Cooper v Cooper & Co Real Estate Albany Limited
[2025] NZHC 1581
•17 June 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-1142
[2025] NZHC 1581
BETWEEN MARTIN REES COOPER
Plaintiff
AND
COOPER & CO REAL ESTATE ALBANY LIMITED
First Defendant
ZAIDONG RONG
Second DefendantContinued …
Hearing: On the papers Appearances:
B J Burt, K D Puddle and X Shu for the Plaintiff
S L Robertson KC, S F Pearson and G W Easton for Defendants D M Hughes and R A Idoine for the Third Party
Judgment:
17 June 2025
Reissued:
18 June 2025
JUDGMENT OF MUIR
Costs
(Final as to Mr Cooper, Cooper and Co Real Estate Ltd and Cooper and Co Real Estate Albany Ltd
Interim as to Mr Meltzer)
This judgment was delivered by me on 17 June 2025 at 4.30 pm, Pursuant to Rule 11.5 of the High Court rules.
Registrar/Deputy Registrar Date: ……………………………
Solicitors:
Wilson Harle, Auckland Solar Legal, Auckland
Anthony Harper, Auckland
COOPER v COOPER & CO REAL ESTATE ALBANY LIMITED [2025] NZHC 1581 [17 June 2025]
CIV-2021-404-1636 BETWEEN
TIEYING MA
First PlaintiffZAIDONG RONG
Second PlaintiffAND
MARTIN REES COOPER
First Defendant
COOPER & CO REAL ESTATE LIMITED
Second Defendant
COOPER & CO REAL ESTATE ALBANY LIMITED
Third Party
Introduction
[1] In my decision dated 12 May 2025, I gave judgment against the second defendant Cooper and Co Real Estate Ltd (CCRE)1 in the amount of $71,270.90 together with interest from 1 September 2018, but with a direction that the judgment sum be paid to Cooper and Co Real Estate Albany Ltd (CCREA).2 I otherwise dismissed the plaintiff’s claims.3 I also gave judgment against CCREA and in favour of CCRE in the amount of
$432,000 together with interest calculated from 1 September 2018.4 My judgment acknowledged that the insolvency of CCREA meant the prospects of recovery were limited.5
[2] The claims ultimately faced by Mr Cooper and by CCRE (together, the defendants) were for a sum approaching $10,000,000. This in turn represented a significant concession on the penultimate statement of claim which sought over
$25,000,000. The reduction in quantum only occurred after the first week of trial when a third amended statement of claim (3ASOC) was filed with leave.
[3] At the conclusion of my judgment, I invited the parties to confer on costs and, in the absence of agreement (a somewhat forlorn hope given that background to the proceedings and the nature of the allegations in them), identified a timetable for written submissions. These are now to hand. Like those in the substantive proceedings, they are prodigious.6 Again, the parties’ positions represent polar opposites. Each of the defendants, and CCREA and/or its court appointed manager, Mr Meltzer, seek indemnity costs. In the case of the defendants, the amount sought is $1,315,323.87 excluding GST.7 In the case of CCREA/Mr Meltzer the sum claimed is $251,812.26.
[4] As a fallback position both the defendants and CCREA/Mr Meltzer seek scale costs with a 50 per cent uplift for all steps.
1 Incorrectly identified in the intituling as Cooper and Co Real Estate Albany Ltd.
2 Cooper v Cooper & Co Real Estate Albany Ltd [2025] NZHC 478 at [385].
3 At [385].
4 At [386].
5 At [382]. I note that CCRE does not seek costs against CCREA on the successful claim.
6 Comprising over 50 pages plus extensive schedules. Significant affidavit evidence was filed.
7 GST is not sought as CCRE is registered for GST purposes.
[5]In the case of the defendants this results in a claim, including disbursements, of
$596,993.12. None of the individual components of the defendants’ scale costs calculation are challenged. Nor are their disbursements. The plaintiffs proceed from a position of more generalised principle. They say that as between themselves and the defendants, costs should lie where they fall, primarily on account of the award against CCRE previously referred to. They submit that this qualifies them to take advantage of what they say is the principle that “success on more limited terms is still success.”8 Alternatively, if the Court is minded to award costs to the defendants, they say these should be calculated on a scale basis, reduced pursuant to r 14.7(f)(ii) of the High Court Rules 2016 to reflect CCRE’s lack of success on the one claim identified.
[6] In respect of the claims by CCREA/Mr Meltzer, the plaintiffs say that CCREA was only a party to the proceedings as a result of the third-party notice and associated statement of claim issued by CCRE which sought the $432,000 support office contribution referred to. They say it would be improper for them to be responsible for the costs of any party, let alone on an indemnity basis, when they had not sought relief against it. And they reject any claim by Mr Meltzer in a personal capacity apart, possibly, from payment of witnesses’ expenses.
[7] It now falls to me to adjudicate these diametrically opposed positions. I do so conscious of the fact that my overriding objective must be to achieve an outcome that best meets the interest of justice. Nevertheless, my discretion is not unfettered. It must be exercised in accordance with the applicable High Court Rules (rr 14.2–14.10) and be consistent with established principle. That said, the claim by CCREA/Mr Meltzer raises an almost unique set of considerations where only limited guidance is available from the authorities.
[8] I intend to start with the claims by the defendants and then proceed to those by CCREA/Mr Meltzer.
8 Weaver v Auckland Council [2017] NZCA 330, (2017) 24 PRNZ 379 at [26].
Claim by the defendants
Indemnity costs
[9] The circumstances in which the court may order a party to pay indemnity costs are identified in r 14.6(4). Relevantly, in terms of the claim by Mr Cooper/CCRE, this provides:
(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
…
(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.
[10] Generally, indemnity costs under r 14.6(4)(a), (b) and (f) are not awarded other than where the relevant party has behaved either “badly or very unreasonably”9 “[F]lagrant” is the yardstick.10 However, the authorities also recognise that, where indemnity costs are sought on a “hopeless case” basis, it is not necessary to independently establish flagrant misconduct because it is effectively assumed in prosecution of the case.11
[11] Claims will be regarded as “hopeless” if commenced or continued in circumstances where the plaintiff, properly advised, should have known that it had no chance of success. Such a case is presumed to have been commenced or continued for an ulterior motive or because of wilful disregard of the known facts or the clearly established law.12 This Court has recognised that where causes of action are manifestly time barred, hopelessness can be assumed.13
9 Bradbury v Westpac Banking Corporation [2009] 3 NZLR 400, (2009) 19 PRNZ 385 (CA) at [27].
10 At [28] citing Prebble v Huata [2005] NZSC 18, (2005) 2 NZLR 467 at [6].
11 Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2014] NZCA 348, (2014) 22 PRNZ 322 at [17].
12 At [17] and [27].
13 Ballantyne Trustees Ltd v GBR Investment Ltd [2017] NZHC 908 at [15] and [16].
[12] While conduct prior to the commencement of a proceeding is not of itself a basis for awarding indemnity costs, such conduct may be relevant in determining whether the plaintiff has commenced or continued proceedings for an ulterior purpose or whether the plaintiff has acted in disregard of known facts or law.14
The defendants’ argument
[13] The defendants claim that this was an archetypal hopeless case which the plaintiffs prosecuted with “wilful disregard” for known facts and clearly established law. They say that there were a number of flags which signalled inevitable failure, including:
(a)The conclusion of Mr Byers, the accountant appointed at the parties’ joint expense, that CCREA’s accountants Blackmore Virtue & Owens (BVO) had prepared financials for CCREA “without bias or favour”.
(b)IRD’s conclusion, following a risk review initiated by Mr Rong, that there were no issues, concerns or unresolved matters in respect of CCREA.
(c)The extensive report prepared by CCREA’s court appointed manager, Mr Meltzer largely dismissing the multiple complaints made by Mr Rong and which Mr Meltzer’s appointment tasked him to investigate.
(d)Advice from independent accountants commissioned by Mr Meltzer (Grant Thornton New Zealand) inconsistent with theories advanced by the plaintiffs in their claims.
[14] They point out that millions of dollars’ worth of claims were abandoned one week into the hearing, including a claim of “at least” $7,450,911.71 based on assertions of misappropriation of funds belonging to CCREA. They say that the 3ASOC filed at that point nevertheless maintained a number of hopeless claims, including:
(a)An unquantified claim against Mr Cooper for Mr Meltzer’s fees and costs based on a challenge to Mr Meltzer’s independence.
14 Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue, above n 11, at [16] and [17].
(b)A claim that Mr Cooper was liable for $3,000,000 for a half share of the value of the Albany franchise, when, as a result of expiration of the franchise and the dysfunctionality which had preceded it, it was patently obvious that the franchise had no value.
(c)An assertion that there was no equality of contribution to the purchase price of the Albany franchise, despite independent advice to the contrary.
(d)A claim that Mr Cooper solicited sales consultants from CCREA contrary to confirmation in writing from the consultants that they left of their own accord, which evidence was annexed to Mr Meltzer’s report.
[15] In relation to the first cause of action they say that what ultimately remained of it—a claim of “at least” $552,178.86—relied on transactions involving CCREA’s branch predecessor which occurred between eight and 12 years prior to the filing of proceeding and that what I referred to in my judgment as “insuperable limitation issues” justifies description of that cause of action as hopeless.15 They suggest claims under the first cause of action were not “seriously pursued in closing”.
[16]In relation to the second cause of action, they say that:
(a)The plaintiffs’ failed properly to quantify their claims, seeking compensation under s 174(2)(b) of the Companies Act 1993 “in a sum the Court considers fit after enquiring into the affairs of the company.”
(b)Those claims in respect of which quantification was attempted involved significantly inflated assessments and were pursued in the face of Ms Jordaan’s careful explanation of the facts and the calculations in her brief of evidence.
(c)The plaintiffs claimed every support office costs incurred by CCREA without recognising any of the benefit provided by CCRE’s support office,
15 Cooper v Cooper & Co Real Estate Albany Ltd, above n 2, at [151].
despite all of the evidence establishing such benefit and Mr Meltzer’s recognition of the same.
(d)A significant number of the claims also sought to challenge conduct more than six years prior to the proceeding being filed.
[17] They also submit that the plaintiffs persisted in allegations of deliberate misfeasance when that was never indicated in the evidence and despite my rejection of that characterisation at the conclusion of the first two weeks of trial.16 As I noted at point, there was no evidence before me to indicate Mr Cooper/CCRE had deliberately sought to deprive the plaintiffs of their legitimate financial benefits.
Assessment
[18] I start with an observation which applies equally to the claim for indemnity costs and that for increased costs.
[19] The plaintiffs say that because of the judgment which I gave against CCRE in the amount of $71,270.90 plus interest,17 the plaintiffs achieved some success and that costs should therefore lie where they fall. They rely on the Court of Appeal’s judgment in Weaver v Auckland Council where it was held that “success on more limited terms is still success”.18
[20] I do not consider Weaver to govern the outcome in this case. In Weaver the plaintiffs were successful but only as to 50 per cent of the quantum of damages claimed. The Court assessed the time on the unsuccessful claims as approximately 50 per cent of the hearing time.19 In this case, the $71,270.90 was less than 1 per cent of the compensation claimed in the 3ASOC, being “at least” $9,844,637.28. Moreover, the time spent in relation to this aspect of the claim was relatively brief—the facts were not in
16 At which point Mr Rong, Ms Ma and Mr Cooper had all been heard and cross-examined and I was able to make an informed assessment of their credibility.
17 The judgment was in respect of a Harcourts head office royalty rebate inadvertently credited to CCRE’s account, rather than that of CCREA. CCRE asserted rights of set-off against the sum of
$432,000 unpaid by CCREA for support costs. I gave judgment for that amount against CCREA but did not consider a set-off available.
18 Weaver v Auckland Council, above n 8, at [26].
19 At [29].
dispute and the matter fell to be decided on written submissions. In the context of the plaintiffs other wide-ranging claims, it would, in my view, be unrealistic and contrary to the well-established principles governing the court’s discretion on costs, to suggest that no award should be made in favour of Mr Cooper/CCRE simply on account of the relatively modest judgment awarded against CCRE.
[21] Moreover, my judgment directed payment to CCREA, not the plaintiffs. The defendants are correct in saying therefore that, as against the plaintiffs, they were in all respects, the successful parties.
[22] Returning then to the indemnity costs claim, the point has to be made at the outset that the threshold is a high one and justifiably so given the rights that parties have in respect of access to the courts. It will only be in exceptional cases that the court will entertain such a claim.
[23] I have already indicated that for a case to be regarded as “hopeless”, and thus in the exceptional category, it must be demonstrated that it was commenced in wilful disregard of known facts or clearly established law. As the plaintiffs submit, the mere fact that a party is ultimately unsuccessful on one or more elements of its claim does not render that party’s claims hopeless from the outset. A case cannot be regarded as hopeless if it engages with fine distinctions or complex reasoning.20 Ex post facto assessment should be resisted.
[24] In this case, each of the defendants and the third party acknowledge the complexity of the case in their submissions. The plaintiffs’ claims were brought in equity (in respect of the pre-incorporation period) and under s 174 of the Companies Act 1993 in respect of claims postdating 19 June 2012, when incorporation occurred. Claims under s 174 are discretionary, and, although the jurisdiction is statutory, invoke principles akin to those in equity. It is a jurisdiction where nuance can be especially important and where a party’s rights to access the courts, and their discretionary assessment, must be carefully protected.
20 TheCircle.co.nz Ltd v Trends Publishing International Ltd (in liq and in rec) [2021] NZCA 235 at [33] and [34].
[25] In my view, although the plaintiffs’ case was always a very difficult one, it would be inappropriate to impose indemnity costs on the grounds of “hopelessness”.
[26] For a start it must be acknowledged that Mr Cooper, equally with Ms Ma and Mr Rong, were authors of their own misfortune by virtue of their failure to adequately document their relationship at critical times. Undoubtedly, as I point out in my judgment, Mr Cooper was required by statute to make formal disclosure of his remuneration.21 There should have been a related entry in the interests register. He was in default of these obligations. Although I held that no associated relief was appropriate under s 174,22 he left the door ajar to at least some of the claims which the plaintiffs pursued.
[27] In addition, it was always open to CCRE to make payment of the franchise fee rebate, inadvertently credited to the CCREA account, but it chose not to, resulting in a judgment in the limited terms indicated with payment directed to CCREA.
[28] There were other aspects of the claim (I accept almost de minimis in terms of quantum) which had some underlying merit, albeit the relevant payment had been made to an entity which was not party to the proceedings and which I therefore declined to give relief in respect of.
[29] More significantly, it could never be suggested that the plaintiffs’ position in respect of limitation on the s 174 claims was hopeless. Indeed, such authority as there was in New Zealand, supported their position. Ultimately, I chose to follow the contrary approach of the English Court of Appeal in THG PLC v Zedra Trust Company (Jersey) Ltd.23 However, that decision was not delivered until 23 February 2024 at the conclusion of the first two weeks of the trial.24
[30] To similar effect, Mr Cooper/CCRE argued that the whole of the plaintiffs’ claims were precluded by the principle of reflective loss. They advanced this argument on an effectively “slam dunk” basis. I did not accept the argument, emphasising the broad and
21 Cooper v Cooper & Co Real Estate Albany Ltd, above n 2, at [293].
22 At [294].
23 THG PLC v Zedra Trust Company (Jersey) Ltd [2024] EWCA Civ 158, [2024] 2 All ER (Comm) 835.
24 The case was significantly underestimated in terms of trial direction. It adjourned part heard on 23 February 2024 and was unable to be resumed until 21 October 2024.
flexible jurisdiction conferred by s 174 and recognised by Anderson J in the recent decision of Miedema v Petrou.25 This meant that the merits of the s 174 claims (or at least those not statute barred) had to be carefully considered.
[31] It is correct that my judgment aligned in material respects with the conclusions Mr Meltzer reached in respect of the multiple complaints he was tasked to investigate. However, this court was not bound by Mr Meltzer’s views and the plaintiffs had a prima facie right to reconsideration of their grievances. Undoubtedly, there were parts of their case which were, or which bordered on, being hopeless. I put in that category the claims under the first cause of action, which were so closely aligned to trust claims as to invoke a definitive Limitation Act 1950 response. But the defendants’ attendances cannot be realistically differentiated between the first and second causes of action and, in any event, my assessment is that the first cause of action occupied a comparatively much smaller part of the dispute. Certainly, it received very modest attention in the plaintiffs’ closing submissions.26 In my view the better way to now approach the frailty of that particular cause of action is to factor it into an award for increased costs.
[32] Ultimately, although I have some sympathy for Mr Cooper and CCRE’s position and regard the claim to indemnity costs as reasonably finely balanced, I am not persuaded that I should invoke the jurisdiction under r 14.6(4). I consider Mr Rong, in particular, to have suffered from an element of myopia and although never having actually brought a claim in fraud to have insinuated fraud when he should not have. However, the significant failings in the governance of CCREA, emphasized by Mr Meltzer in his report, and for which Mr Cooper had at least equal responsibility meant that there was a plausible potential claim under s 174. Ultimately, the plaintiffs’ evidence was insufficient to establish it. However, that conclusion was only appropriately reached after hearing and assessing the witnesses, including expert. These are not the hallmarks of the “archetypal” hopeless case.
[33]I therefore decline the defendants’ claim for indemnity costs.
25 Miedema v Petrou [2024] NZHC 3169.
26 Nine of 272 paragraphs in the written closing and brief oral submission.
Increased costs
Jurisdiction
[34] High Court Rule 14.6(3) sets out the circumstances in which the court may order a party to pay increased costs. Relevantly it provides:
14.6 Increased costs and indemnity costs
(3)The court may order a party to pay increased costs if—
…
(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 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
…
(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
…
(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.
[35] In an unmeritorious case, increased costs apply to all steps in the proceeding.27 The courts generally entertain increases in the range of 20 to 50 per cent on scale although the latter is not a cap.28 In TheCircle.co.nz Ltd v Trends Publishing International Ltd (in liq and in rec) the Court of Appeal awarded an increase of 50 per cent for a partially hopeless case.29 Recently, the High Court has also ordered a 50 per cent increase in respect of all steps in the proceeding where the plaintiffs were on notice of the lack of
27 NR v MR [2014] NZCA 623, (2014) 22 PRNZ 636 at [52]; and Broadspectrum (New Zealand) Ltd v Nathan [2017] NZCA 434, [2017] ERNZ 733 at [57].
28 Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [47] and [48].
29 TheCircle.co.nz Ltd v Trends Publishing International Ltd (in liq and in rec), above n 20, at [57].
merit of their position, refused a reasonable offer to withdraw the proceeding without cost consequences and contributed unnecessarily to the time and expense of the proceeding.30
[36] Rule 14.6(3)(b)(v) refers to a failure to accept an offer under r 14.10. Rules 14.10 and 14.11 govern written offers without prejudice except as to costs, commonly known as Calderbank offers. Subject to the court’s discretion, the offeror is entitled to costs on the steps taken in the proceeding after the offer is made if the offer is more beneficial to the offeree than the judgment it obtains.31 As is apparent from r 14.6(3)(b)(v), offers to settle or dispose of proceeding, other than Calderbank offers, are also relevant to the increased costs jurisdiction.
The defendants’ case
[37] The application for increased costs is made by reference, individually and collectively, to the criteria specified in rr 14.6(3)(b)(i); or (ii) and/or (iii); or (v) and/or 14.6(3)(d).
[38]In respect of r 14.6(3)(b)(i), the defendants emphasise that:
(a)The trial was scheduled to commence on 12 February 2024. Strict timetables were imposed to ensure that the plaintiffs served their briefs of evidence, draft chronology and initial index of documents in adequate time to enable the trial to proceed immediately after the holiday period. 27 October 2023 was the date fixed for this purpose. The plaintiffs did not comply with this time limit. Indeed, they only complied after the defendants’ filed an urgent application for strike-out and unless orders. Because the plaintiffs were between solicitors at the time, the briefs which were served contained an extensive amount of inadmissible evidence including unnecessary personal attacks on Mr Cooper/CCRE which the defendants succeeded in striking out on 14 December 2023.
30 Nottingham v Attorney-General [2025] NZHC 592 at [16].
31 High Court Rules 2016, r 14.11.
(b)The plaintiffs called Mr Sumich to give expert evidence. His initial brief of evidence did not comply with r 9.43(2). On the defendants’ application, the plaintiffs were ordered to serve a compliant version.
(c)There were many other procedural defaults by the plaintiffs, all documented in the defendants’ unless order application. They say that the plaintiffs’ serial failures caused them unnecessary costs in having to force the plaintiffs to comply and/or amend relevant timetables to account for delay. They point out, for example, that the plaintiffs breached the timetable direction to file and serve their first amended statement of claim by seven months and that during the intervening period they failed to comply with their own proposed extensions and then failed to engage with the defendants in attempts to reach agreement on a revised timetable once their amended claim was served.
[39] In respect of r 14.6(3)(b)(ii) and (iii), they say that the plaintiffs chose to pursue an unmeritorious case. They adopt the submissions made by them in their indemnity claim.
[40] In respect of rr 14.6(3)(b)(v) and 14.6(3)(d), they reference the fact that in his report Mr Meltzer advanced what he called a number of “mediation type proposals” which would have resulted in payments or credits by CCRE to CCREA totalling approximately
$800,000 and his evidence at trial that these proposals were accepted by Mr Cooper’s interests but not by the plaintiffs who, several months later, commenced their proceedings. The defendants say that this would have delivered a substantially better outcome for the plaintiffs, not only on account of the payments and credits which would have flowed, but by significant reduction in the costs incurred by Mr Meltzer and partially funded by CCREA—money which would have otherwise have flowed back to the creditors or shareholders.32
[41] If that submission is not accepted, then the defendants invoke the formal Calderbank offer made by them on 10 November 2022. At that time, they offered to pay
32 Initially Mr Meltzer’s attendances in relation to the litigation were funded by monies held on his behalf for CCREA. Such reserves have long since been exhausted.
the plaintiffs $125,000 on account of their claims together with the sum of $33,579.50 being scale costs calculated on a 2B basis to that point in time. Additionally, they offered to withdraw CCRE’s counterclaim. The defendants say that this can be compared with the nil recovery that the plaintiffs received under the judgment, which directed that payment in respect of the singularly successful claim be made to CCREA.
Assessment
[42] I have reviewed the procedural history of the claim. The defendants are correct in their reference to multiple breaches by the plaintiffs of timetable and related orders and failure to adhere to the relevant rules of court. Part of this may have been attributable to their sequential changes of solicitor (there appear to have been four different instructing solicitors at various times), but they have no lesser responsibility for that fact. I have been left in no doubt that the plaintiffs serial failures exacerbated the defendants’ costs. Ultimately, they were required to apply for unless orders and then take further steps in relation to the plaintiffs’ non-compliant briefs of evidence. Although the defendants obtained an order for costs on the unless orders application, costs were not fixed. The convenient course at this point is simply to take that application into account in the overall assessment of whether an uplift is necessary on account of failure to comply with the Court’s rules and/or directions.
[43] In respect of the criteria in r 14.6(3)(ii) and (iii), I have already identified that although I am not prepared to describe the entire claim as “hopeless” there were certainly aspects of it which invited or at least bordered on that description. Generally, the claim, in my view, can be described as unmeritorious. I am conscious in that respect of making an ex post facto assessment based on my ultimate judgment but there were, as I have indicated, many antecedent signs that the claim faced major hurdles, particularly in the context of Mr Meltzer’s report when, as I say in the judgment, his forensic abilities are well recognised, he conducted an exhaustive inquiry viewing thousands of documents, he interviewed relevant parties, obtained further specialist advice where required and came to the conclusions he did.
[44]I consider an uplift on scale costs is justified under r 14.6(3)(b)(ii) and (iii).
[45] In respect of the settlement offers, the implications of the formal offer made on 10 November 2022 are clear. Had the offer been accepted, the plaintiffs would have received $158,579.50 compared with their nil recovery pursuant to my judgment. Reviewing the steps and claims identified by the defendants in sch 2 to their principal submission the uplift claim would be some $23,500 less if steps taken prior to 10 November 2022 were removed from the calculation.33
[46] However, in my view, the proposal advanced by Mr Meltzer on 9 December 2020 which was accepted by Mr Cooper/CCRE but not on Mr Meltzer’s evidence, by Mr Rong and Ms Ma, must also be taken into account.
[47] In his submission on behalf of the plaintiffs, Mr Burt says that Mr Meltzer’s proposals were never endorsed by the first and second defendants, were made to Mr Rong and not the plaintiffs collectively, were limited to support office fees and made without authority to bind any party. I do not accept any of this as determinative.
[48] Mr Meltzer’s report may have referred to the proposals as relating generally to “support office costs”, but his covering letter made it clear that what was being proposed was a mechanism by which all claims might be settled. Moreover, in evidence before me he said that his proposal was “part of a way of concluding all the matters between shareholders to enable the company then to be liquidated”, that it was “[a]lmost like a mediated suggestion”, that Mr Cooper accepted the proposal as a pragmatic way to move forward, the total value of his offer was in the order of $800,000 and that Mr Rong and Ms Ma would not agree to their claims being resolved on that basis.
[49] It would, in my view, be unrealistic not to take this proposal into account. As I have already observed, r 14.6(3)(b)(v) is expressed sufficiently widely to capture settlement initiatives less formal than those envisaged under r 14.10. The evidence establishes that there was an offer to settle communicated to Mr Meltzer, that acceptance of the offer would have seen Mr Rong and Ms Ma in an appreciably better position than they were pursuant to the judgment and that they declined to cooperate in the suggested
33 Noting in this respect that item 20 in the schedule listing the documents relates both to a list filed by Ms Jordaan on 14 March 2022 and one by Mr Cooper on 21 December 2023 with the result that I have taken half of the attendances as predating the Calderbank offer.
resolution. They did so because of their ongoing belief that they were entitled to many millions of dollars worth of compensation, primarily because there was no directors’ resolution authorising payment of support office costs to CCRE on the basis charged.
[50] Taking these factors cumulatively into account I am satisfied, by a comfortable margin, that increased costs should be allowed. I consider the appropriate quantum of the uplift to be 50 per cent. In that aspect I am influenced equivalently by the plaintiffs’ failure to comply with rules and directions, their pursuit of unmeritorious claims and their failure to accept offers which, contrasted with the outcome in terms of my judgment, were demonstrably to their benefit.
Quantum of the uplifted scale costs to be awarded
[51] As indicated, the plaintiffs do not take issue with any of the specific steps identified by the defendants and the claims they make.
[52] I note however that the schedule includes an allowance for third counsel at the same rate as applied for second counsel (that is, 50 per cent of the lead counsel rate). It is unusual to make an allowance for third counsel but in cases of particular factual complexity or where the proceedings engage with a substantial volume of documents, the claim can be entertained. I consider this to be such a case but by the same token it is inevitable that third counsel will be exercising a more junior role than that of second counsel. Cooke J recognised this to be the case in Helilogging Ltd (in rec and in liq) v Civil Aviation Authority of New Zealand where he made an allowance of 25 per cent rather than 50 per cent for third counsel.34 I do likewise. The result (with 50 per cent uplift) is to deduct $14,788.12 from the sum sought by the defendants.
[53] I also make a further deduction of $15,000 under r 14.7(d), (f)(iii) and (g) to recognise the fact that, although the defendants can be described as having “succeeded overall”, they failed in relation to their claimed retention of the franchise fee rebate. As indicated, there was no significant factual dispute in this respect, but the submissions of all parties were comprehensive. Necessarily, I must make a robust assessment, but I am
34 Helilogging Ltd (in rec and liq) v Civil Aviation Authority of New Zealand [2021] NZHC 1676.
satisfied that as a result of what I considered to be CCRE’s unlawful set-off there was a sufficiently material increase in the plaintiffs’ costs that this issue should be recognised.
[54] Because the steps, daily allocations and disbursements referenced in the defendants’ memorandum are not otherwise challenged, it is unnecessary for me to replicate these in a schedule to this judgment.
[55] Instead, I can deal with the claim holistically. I accordingly award costs against the plaintiffs and in favour of the defendants in the amount of $363,844.8835 together with disbursements in the amount of $203,360.12 (total $567,205).
The claim by Cooper and Co Real Estate Albany Ltd and/or Mr Meltzer
Claim by CCREA
[56] CCREA was not a defendant to the plaintiffs’ claims. It was added to the proceedings as a third party by CCRE. CCRE’s claim was for unpaid support office costs for the period January 2018 (when Mr Rong persuaded CCREA’s bankers to suspend previous mandates) and 30 August 2018 when, with the support of the Company’s directors, Mr Rong and Mr Cooper, the High Court appointed Mr Meltzer as independent manager of CCREA.
[57] For the plaintiffs to be required to pay costs to a party who they have not sued would be unorthodox—the more so in the present case for the fact that CCREA did not pursue a claim against CCRE in respect of the franchise rebate. Prosecution of that issue fell to the plaintiffs and the result was a judgment in the sum of $71,270.90 (plus interest in a likely sum of approximately $25,000) with a direction that this be paid to CCREA. CCREA therefore benefited significantly from this aspect of the plaintiffs’ case.
[58] I accept that there was an extended period during which the plaintiffs pursued discovery against CCREA and that it incurred associated costs. Ultimately, the plaintiffs’ applications in that respect were withdrawn. CCREA’s indication at that point was that it
35 Being the $393,633 claimed less an adjustment of $14,788.12 in respect of the appearance of third counsel and $15,000 in respect of the judgment against CCRE identified in Cooper v Cooper & Co Real Estate Albany Ltd, above n 2, at [385].
was not minded to seek costs. As a non-party vis-à-vis the plaintiffs, it had the capacity to do so. I do not therefore regard the discovery issue as decisive.
[59] Standing back, I do not consider it appropriate to make any award of costs in favour of CCREA. However, while the distinction may to some extent seem academic, I come to a different conclusion in respect of the claims made by its court appointed manager.
Claim by Mr Meltzer
[60] Mr Meltzer brings a claim (individually or in combination with CCREA) for indemnity costs under r 14.6(4)(d). This provides:
(4)The court may order a party to pay indemnity costs if—
…
(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
[61] As indicated, the sum sought is $251,812.26 including disbursements. In the alternative, he seeks scale costs in the amount of $91,776 with a 50 per cent uplift making for a total claim of $137,664.
[62] He says that it was reasonable for him to have participated in the proceedings, indeed that this was frequently necessary, and that at least until the 3ASOC was filed one week into the hearing, the challenges made by the plaintiffs to his professional reputation were such that he had no alternative but to retain counsel. He says that considerable care was taken to ensure only the bare minimum of attendances necessary to protect the interests of CCREA and his professional reputation.
Discussion
[63] The ultimate touchstone in respect of recovery under r 14.6(4)(d) (like any costs award), is the interests of justice.36 The discretion which I exercise must always be assessed through that lens.
36 Kinney v Pardington (as executors and trustees of the estate of Pardington) [2021] NZCA 174 at [1].
[64] Two criteria must be established before any such award may be made under r 14.6(4)(d). First, the claimant must be a non-party to the proceeding. Secondly, that claimant must have acted reasonably. Where there is a dispute as to the reasonableness of indemnity costs, the trial court should make its own assessment.37
[65] “Party” is defined in the High Court Rules as meaning “any person who is a plaintiff or a defendant or a person added to a proceeding.” Mr Meltzer was not a party to the proceeding. In Mana Property Trustee Ltd v James Developments Ltd, the Supreme Court adopted a similar position in respect of the liquidators.38 The Court held that the party to the relevant litigation was the company, not the liquidators, and that although they were agents of the company they were not liable in costs absent impropriety which was not established.39
[66] The position of Mr Meltzer can, in my view, be considered broadly analogous to that of a liquidator. He was appointed on the joint application of the principal protagonists Mr Rong and Mr Cooper. He was charged by direction of the Court with inquiring into Mr Rong’s multiple grievances, as well as attending to all the normal incidents of winding CCREA down, disposing of its assets, meeting the claims of its creditors and defending its interests generally. Although he received an indemnity for his costs and disbursements from CCREA he could not reasonably have anticipated that he would be left defending his own reputation and the interests of CCREA from a “pot” which had by that stage been exhausted.40 Provided he or she has acted reasonably, it would be a most unusual result if the manager of a company appointed by the High Court was left exposed to meet from his or her own resources the costs of defending claims by a shareholder against the company which impugned his management thereof and attacked the conclusions reached in respect of court mandated inquiries. I start therefore from a position that Mr Meltzer ought to be fully indemnified to the extent he has acted reasonably.
[67] I consider that he did so in all respects. As the manager of the Company, which was the subject of the litigation, he had direct knowledge and was in possession of
37 Edel Metals Group Ltd v Geier Ltd [2018] NZCA 494.at [64].
38 Mana Property Trustee Ltd v James Developments Ltd [2010] NZSC 124, [2011] 2 NZLR 25 at [10].
39 At [10].
40 Noting that he authorized generous distributions to CCREA’s shareholders on sale to Mr Cooper’s interests of CCREA’s Albany fit-out.
evidence regarding the claims at issue at trial. It was highly likely that he would be required to make submissions and provide evidence to ensure the claims were properly determined. It was in CCREA’s interests that his counsel address me on issues such as who the beneficiary of any award should be if the plaintiffs’ s 174 claims were made out. His counsel greatly assisted in this respect. It was also predictable that the plaintiffs would seek access to all CCREA’s records and that this process would have to be managed by him.
[68] Moreover, he was fully justified in seeking to protect his professional reputation against allegations by the plaintiffs, only abandoned in the 3ASOC, that he had not acted independently of Mr Cooper’s interests. Predictably there was also a sustained attack on the accuracy of the conclusions in respect of the Court’s particularised inquiries.
[69] As Trial Judge I was also able to observe first-hand the restraint with which his counsel approached participation in the proceedings—only attending when there was genuinely an issue which engaged with CCREA’s interests or when relevant evidence was being given, including obviously by Mr Meltzer himself. I am unpersuaded that there is anything in the attendances of Mr Meltzer, associates in his firm or his solicitors/counsel in relation to the litigation which could be considered unreasonable. He should not, in the final reconning, be out of pocket for any of the $251,812.86 incurred.
[70] It is for those reasons that I consider Mr Meltzer to be in that category of persons under r 14.6(4)(d) in whose favour this Court may exercise its discretion in awarding indemnity costs.
[71] If I am wrong in that analysis, I consider r 14.6(4)(f) to be engaged and the circumstances of Mr Meltzer’s involvement in these proceedings to be some other reason which justifies the court making an order for indemnity costs. This despite the principle that the determination of costs should be predictable and expeditious.
[72] However, the circumstances of this case raise a set of almost unique considerations. The terms of Mr Meltzer’s appointment entitled him to be indemnified by CCREA for his costs. Through the early stages of the litigation there were available
funds to do so. That is why, of the $251,812.26 in costs which have been incurred, only
$133,088.17 at this stage remains outstanding.41
[73] Moreover, my judgment provides for a payment by CCRE to CCREA in a total amount which I expect to be in the order of $90,000–100,000. This may indeed already have been paid. It is possible therefore that in his personal capacity Mr Meltzer’s ultimate exposure for unpaid costs is as little as $30,000. It is arguable that is the only sum to which he is entitled to indemnity from the plaintiffs.
[74] In that context all that would result from an indemnity award of $251,812.26 would be to flush up CCREA’s cash resources, which in the context of my $432,000 judgment against it would see a significant payment back out to CCRE.42 In a practical sense that would mean that CCRE received a sum unanticipated in my judgment (which identified the third party claim as “somewhat academic”).
[75] But there are a number of unknowns in respect of which I need to be further addressed before I can make a final decision in terms of Mr Meltzer’s costs entitlements, including:
(a)What is the exact quantum of CCREA’s recovery (including interest) under
[385] of my judgment?
(b)Has this sum now been paid?
(c)Does Mr Meltzer have priority over any other creditors of CCREA including (now) CCRE?
(d)Are there any other creditors of CCREA, noting as I do at [137], n 25 to my judgment that as at the time of delivery Mr Meltzer had yet to determine the validity of an invoice from Prestige Print?
41 As confirmed in a memorandum filed after trial by his counsel on 8 November 2024.
42 It is a given that if Mr Meltzer received an indemnity award from the plaintiffs he would have to account back to CCREA for the $118,274.09 already paid to him or his solicitors by it.
[76] For these reasons my judgment in respect of Mr Meltzer’s costs claim is issued on an interim basis and will not be quantified until receipt of further submissions. Since each of the plaintiffs, the defendants and Mr Meltzer stand to be affected by the ultimate award I make, brief submissions are invited from each by 4 July 2025. I will then issue my final judgment on Mr Meltzer’s claim.43
Result
[77] I award costs and disbursements against the plaintiffs and in favour of the defendants in the sum of $567,205.
[78]I dismiss the application for costs by CCREA.
[79] In respect of the application by Mr Meltzer for costs against the plaintiffs I make the findings and observations in [60]–[76] hereof and invite further submissions by 4 July 2025 to facilitate final quantifications.
Muir J
43 I am anticipating no more than 3-5 pages from each counsel.
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