Clode v Waterloo Buildings Limited (in liquidation)

[2012] NZHC 3609

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-002261 [2012] NZHC 3609

BETWEEN  BRENT DOUGLAS CLODE Applicant

ANDWATERLOO BUILDING LIMITED (IN LIQUIDATION)

Respondent

Hearing:         On the papers

Counsel:         Applicant in person

M Tingey for Guardian Trust

Judgment:      5 February 2013

COSTS JUDGMENT OF ASHER J

This judgment was delivered by me on Tuesday, 5 February 2013 at 5pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel :

Bell Gully, DX CP 20509, Auckland.
Email: [email protected] and [email protected]

Copy to:

BD Clode, PO Box 91328, Auckland 1142. Email: [email protected] or  [email protected]

CLODE V WATERLOO BUILDING LTD (IN LIQUIDATION) HC AK CIV-2012-404-002261 [5 February

2013]

Background

[1]      The New Zealand Guardian Trust Company Ltd (“the Guardian Trust”) seeks

costs in this proceeding.  It is not a party.

[2]      The applicant, Mr Clode, by originating application sought leave of the Court to bring a derivative action on behalf of the respondent, Waterloo Building Ltd (in liquidation), against the Guardian Trust.   The application was filed on 31 August

2012.   The liquidator of Waterloo Building Ltd filed a notice of opposition and affidavit of opposition.

[3]      The Guardian Trust was informed of the proceeding and from an early stage has been involved in its progression.  Mr Tingey for the Guardian Trust appeared at the first call of the matter on 22 August 2012.  He immediately advised the Court that he might wish to seek leave to have the Guardian Trust joined as a party.  There were then a number of attendances before the Court.  The proceeding was transferred to the commercial list.

[4]      The  Guardian  Trust  formally  applied  to  be  joined  as  a   respondent. Preliminary issues arose surrounding Mr Clode’s ability as an applicant to seek leave to commence derivative proceedings.  There was an issue as to whether in fact he was a shareholder in a beneficial capacity.  Ultimately, Mr Clode advised the Court in a commercial list callover on 9 November 2012 that the proceeding could be struck out and an order was made.

[5]      In the meantime, the Guardian Trust had incurred costs in filing memoranda and an application for joinder, in pursuing removal to the commercial list and for a number of appearances and attendances.

[6]      Costs on a 2B scale total $7,761 with disbursements of $483.40.

[7]      Mr Clode opposes an order of costs.   He advises that he abandoned the proceeding because of the dispute about his shareholder status.  He decided to stop

the proceeding rather than waste resources and the Court’s time.  He points out that

the Guardian Trust joined the proceeding of its own volition.

Discussion

[8]      It  is  usual  practice  to  join  the  proposed  defendant  to  an  originating application to commence a derivative proceeding.  It is only by those means that the likelihood of the proceeding succeeding and other relevant criteria can be fully explored.  The Guardian Trust should have been joined.

[9]      The Court undoubtedly has jurisdiction to order costs against a non-party. As was observed in Erwood v Maxted, where a party who had been joined sought costs:[1]

[1] Erwood v Maxted [2010] NZCA 93, (2010) 20 PRNZ 466 at [18] (footnotes omitted).

We have no doubt that this Court possesses jurisdiction to make such an order in respect of a non-party under the broad discretion conferred by r 53 of the Court of Appeal (Civil) Rules 2005 to make any orders as to costs that seem just.  There is ample authority in New Zealand and elsewhere for the proposition that a broadly-based costs discretion may be exercised against non-parties to civil litigation.  Although these cases have dealt with awards of costs against a non-party, we see no reason in principle why a non-party, in circumstances such as those applicable here, should not be entitled to an award of costs in their favour.

[10]     This was a case under r 53 of the Court of Appeal (Civil) Rules 2005.  Under r 14.1 of the High Court Rules, costs are at the discretion of the Court and the principles applying to determination of costs at r 14.2 are set out in broad terms. Rule 14.2(a) sets out the general rule that costs follow the event.  This refers to the “party” who fails and the “party” who succeeds.  Although there is no High Court equivalent to r 53, which allows the Court to make any orders that “seem just”, r 53A of the Court of Appeal (Civil) Rules is in the same terms as r 14.2 of the High Court Rules.

[11]     I have no doubt that the Court is not limited by r 14.2 to awarding costs only in favour of parties.  Rule 14.2(a) sets out only a principle to be applied in relation to an unrestricted discretion.  It must be construed against the broad objective of the rules, which is stated in r 1.2 to be to secure the just, speedy and inexpensive

determination of a proceeding.

[12]     Here it is just that Guardian Trust, which should have been joined in the first place and has been put to the costs listed above, receive an award of costs as if it were a successful party.  Mr Clode has essentially failed in respect of his proceeding aimed at the Guardian Trust.  Costs follow that event.

[13]     In a memorandum dated 7 November 2012, the Guardian Trust indicated it would not seek costs against Mr Clode in relation to the joinder application. This was on the basis that Mr Clode did not oppose that joinder.   Mr Clode did not ultimately oppose.   However, that related only to the issue of costs on the joinder application, and that concession has been overtaken by Mr Clode’s abandonment of the substantive proceeding.  Plainly it was a limited concession, made to achieve a quick and cost efficient outcome of the joinder application.  The memorandum does not prevent Guardian Trust from obtaining costs.

[14]     Mr Tingey has had to file a considerable number of documents and appear on a number of occasions.  He was preparing on the basis that he would be the party presenting the opposition on the merits to the application.  The assessment of what is the fair amount should be calculated in the usual way.  I am not able to say whether the actual memorandum of costs attached to Mr Tingey’s memorandum is accurate.

Result

[15]     The applicant Mr Clode is to pay the New Zealand Guardian Trust Company

Ltd costs on a 2B basis together with disbursements of $483.40.

……………………………..

Asher J