Dalton v Mackley - [2021] NZHC 2999

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-000760

[2021] NZHC 2999

UNDER the Companies Act 1993

IN THE MATTER

of the liquidation of Carbon Group Limited (in liquidation)

BETWEEN

SIMON DALTON and MATTHEW PETER KEMP

Applicants

AND

NEIL MACKLEY

Respondent

Hearing: On the papers

Counsel:

K K Kommu for Applicants

B J Norling and C T Zhang for Respondent

Judgment:

5 November 2021

COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 5 November 2021 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

DALTON v MACKLEY Costs Judgment [2021] NZHC 2999 [5 November 2021]

Costs application

[1] The liquidators of Carbon Group Ltd (in liq) applied for directions under s 284(1)(a) of the Companies Act 1993. On 29 July 2021, Powell J directed that a hearing be held to determine as a preliminary issue whether the Court had jurisdiction under s 284(1)(a) to grant directions of the scope and nature sought by the liquidators.

[2] In an interim judgment of 7 September 2021, I held the orders sought by the liquidators were not orders the Court could properly make under s 284(1)(a) in the circumstances of this case.1

[3] In a further judgment of 8 October 2021, I made directions to regularise the proceeding and I called for submissions on costs in relation to the interim judgment.2 The directions I made included that upon receipt of memoranda I would decide the issue of costs on the papers unless I considered a hearing was required. I then received memoranda from counsel in relation to costs. Following receipt of the liquidators’ memorandum a further memorandum of reply submissions was filed for the respondent. There was no direction for the filing of reply submissions and no leave was sought to do so. In the result they were not substantially helpful.

The respondent seeks costs

[4] Counsel for the respondent submits the respondent should be awarded costs of the proceeding to date on a 2B basis with a 50 per cent uplift. The submissions proceed on the premise that the respondent was the successful party and therefore entitled to costs.

[5] The respondent’s claim for an uplift on scale costs relies on r 14.6 of the High Court Rules. The respondent submits the liquidators used the wrong procedure to commence the proceeding in an attempt to shortcut standard court procedures and this was not appropriate. This, it is submitted, put the respondent to significant unnecessary cost. It is said the respondent’s actual costs significantly exceed both scale costs and the increased costs that are sought, so that even the uplift on scale costs

1 Dalton v Mackley [2021] NZHC 2329.
2 Dalton v Mackley [2021] NZHC 2697

will not put the respondent back into the position he would have been had the proceeding been commenced on a proper basis.

[6] The respondent’s counsel advises that Calderbank offers have been exchanged which…

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.

Continue reading Dalton v Mackley

Details

AGLC: Dalton v Mackley [2021] NZHC 2999
Case: [2021] NZHC 2999
Decision Date: 5 November 2021

CaseChat Overview and Summary

In the High Court of New Zealand, the applicants Simon Dalton and Matthew Peter Kemp, liquidators of Carbon Group Ltd, applied for directions under the Companies Act 1993. The application was opposed by Neil Mackley, the respondent. The applicants sought a ruling on the jurisdictional scope of the court's authority to grant the directions they requested. The central legal issue was whether the court had the jurisdiction to grant the directions sought by the liquidators under section 284(1)(a) of the Companies Act 1993.

The court found that the liquidators had not correctly applied the appropriate procedure and, as such, the orders they sought were not orders the court could properly make. The respondent contended that he was entitled to costs of the proceeding to date on a 2B basis with a 50% uplift, arguing that the liquidators' incorrect procedure resulted in significant unnecessary costs. In contrast, the liquidators argued that the costs should be limited to those incurred in relation to the interim judgment and not the proceeding as a whole. They also contended that there were no grounds for awarding increased costs as their position did not lack merit.

The court determined that all matters of costs were discretionary, but the discretion must be exercised on a principled basis. It was held that the respondent was successful upon the hearing of the preliminary issue and was prima facie entitled to costs in relation to that matter. However, the court did not accept that the respondent was entitled to costs of the whole proceeding to date, as the proceeding had not been determined. The court also found that the liquidators' approach was supported by authority, and the respondent's late objection to jurisdiction did not warrant an award of increased costs. The court decided to award the respondent costs calculated on a 2B basis in relation to the determination of the preliminary issue and reserved leave for the respondent to apply for "top-up" costs following the determination of the proceeding on the basis of any Calderbank offers exchanged between the parties.

Orders