Beverley v DC One H1 Limited - [2025] NZHC 1618

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2022-485-157

[2025] NZHC 1618

BETWEEN ANTHONY AND WENDY BEVERLEY & ORS
Plaintiffs

AND

DC ONE H1 LIMITED & ORS

Defendants

CIV-2023-485-47

BETWEEN

DRYLANDCARBON GP ONE LIMITED & ORS

Plaintiffs

AND

WILLIAM JAMES WATERHOUSE LECKIE & ORS

Defendants

Hearing: 16 June 2025

Counsel:

M G Colson KC, K J Dobbs, M R M Gale and C B M Enright for Plaintiffs

J B M Smith KC, A S Olney, O C Gascoigne and C J Houlahan for Defendants

Judgment:

16 June 2025

ORAL JUDGMENT OF RADICH J
(Adjusted orders for costs of derivative proceeding)

[1] The issue for consideration is whether orders made under s 166 of the Companies Act 1993 about the payment of the plaintiff companies’ costs in the derivative action should be adjusted. Currently, the orders provide for the costs to be

BEVERLEY v DC ONE H1 LTD [2025] NZHC 1618 [16 June 2025]

met by the plaintiff companies. The various orders that have been made under s 166 of the Companies Act for the costs of the derivative action to be met by the companies are described in my judgment of 17 May 2024 and these few paragraphs provide a brief recap in order to provide context for this decision.

[2] In December 2022, the High Court granted leave to Anthony and Wendy Beverley to bring this derivative proceeding under s 165 of the Companies Act and ordered, under s 166, that the reasonable costs of the proceeding be met in the first instance by the first, second and third plaintiffs (the original costs order).1

[3] The Court of Appeal upheld that decision in November 2023, finding, among other things, that a prudent business person acting in their own interests would pursue the claims and that it would not be unjust or inequitable for the plaintiffs to meet the costs of the proceeding at that stage.2

[4] On 21 December 2023, an interim varied costs order was made by consent by Cooke J in the following terms:
(a)The Beverleys will meet the plaintiff companies’ costs in the derivative proceeding (that is, the costs of Bell Gully, Mike Colson KC, Wilson Harle and McGrath Nicol (the Derivative Proceeding Costs)), which are invoiced in the period from the date upon which this order is made, until 23 February 2024 (the Interim Funding Period) (at which point, absent further order of this Court, the original costs order shall resume its effect);

(b)Subject to the parties’ differing views as to the meaning of the qualifier “in the first instance”, the Beverleys will be entitled to recover from the plaintiff companies any Derivative Proceeding Costs which they meet during the Interim Funding Period, save that the Beverleys will only be entitled to recover such costs as and when the plaintiff companies (or any one of them) have the means to pay them; and

(c)Derivative Proceeding Costs invoiced to the plaintiff companies prior…

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.

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Details

Case: [2025] NZHC 1618
Decision Date: 16 June 2025

CaseChat Overview and Summary

The case of Beverley v DC One H1 Limited before the High Court of New Zealand, Wellington Registry, involved a dispute over the payment of costs in a derivative proceeding. The plaintiffs, Anthony and Wendy Beverley, sought to adjust the orders made under s 166 of the Companies Act 1993, which currently required the plaintiff companies to meet the costs of the derivative action. The key legal issues were whether it was unjust or inequitable for the plaintiff companies to bear the costs and if the proposed orders for funding the costs were appropriate.

The court considered the financial positions of the plaintiff companies, the fiduciary duties of the Beverleys, and the potential impact on the companies' solvency. It was noted that the plaintiff companies had positive cash flow and balance sheet positions, but any ordered costs could potentially affect their solvency. The court decided that while it was appropriate for the plaintiff companies to contribute significantly to the costs, some hedging of the defendants' exposure to costs was necessary. Therefore, the court ordered that $400,000 of the available funds be placed in trust to cover potential future costs awards in favour of the defendants. The remaining funds would be used to meet the ongoing costs of the proceeding, with the Beverleys stepping in to cover costs if the companies were unable to do so, subject to repayment when the companies had the means.

The final orders of the court were that $400,000 of the available funds would be placed in trust, $50,000 would be retained as a float, and the balance would be transferred to the Beverleys for use in paying the costs of the derivative proceeding. The Beverleys would continue to fund any remaining costs if the companies could not do so, with repayment to be made when the companies had the funds.

Orders