Burney v Manaia Grove Ltd - [2018] NZHC 1031

IN THE HIGH COURT OF NEW ZEALAND MASTERTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHAKAORIORI ROHE

CIV-2017-435-15

[2018] NZHC 1031

UNDER the Companies Act 1993

IN THE MATTER

of an application for liquidation

BETWEEN

JILLS HELEN ANGUS BURNEY

Plaintiff

AND

MANAIA GROVE LTD

Defendant

Appearances:
Mr A Beck for plaintiff

Mr J Goddard for defendant
No appearance for Deborah Jeane Hambly

Judgment:

11 May 2018

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON ON COSTS

[On the papers]

[1] The plaintiff commenced this proceeding by notice of proceeding and statement of claim dated 7 July 2017 seeking an order pursuant to s 241 of the Companies Act 1993 for the appointment of a liquidator to, and the winding up of, the defendant, Manaia Grove Ltd. The Court made such an order on 10 April 2018.

[2] A little background: the plaintiff and Deborah Jeane Hambly were domestic partners. They formed Manaia as a vehicle for the ownership of their home in Masterton. They were both shareholders in, and the directors of, the company. Their relationship broke down. The break up was bitter. There were recriminations. Ms Burney obviously concluded that the only way of getting the house sold and the proceeds distributed was to wind Manaia up. So she commenced this proceeding. Ms Hambly opposed her application. Vehemently. Lengthy affidavits were

BURNEY v MANAIA GROVE LTD [2018] NZHC 1031 [11 May 2018]

exchanged. There were interlocutory skirmishes. Eventually, the orders sought by Ms Burney were made by consent. But, in the meantime, both parties incurred substantial costs. Neither, I confidently expect, will look back on their involvement in the proceeding with unadulterated pride. On Ms Burney’s behalf, Mr Beck now seeks costs. He wisely restricts the application to scale costs and proposes a 2B basis for their calculation.

[3]There are two features of this application which call for elaboration.

[4] First, Mr Beck includes in his calculations the scale costs associated with Ms Burney’s application pursuant to s 246 of the Act for the appointment of an interim liquidator. That application was refused by Associate Judge Smith in a judgment dated 24 August 2017. Whilst his Honour declined to appoint an interim liquidator, it is obvious from the terms of his judgment that he had some sympathy for Ms Burney’s wish to have third party input, and made arrangements for an early fixture. In relation to this I accept the submission that the application for the appointment of an interim liquidator was a reasonable step for Ms Burney to have taken, notwithstanding that it was ultimately unsuccessful, and that it was in part that application which lead to Ms Hambly withdrawing her opposition to the winding up of Manaia.

[5] Second, Mr Beck submits that the costs order which Ms Burney seeks should be made not against the company in liquidation, but against Ms Hambly. In doing so, he refers me to Dymocks Franchise Systems (NSW) Pty Ltd v The Todd (No. 2)1 and Mana Property Trustee Ltd v James…

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: [2018] NZHC 1031
Decision Date: 11 May 2018

CaseChat Overview and Summary

The High Court of New Zealand Masterton Registry was presented with a case involving a dispute between Jills Helen Angus Burney, the plaintiff, and Manaia Grove Ltd, the defendant. The plaintiff sought an order for the winding up of the defendant company under the Companies Act 1993. The plaintiff and Deborah Jeane Hambly were domestic partners who had formed Manaia Grove Ltd as a vehicle for the ownership of their home in Masterton. The relationship between the two broke down, leading the plaintiff to initiate the winding up proceeding to sell the house and distribute the proceeds. Deborah Jeane Hambly opposed the application, resulting in substantial costs incurred by both parties. The court made the orders sought by the plaintiff by consent. Now, the plaintiff seeks costs on a scale basis.

The court needed to decide whether the scale costs associated with the plaintiff's application for an interim liquidator should be included in the calculation, despite the application being unsuccessful. The court also needed to determine whether the costs order should be made against the company in liquidation or against Deborah Jeane Hambly, who had opposed the winding up of the company. The court found that the application for an interim liquidator was reasonable and that Deborah Jeane Hambly controlled and funded the proceeding, thus benefiting from it.

The Associate Judge Johnston ruled that the proper course was to award the plaintiff scale costs against Deborah Jeane Hambly, based on the reasoning in the cases of Dymocks Franchise Systems (NSW) Pty Ltd v The Todd (No. 2) and Mana Property Trustee Ltd v James Developments Ltd. The Associate Judge also considered the English Court of Appeal's judgment in Metalloy Supplies Ltd (in liq) v M A (UK) Ltd. The court found that it was just and reasonable to visit costs on Deborah Jeane Hambly as she was the real party interested in the outcome of the suit. The court awarded the plaintiff scale costs in the sum of $14,941, together with disbursements in the sum of $1,771.55, against Deborah Jeane Hambly. The liquidator took a neutral stance on the matter.

Orders