ltd [2013] NZHC 3040.

costs in such a situation were “directly thrown away or wasted”, at least in part, by reason of an adjournment.4

Plaintiff’s position

[7]                  The plaintiff does not resist costs being awarded on the interlocutory application only, under r 14.8, and accepts the defendants’ calculation. However, it resists a further award of costs in respect of vacation of the fixture.

[8]                  The plaintiff says that there is no suggestion that it caused the delay, was in default or deliberately caused the adjournment of the 2018 proceeding. To the contrary, it wished the 2018 proceeding to proceed. Further, both parties were ready for trial to commence on the scheduled date and both parties will have wasted costs in preparation for the fixture. In Mr Davis’ submission, the question of “wasted time” costs should be reserved for the final judgment.

Discussion

[9]                  Costs are at the discretion of the Court.5 The High Court Rules do not specifically provide for an award of wasted costs, but it is plain from the authorities cited by the defendants that there is such jurisdiction.

[10]              The commentary in McGechan on Procedure sets out the rationale for the jurisdiction to award “wasted costs” as:6

(a)to compensate the other party or parties not in default who have wasted costs (including disbursements and the fees of expert witnesses); and

(b)to impose a sanction on the defaulting party, in an effort to avoid future wastage of costs and of judicial and court resources, and inconvenience to other parties awaiting fixtures in the court.7

4      Jeffreys v Morgenstern, above n 2, at [37].

5      High Court Rules 2016, r 14.1.

6      McGechan on Procedure (online ed, Brookers) at [HRPt14.16A]

7      Marley New Zealand Ltd v Skellerup Rubber Services Ltd, above n 3, at [11].

[11]As Venning J noted in Marley, in a situation such as this:8

The Court must fix an award of costs appropriate in the particular circumstances of the case before it. There is limited assistance to be had from other cases as the situations where cases are adjourned vary considerably.

Determine costs now or after the substantive fixture?

[12]              I agree with the defendants that it is appropriate to determine the application for costs now rather than to defer it to follow the outcome of the substantive fixture. The High Court Rules contemplate the costs on interlocutory applications be addressed following the determination of the particular applications.9 The Court will not be in any better position at the conclusion of the substantive hearing to determine whether and what costs are appropriate because the scheduled trial could not take place.

[13]              I do not consider it relevant that the plaintiff will also have incurred wasted expenditure.

Procedural background

[14]              It is necessary to put this wasted costs application in the context of the procedural history of the case. The 2018 proceeding has had a messy history since it was first filed in March 2018. It has been characterised by numerous delays and failures to agree on matters of trial preparation, with accusations by both parties that the delay is the fault of the other. From my perusal of the file, I see a scheduled hearing date has been vacated on two previous occasions. Since I ordered consolidation and vacation of the May fixture and set a new hearing date for September 2021, that date too has been vacated at the request of the parties.

[15]              I do not think the difficulties in managing this proceeding and bringing it to hearing can be laid at the feet of just one party. It seems to me that both parties have, at various points, been responsible for late applications and consequent delays. That factor is relevant to my consideration.

8 At [9].

9      High Court Rules, r 14.8.

Defendants previously indicated no disadvantage on consolidation and adjournment

[16]              The other factor, which is ultimately determinative, is that in the defendants’ application for consolidation and vacation of the fixture, Mr Morten submitted that no disadvantage would be suffered by the parties if the proceeding were delayed. His submission was that time and costs for both parties would be saved by consolidation. That was a factor I took into account in granting the application.10 Having made that submission to the Court, I do not think it is open to the defendants, having secured the consolidation and vacation of fixture, to now say otherwise.

Result

[17]              The result is that the defendants are to have costs on the application for consolidation of $7,050.50 and disbursements of $500. I decline to order wasted costs.

Gwyn J

Solicitors:

Clark Boyce, Christchurch

Wisheart Macnab & Partners, Blenheim

10     Allott v Mark, above n 1, at [11].