Capper v Riverside Pride Limited

[2023] NZHC 683

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE

CIV-2022-463-45

[2023] NZHC 683

UNDER

the Companies Act 1993

IN THE MATTER OF

a liquidation

BETWEEN

TANIA MICHELE MYRUP CAPPER

Applicant

AND

RIVERSIDE PRIDE LIMITED

First Respondent

STEVEN PETER DALLINGER

Second Respondent

On papers: Counsel:

31 March 2023

W D Hofer for the Applicant S Scott for the Respondents

Judgment:

31 March 2023

COSTS JUDGMENT OF ASSOCIATE JUDGE TAYLOR

This judgment was delivered by me on 31 March 2023 at 3:00pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:

Tompkins Wake (W D Hofer), Hamilton, for the Applicant Steve Scott, Tauranga, for the Respondents

CAPPER v RIVERSIDE PRIDE LIMITED [2023] NZHC 683 [31 March 2023]

[1]        On 7 February 2023, the Court issued a judgment (the judgment) placing the first respondent, Riverside Pride Limited (the Company), into liquidation and dismissing all interlocutory applications made by the second respondent.1

[2]        Mr Hofer, counsel for the applicant, Ms Capper, has filed a memorandum dated 7 March 2023 seeking costs as the successful party in all respects. The applicant seeks an order against the second respondent for 2B costs with a 100 per cent uplift on all steps in the proceeding on the following grounds:

(a)despite using all best endeavours to reach agreement on costs as directed at [77] of the judgment, the second respondent has not responded substantively to the applicant’s suggestion regarding costs; and

(b)the second respondent acted unreasonably in filing an appearance under protest to jurisdiction and in pursuing his interlocutory applications knowing them to be without merit, and despite being on notice that the applicant would seek indemnity costs if he continued to pursue them.

[3]        The applicant has elected not to seek indemnity costs because of the inter- related nature between her own applications and the second respondent’s interlocutory applications, making it too difficult to split out the time entries as they relate to each application separately.

[4]        Counsel for the second respondent has advised the Court that he does not have any instructions from the second respondent and accordingly will not be filing any reply to counsel for the applicant’s memorandum.

1      Capper v Riverside Pride Ltd [2023] NZHC 80 at [73]–[74].

Law and applicant’s submissions

[5]        Rule 14.6 of the High Court Rules 2016 sets out the circumstances in which the Court may depart from the standard scaled approach and award increased or indemnity costs:

14.6     Increased costs and indemnity costs

(1)Despite rules 14.2 to 14.5, the court may make an order—

(a)increasing costs otherwise payable under those rules (increased costs); or

(b)that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).

(2)The court may make the order at any stage of a proceeding and in relation to any step in it.

(3)The court may order a party to pay increased costs if—

(a)the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or

(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

(i)failing to comply with these rules or with a direction of the court; or

(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or

(iv)failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or

(v)failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or

(c)the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or

(d)some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.

(4)The court may order a party to pay indemnity costs if—

(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or

(b)the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or

(c)costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or

(d)the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or

(e)the party claiming costs is entitled to indemnity costs under a contract or deed; or

(f)some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.

[6]        The applicant submits that the grounds for both increased costs (for all steps in the proceeding) and indemnity costs to the extent they relate to the second respondent’s interlocutory applications, are appropriate in the present case because:

(a)the second respondent pursued his applications in wilful disregard of known facts and clearly established law;

(b)the second respondent pursed his applications knowing they were unnecessary and lacked merit;

(c)the second respondent acted vexatiously, frivolously, improperly, or unnecessarily in continuing his interlocutory applications being on notice of the above.

[7]        The submissions for the applicant then consider each of the second respondent’s interlocutory applications.

Second respondent’s appearance under protest to jurisdiction and the application to dismiss the applicant’s liquidation proceeding

[8]        Mr Hofer submits that the second respondent’s appearance under protest to jurisdiction filed together with an application to dismiss the application for appointment of liquidators to the Company was based on a misunderstanding of the legal position of the Family Court’s jurisdiction to divide relationship property.

[9]        Mr Hofer submits that the exclusive jurisdiction of the High Court to hear liquidation applications is a settled point of law. He submits that this was noted for the applicant in both correspondence to counsel for the second respondent on receipt of the second respondent’s application, and in its documents in opposition. The exclusive jurisdiction of the High Court was confirmed in the judgment,2 as well as accepting the applicant’s position that, by applying to stay advertising, the second respondent had taken a step in the proceeding and submitted to the High Court’s jurisdiction.

[10]      Mr Hofer submits that the second respondent’s continuation of his application to dismiss the liquidation on the basis of the extant Family Court proceedings was done so in wilful disregard of the known facts and clearly established law, and knowing that the applications lacked merit and could not succeed.

Second respondent’s interlocutory application to rescind appointment of interim liquidators

[11]      On 7 September 2022, the second respondent filed an interlocutory application to rescind the appointment of the interim liquidators after the High Court appointed Steven Khov and Kieran Jones as interim liquidators of the Company on 1 September 2022. The second respondent requested that his application be heard on 5 October 2022, the same date as the applicant’s substantive liquidation application was to be determined.

[12]      Mr Hofer submits, and also submitted at the substantive hearing on 5 October 2022, that the application to rescind the appointment of the interim liquidators was

2      Capper v Riverside Pride Ltd, above n 1, at [53].

otiose. If the applicant’s substantive application for liquidation was not successful, the pre-requisite for the appointment of the interim liquidators would fall away, rendering the second respondent’s application nugatory. If the liquidation application succeeded, then clearly the application to rescind the appointment of interim liquidators must fail. This was accepted in the judgment.3 Mr Hofer submits that by proceeding with his application to rescind the appointment of interim liquidators, the second respondent acted vexatiously, frivolously, improperly or unnecessarily by taking an unnecessary step in the proceeding which forced the applicant to incur costs in preparing documents and submissions in opposition.

Increased costs

[13]      Mr Hofer submits while the grounds for indemnity costs are made out as above in relation to the second respondent’s conduct in pursuing his interlocutory applications, the applicant rather seeks costs with an uplift due to the difficulty in separating out steps of the matters to which normal 2B costs can be claimed versus indemnity costs.

[14]      Mr Hofer submits that despite the Court agreeing in the judgment that the questions to be determined at the hearing were only those in relation to the applicant’s substantive liquidation application, the applicant was still required to file documents and submissions in opposition to the second respondent’s interlocutory applications. Therefore the steps taken in relation to the substantive liquidation application are inextricably linked into the interlocutory applications, which justifies an award of increased costs on all steps.

Discussion

[15]      Mr Hofer has referred to the decision in Bradbury v Westpac Banking Corporation4 as authority for the proposition that indemnity costs have been awarded where proceedings were continued with wilful disregard of known facts or clearly established law, or where the respondent has made allegations which ought never to have been made or unduly prolonged their case with groundless contentions

3 At [47].

4      Bradbury v Westpac Banking Corporation [2009] NZCA 234 at [29].

(the “hopeless case”). The lower threshold for an award of increased costs may be appropriate where there is failure by the paying party to act reasonably.5

[16]      Mr Hofer has also referred the Court to Mueller v Hendren6 as an example of a 75 per cent uplift being awarded, and to the decision in AAI Limited v 92 Lichfield Street (In Receivership and Liquidation)7 as an example of a 100 per cent uplift being awarded.

[17]      In my view, the second respondent’s pursuit of the interlocutory application arguably falls short of the behaviour justifying indemnity costs. The second respondent acted unreasonably in pursuing these applications on notice that they have lacked merit and were unnecessary, but in my view the behaviour was arguably not egregious enough to justify indemnity costs.

[18]      The award of costs is discretionary and a broad assessment of costs is required. In my view it is appropriate that the applicant be awarded 2B costs on all steps in the proceedings, with a 50 percent uplift. This should approximate to the actual costs in respect of the proceedings. I have reviewed Appendix 1 to Mr Hofer’s memorandum and award of costs of $44,812.50 (being costs of $29,875.00 together with an uplift of 50 per cent). Disbursements are fixed at $1,083.00, making a total award of costs and disbursements of $45,895.50.

…………………………….. Associate Judge Taylor

5      Bradbury v Westpac Banking Corporation, above n 4, at [27].

6      Mueller v Hendren HC Auckland, CIV-2007-404-7103.

7      AA1 Limited v 92 Lichfield Street (In Receivership and In Liquidation) [2016] NZHC 90.