Debut Homes Limited (in liquidation) v Cooper - [2022] NZHC 1302

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2015-404-002280

[2022] NZHC 1302

BETWEEN
DEBUT HOMES LIMITED (IN LIQUIDATION)
First Plaintiff

HENRY DAVID LEVIN AND VIVIEN JUDITH MADSEN-RIES AS LIQUIDATORS OF DEBUT HOMES LIMITED (IN LIQUIDATION)

Second Plaintiffs

AND

LEONARD WAYNE COOPER

First Defendant

LEONARD WAYNE COOPER AND TRACEY COOPER AS TRUSTEES OF THE L & T COOPER FAMILY TRUST

Second Defendants

Hearing: 27 May 2022

Appearances:

P V Shackleton for the Plaintiffs

R B Hucker for the First and Second Defendants

Judgment:

2 June 2022

JUDGMENT OF HINTON J

(As to costs and interest)

This judgment was delivered by me on Thursday 2 June 2022 at 4.30 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:………………………

Solicitors:
Meredith Connell, Auckland Hucker & Associates, Auckland

DEBUT HOMES LIMITED (IN LIQUIDATION) v COOPER [2022] NZHC 1302 [2 June 2022]

Introduction

[1] In 2018, liquidators of the plaintiff company (Debut) sued its sole director, Mr Cooper, for breaches of the Companies Act 1993 (the Act). Mr Cooper and his wife were settlors, trustee, and principal beneficiaries of the second defendant, a family trust. The liquidators sought an order against the trust to discharge the trust’s security charge in respect of a loan made to Debut. I gave judgment on 15 March 2018 in favour of the plaintiffs against both defendants.

[2] The parties made written and oral submissions as to costs in 2018. By consent, the costs judgment was withheld pending the outcome of an appeal process. The substantive judgment was ultimately upheld by the Supreme Court after being overturned by the Court of Appeal. With the appeal process finally completed, the parties filed further memoranda to finalise the issue of costs in this Court and a further telephone hearing was convened on 27 May 2022.

[3] The plaintiffs seek costs against the first and second defendants on a joint and several basis. They modified the amount originally sought both in terms of costs and disbursements following the first memorandum filed by Mr Hucker, to recognise a number of relatively minor points that were conceded. The final amount claimed by way of costs is $62,941.75 as set out in a schedule attached to the plaintiffs’ memorandum dated 1 May 2018. Disbursements total $23,968.62, being primarily expert fees of Mr Killick, along with a small service fee.

[4]There is also an outstanding issue of interest to the date of judgment.

Costs against first defendant

Liability for costs

[5] Mr Hucker for the defendants properly accepts that the plaintiffs were the successful party as against the first defendants, subject to the points noted below. Also subject to the points noted below he accepts that the schedule of costs and disbursements is properly calculated.

Expert’s fees and disbursements

[6] Mr Hucker takes issue over the charging of travel time and air fares of Mr Killick. Mr Killick is an expert forensic accountant based in Christchurch. He had to travel to Auckland for…

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: [2022] NZHC 1302
Decision Date: 2 June 2022

CaseChat Overview and Summary

Debut Homes Limited, a company in liquidation, sued Leonard Wayne Cooper, its former director, and the L & T Cooper Family Trust, of which Mr Cooper and his wife were settlors, trustees, and beneficiaries, for breaches of the Companies Act 1993. The liquidators sought an order to discharge the family trust’s security charge in respect of a loan made to Debut. The High Court found in favour of the plaintiffs and ordered the defendants to pay compensation. The appeal process followed, with the substantive judgment upheld by the Supreme Court. The case then returned to the High Court to determine the issue of costs. The plaintiffs sought costs against the first and second defendants on a joint and several basis. The defendants argued for a reduction of the costs awarded, claiming partial success in the proceedings, among other reasons. The court held that no deductions were to be made to the costs and disbursements claimed by the plaintiffs against the first defendant. They were payable in full. Regarding the second defendants, the court awarded costs and disbursements at 50 per cent of the amounts sought, on a joint and several basis with the first defendant. The plaintiffs were also entitled to interest at a rate of five per cent per annum running from the date of liquidation to the date of judgment. The substantive judgment was recalled for that purpose.

The court’s decision was based on the substantial success of the plaintiffs in the proceedings, despite the mixed outcomes in their arguments against the first defendant. The court found that the plaintiffs’ arguments were reasonably run and necessary to obtain judgment. The court also considered the inextricable link between the cases of the first and second defendants, as observed by the Supreme Court. The court rejected the defendants’ arguments for a reduction of costs, finding that most of the points raised were part of the wider matrix of the case. The court emphasised that the plaintiffs had to run all of their arguments to achieve their ultimate success and that the defendants’ arguments for a reduction of costs did not significantly impact the outcome. The court also found that the plaintiffs were entitled to interest from the date of liquidation, as the cause of action arose on that date, and the compensation under the Companies Act fell within the category of damages.

Orders