Beverley v Drylandcarbon GP One Limited - [2023] NZHC 586

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2022-485-158

[2023] NZHC 586

BETWEEN
ANTHONY and WENDY BEVERLEY

Applicants

AND

DRYLANDCARBON GP ONE LIMITED

First Respondent

AND

DRYLANDCARBON ONE MANAGEMENT LIMITED

Second Respondent

AND

DC ONE H1 LIMITED

Third Respondent

AND

WILLIAM JAMES WATERHOUSE LECKIE

Fourth Respondent

Continued page 2 …

Hearing: On the papers

Counsel:

M G Colson KC, K J Dobbs and M R M Gale for Applicants A S Olney, M G Mallett and O C Gascoigne for Respondents

Judgment:

22 March 2023

COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 22 March 2023 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

BEVERLEY v DRYLANDCARBON GP ONE LTD [2023] NZHC 586 [22 March 2023]

ANDCHRISTOPHER GORDON LEWIS MORRISON
Fifth Respondent

ANDLEWIS TUCKER AND COMPANY LIMITED
Sixth Respondent

ANDPHEASANT TAIL HOLDINGS LIMITED
Seventh Respondent

ANDLEWIS TUCKER FOREST PARTNERS LIMITED
Eighth Respondent

ANDLEWIS TUCKER FP INVESTMENTS LIMITED
Ninth Respondent

AND FOREST PARTNERS GP LIMITED
Tenth Respondent

ANDLEWIS TUCKER FP MANAGEMENT LIMITED
Eleventh Respondent

[1] In a judgment of 22 December 2022, I granted an application by the applicants (Mr and Mrs Beverley) for leave under s 165 of the Companies Act 1993 to bring proceedings in the name and on behalf of the first to third respondents against the fourth to eleventh respondents.1 I also held that the costs of the application were to be paid by the fourth and fifth respondents (the Directors). In the event there was disagreement as to quantum of those costs, counsel were to file submissions and I would determine the matter on the papers.

[2] On 22 February 2023, counsel for Mr and Mrs Beverley filed a memorandum advising there had been no engagement by the Directors on costs. They asked the Court to determine the issue of costs. Specifically, Mr and Mrs Beverley sought:

(a)costs to be assessed on a 3C basis;

1 Beverley v Drylandcarbon GP One Ltd [2022] NZHC 3606.

(b)an allowance for second counsel;

(c)a 50 per cent uplift in respect of the step relating to the preparation of affidavits; and

(d)disbursements, including experts’ fees.

[3] On 1 March 2023, I received submissions from counsel for the Directors. They argue that Mr and Mrs Beverley should be awarded costs on a 2B basis with no uplift, no certification for second counsel, and no expert witnesses’ fees as disbursements.

[4] In a minute of 1 March 2023, I granted Mr and Mrs Beverley leave to file submissions in reply and they were received on 7 March 2023.

[5]This judgment will resolve the following issues:

(a)Should the appropriate daily recovery rate be on a category 2 or category 3 basis?

(b)What is the appropriate time allocation for each step in the proceeding (which includes any uplift for preparation of affidavits)?

(c)Should there be an allowance for second counsel?

(d)Are Mr and Mrs Beverley entitled to recover expert witness fees…

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: [2023] NZHC 586
Decision Date: 22 March 2023

CaseChat Overview and Summary

In the case of Beverley v Drylandcarbon GP One Limited, the applicants, Mr and Mrs Beverley, sought leave to bring a derivative action on behalf of several companies against other respondents, which was granted by the Court. Following this, Mr and Mrs Beverley applied for costs against the fourth and fifth respondents. The legal issues before the Court were whether costs should be assessed on a category 2 or category 3 basis, the appropriate time allocation for each step in the proceeding, whether there should be an allowance for second counsel, and if Mr and Mrs Beverley were entitled to recover expert witness fees and in what amount.

The Court found that the proceeding was of such complexity that it required counsel to have special skill and experience, classifying it as a category 3 proceeding. The Court also determined that band B should be applied to some steps and band C to others, as set out in the attached schedule one, and rejected the claim for an uplift on scale costs for the preparation of affidavits. The Court allowed for second counsel due to the complexity of the facts and legal issues. Finally, the Court allowed the experts' fees as disbursements as they were reasonably necessary and incurred for the conduct of the proceeding.

The applicants were awarded costs against the fourth and fifth respondents in the sum of $48,449.25 and disbursements of $25,824.57 as set out in schedules one and two (attached).

Orders