Classic Flights Limited (in liquidation) v Li - [2025] NZHC 1712

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2023-425-65

[2025] NZHC 1712

UNDER The Companies Act 1993

BETWEEN

CLASSIC FLIGHTS LIMITED

(in liquidation) First Plaintiff

TREVOR EDWIN LAING and EMMA MARGARET LAING

Second Plaintiffs

AND

JUNJIE LI

Defendant

Hearing: On the Papers

Appearances:

J C D Guest for Plaintiffs

B B Gresson and E M A Downey for Defendant

Judgment:

26 June 2025

JUDGMENT OF CHURCHMAN J

[Costs]

Introduction

[1] In my judgment dated 6 May 2025, I found the plaintiff breached his duties as a director of the plaintiff, Classic Flights Ltd (in liquidation) (Classic Flights), under s 301 of the Companies Act 1993.1 I ordered the defendant to pay $126,607.78 plus interest of $32,784.

1 Classic Flights Ltd (in liquidation), Laing and Laing v Li [2025] NZHC 1063.

CLASSIC FLIGHTS LIMITED (in liquidation) v LI [2025] NZHC 1712 [26 June 2025]

[2] The liquidators on behalf of Classic Flights, Trevor Laing and Emma Laing, seek indemnity costs against the defendant, Mr Li. The plaintiffs seek an award of indemnity costs of $85,000 plus GST for a total of $98,015 for 204 hours of work done related to the proceedings from 15 June 2023. In the alternative, the plaintiffs seek an uplift on the 2B costs at the rate of 75 per cent.

[3] Counsel also seeks $2,000 plus GST to cover the costs preparing of the submissions in respect of costs.

Analysis

[4]Rule 14.6 High Court Rules 2016 provides that:

(1)… the court may make an order—

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

…

(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.

[5] The assessment of the quantum of indemnity costs is by way of a reasoned determination, rather than the Court ordering the amount of the party’s invoiced legal fees without scrutiny, especially where the amount of money involved is substantial.2 A Court may order indemnity costs where particular misconduct adds, unnecessarily to the amount of time taken to…

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 1712
Decision Date: 26 June 2025

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Classic Flights Limited (in liquidation) and others v Li concerned a dispute over indemnity costs sought by the liquidators of Classic Flights against the defendant, Mr Li. The liquidators sought indemnity costs of $85,000 plus GST for 204 hours of work related to the proceedings, or alternatively, an uplift on the 2B costs at the rate of 75 per cent. In addition, the plaintiffs sought $2,000 plus GST to cover the costs of preparing submissions on costs. The legal issues revolved around whether the defendant acted vexatiously, frivolously, improperly, or unnecessarily in continuing to defend the proceeding, which would justify an award of indemnity costs. The court had to assess whether the claimed costs represented the actual and reasonable costs incurred.

The court considered the plaintiffs' submissions and found that the defendant had indeed acted vexatiously, frivolously, improperly, or unnecessarily in defending the proceeding. The defendant had misled the liquidators, continued to defend with incorrect positions, failed to provide appropriate analysis, and was unreceptive to discussions regarding his case. The court also noted the defendant's failure to settle the matter and his misleading conduct, which were detailed in a previous substantive judgment. The court concluded that the sum claimed for indemnity costs represented the actual and reasonable costs incurred. Therefore, the plaintiffs were entitled to the indemnity costs claimed, along with the additional costs for preparing submissions on costs.

In conclusion, the court awarded the plaintiffs indemnity costs of $98,015 and $2,000 plus GST for the preparation of submissions on costs. Disbursements and other expenses were to be determined by the Registrar. This decision recognised the defendant's vexatious conduct in the proceedings and justified the substantial costs claimed by the plaintiffs.

Orders