CP Asset Management Limited v Grant - [2012] NZHC 2573

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-2498 [2012] NZHC 2573

UNDER the Companies Act 1993

IN THE MATTER OF the liquidation of NZ Properties Holding
Limited (in liquidation)

BETWEEN CP ASSET MANAGEMENT LIMITED Applicant

ANDDAMIEN GRANT AND STEVEN KHOV Respondents

Hearing: By memoranda

Counsel: R B Hucker for applicant
B J Norling for respondents

Judgment: 5 October 2012

(SUPPLEMENTARY) JUDGMENT OF LANG J

This judgment was delivered by me on 5 October 2012 at 4.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

CP ASSET MANAGEMENT LIMITED V DAMIEN GRANT AND STEVEN KHOV HC AK CIV-2012-404-
2498 [5 October 2012]

[1] On 30 August 2012 I delivered a judgment requiring the liquidators of New Zealand Properties Holding Limited (in liquidation) (“the liquidators”) to pay costs to the applicant on a category 2B basis together with disbursements as fixed by the Registrar.[1]

[1] CP Asset Management Ltd v Grant and Khov [2012] NZHC 2228.

[2] On 6 September 2012, counsel for the liquidators filed a memorandum seeking clarification as to whether the costs were payable by the liquidators personally. He also pointed out that the Court has the power under reg 16(a) and (b) of the Companies Act 1993 Liquidation Regulations 1994 to direct that costs are to be added to the applicant’s proof of debt, or paid out of the assets of the company as an expense of the liquidators.

[3] I then invited counsel for the applicant to file a memorandum responding to the issues raised by counsel for the liquidators. I am grateful to counsel for filing memoranda in response and reply as directed.

[4] I observe at the outset that the liquidators ought to have raised these issues much earlier. To the extent that I have made an award of costs against the liquidators, I consider I am now functus officio. This is because the applicant perfected my earlier judgment by sealing the order for costs against the liquidators on 6 September 2012. For that reason I do not consider that it is now open to me to revisit my earlier conclusion that the liquidators should be required to pay costs to the applicant.

[5] Had I been able to do so, however, the argument that the liquidators now advance is not strong. They rely principally upon observations made by the Supreme Court in Mana Property Trustees Ltd v James Developments Ltd.[2]In that case the liquidators of a company had permitted litigation in which the company was involved to continue after it was placed in liquidation. The company was ultimately unsuccessful in the litigation, and the opposing party sought an award of costs against the liquidators personally. The Supreme Court noted[3] that the party to the
litigation was the company, and not the liquidators personally. The liquidators had

made their decision to permit the litigation to continue in their capacity as agents of the company, having taken over the conduct of the company’s affairs from its directors.

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: [2012] NZHC 2573
Decision Date: 5 October 2012

CaseChat Overview and Summary

CP Asset Management Limited sought costs from the liquidators of New Zealand Properties Holding Limited, following a dispute over the rejection of a proof of debt. The High Court of New Zealand, Auckland Registry, considered the matter and ruled that the liquidators should be liable for the costs on a category 2B basis. The liquidators argued that the costs should either be added to the applicant's proof of debt, or paid out of the assets of the company as an expense of the liquidators. The court acknowledged that the liquidators should have raised these issues earlier but considered that the matter had become final with the sealing of the order for costs. The court observed that the liquidators could have avoided the costs by giving the applicant a reasonable opportunity to provide supporting information and rescinding or suspending their decision to reject the proof of debt once the applicant provided further information. The court ultimately decided not to make the orders sought by the liquidators and maintained that the liquidators should bear the burden of the costs.

Orders