Beardsmore v Prime Bookkeeping Limited - [2021] NZCA 245

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA542/2020
[2021] NZCA 245

BETWEEN	CLARENCE EDWARD BEARDSMORE Appellant
AND	PRIME BOOKKEEPING LIMITED First Respondent CATHERINE ANN DAVIES Second Respondent

Hearing:	10 May 2021
Court:	Miller, Venning and Peters JJ
Counsel:	A C Harpur for Appellant S T Scott for First and Second Respondents
Judgment:	10 June 2021 at 2.00 pm

JUDGMENT OF THE COURT

AThe appeal is allowed in part. The indemnity costs of $38,957.15 awarded to the respondents is reduced by consent to the sum of $35,128.80.
BThe remaining costs orders in the High Court for actual and reasonable costs from 3 June to 20 July 2020, and for costs on a 2B basis for the costs application, are confirmed.
CThe appellant must pay one set of costs to the respondents for a standard appeal on a band A basis and usual disbursements for costs on the appeal.

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REASONS OF THE COURT

(Given by Venning J)

In December 2018 Mr Beardsmore issued proceedings against Prime Bookkeeping Limited (PBL) and Ms Davies (the respondents) under s 174 of the Companies Act 1993. He subsequently discontinued them.
Brewer J awarded PBL and Ms Davies indemnity costs against Mr Beardsmore in the sum of $38,957.15 plus actual and reasonable costs from 3 June 2020 to the date of discontinuance.[1] He also awarded costs on a 2B basis for the application for costs itself.
[1]Beardsmore v Prime Bookeeping Ltd [High Court judgment] [2020] NZHC 2231 at [39].
Mr Beardsmore appeals against the award of indemnity costs. He says costs should lie where they fall or, at the most, be fixed on a 2B basis and only for a limited number of steps in the proceedings.

Background

Ms Davies is an associate chartered accountant. Her mother was married to Mr Beardsmore. They separated in 2012. Ms Davies worked as an accountant for Mr Beardsmore’s company, Prime Blasting Services Ltd (PBS).
Initially, PBS did not generate enough work to keep Ms Davies employed full‑time. She reached an agreement with Mr Beardsmore that she would provide accounting services for third parties and split the profits with Mr Beardsmore.
PBL was incorporated as the vehicle for Ms Davies to provide her accounting services. Ms Davies and Mr Beardsmore were each directors. They each held one‑half of the shares in PBL.
PBS’s work grew to occupy Ms Davies’s time more and more. So, increasingly, her PBL work was done in her own time after hours. This led to Mr Beardsmore transferring his shares in PBL to Ms Davies in two tranches. Mr Beardsmore also resigned as a director.
Ms Davies left the employment of PBS in 2016 to join a firm of chartered accountants.
In or about 2018, Mr Beardsmore requested information about PBL from Ms Davies including evidence of what had transpired in respect of the transfer of his shareholding. In June 2018, Mr Beardsmore’s solicitors acknowledged receiving relevant documents in response to this request, including shareholder resolutions relating…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Beardsmore v Prime Bookkeeping Limited

Details

AGLC: Beardsmore v Prime Bookkeeping Limited [2021] NZCA 245
Case: [2021] NZCA 245
Decision Date: 10 June 2021 at 2.00 pm

CaseChat Overview and Summary

In Beardsmore v Prime Bookkeeping Limited, the Court of Appeal of New Zealand reviewed the High Court's decision to award indemnity costs to the respondents, Prime Bookkeeping Limited and Ms. Catherine Davies, after the appellant, Mr. Clarence Beardsmore, discontinued his claim against them. The appeal centered on the appropriateness of the High Court's decision to award indemnity costs rather than the usual costs on a 2B basis. Mr. Beardsmore had brought proceedings under section 174 of the Companies Act 1993, alleging oppressive, discriminatory, and prejudicial conduct by Ms. Davies and Prime Bookkeeping Limited. He further alleged that Ms. Davies had forged his signature and filed false documents.

The Court of Appeal found that Mr. Beardsmore had acted improperly and unreasonably by continuing to pursue the proceedings despite the evidence to the contrary. The allegations against Ms. Davies were unfounded and amounted to an allegation of fraud against a professional person. The Court accepted that Mr. Beardsmore had acted irresponsibly and that the award of indemnity costs was justified. However, the Court agreed with the appellant that certain costs incurred before the proceedings were filed should not have been included in the indemnity costs. As a result, the indemnity costs awarded to the respondents were reduced by consent to $35,128.80. The remaining costs orders in the High Court for actual and reasonable costs from 3 June to 20 July 2020, and for costs on a 2B basis for the costs application, were confirmed. The appellant was ordered to pay one set of costs to the respondents for a standard appeal on a band A basis and usual disbursements for costs on the appeal.

Orders