Banbrook v Drennan HC Auckland CIV 2010-404-3027

[2010] NZHC 1809

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-404-003027

UNDER  the Companies Act 1993

IN THE MATTER OF     the liquidation of Millineum Investments

Ltd (in liquidation)

BETWEEN  ANTHONY DAVID BANBROOK Applicant

ANDPETER DRENNAN AND STEVEN KHOV

Respondents

Hearing:         10 September 2010

Appearances: D Wong for Respondents

A D Banbrook, appearing for himself

Judgment:      10 September 2010

ORAL JUDGMENT OF ASSOCIATE JUDGE BELL

Solicitors:

Gaze Burt, PO Box 91345, Auckland

Holmes Dangen & Associates Ltd, PO Box 3500, Auckland

A D BANBROOK V P DRENNAN AND S KHOV HC AK CIV-2009-404-003027  10 September 2010

[1]      This case concerns an argument about costs.  The matter has an unfortunate procedural history.

[2]      Peter Drennan and Steven Khov are the liquidators of Millineum Investments

Ltd.  The company was ordered into liquidation in November 2009.

[3]      The  liquidators  conducted  an  examination  of Mr  Banbrook,  barrister,  on

8 April  2010  and,  following  that  interview,  they  issued  a  notice  to  set  aside  a payment.  The payment was $59,195 which Millineum Investments Ltd made to Mr Banbrook’s instructing solicitors in July 2009.   The instructing solicitors then forwarded that payment to Mr Banbrook in payment is his fees for work carried out for Millineum Investments Ltd up until that date.

[4]      Mr Banbrook’s response to the notice issued  against him was to file an application in this Court to set aside the notice.   That was a mistaken step. Mr Banbrook was relying on an outdated version of s 292 of the Companies Act 1993. He had not taken into account the amendments to the legislation made in 2006.

[5]      The matter was called before me and there was debate about the merits of the matter.   The liquidators were prepared to take a pragmatic view that the notice of application by Mr Banbrook would constitute an objection to the setting aside notice. The liquidators also took the opportunity to reconsider their position.   Since then, they have issued a further notice to set aside.   This time the notice is directed to Holmes Dangen & Associates Ltd, Mr Banbrook’s instructing solicitors, who were the direct  recipients  of  the payment  made by Millineum  Investments  Ltd,  even though Mr Banbrook was the ultimate recipient of that payment.

[6]      Ms Wong, for the liquidators, says that the second notice has been properly served.   She has given me a copy of an affidavit of service.   Holmes Dangen & Associates Ltd have apparently not taken any steps in response to that second notice to set aside.  Holmes Dangen & Associates Ltd could be in some peril if they have not taken any steps to object to that notice to set aside.  I invited Mr Banbrook to take instructions from them to see whether they wanted to have the merits of the setting aside notice argued.  Mr Banbrook was quite firm that he did not have any

instructions from Holmes Dangen & Associates Ltd to argue the merits of the setting aside notice.  Both counsel were agreed that I should not address the merits of that setting aside notice today.  I was simply invited to make a decision on the question of costs on Mr Banbrook’s application to set aside the first notice.

[7]      So far as that application is concerned, Mr Banbrook has caused unnecessary expense to the liquidators because, instead of acquainting himself with an updated version of the legislation, he filed an application in this Court which required the liquidators to instruct counsel and they were put to costs and expense in dealing with an application in this Court which they would not have had to face if Mr Banbrook had followed the appropriate procedures under the Companies Act.

[8]      On the other hand, the notice to set aside can also be seen as misconceived because it is directed against Mr Banbrook who did not receive payment directly from the company but through the channel of his instructing solicitors.  He was not in any direct contractual relationship with Millineum Investments Ltd and he can properly take the point that his instructing solicitors were the direct recipients, with the payment made to him on a non-contractual basis.

[9]      Looking at the matter overall, there are faults on both sides.  The liquidators made a mistake in issuing the notice to set aside against Mr Banbrook, but he equally was mistaken in his response.  In this case, each side should carry their own costs

and I make no order for costs on Mr Banbrook’s application.

R M Bell

Associate Judge