DHC Assets Limited v Arnerich - [2020] NZHC 1133

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-307

[2020] NZHC 1133

UNDER The Companies Act 1993

BETWEEN

DHC ASSETS LIMITED

Plaintiff

AND

ANTONY IVO ARNERICH

Defendant

Hearing: On the papers

Counsel:

F J Thorp & L Turner for Plaintiff

J D McBride & A J Steel for Defendant

Judgment:

29 April 2020

JUDGMENT OF PAUL DAVISON J

[Re Costs]

This judgment was delivered by me on 29 April 2020 at 11:00 am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Duthie Whyte, Auckland Doug Cowan, Auckland

DHC ASSETS LTD v ARNERICH [2020] NZHC 1133 [29 April 2020]

Introduction

[1] DHC Assets Limited (the plaintiff) applies for costs and disbursements totalling $578,139, of which $150,557 is for disbursements. The plaintiff succeeded in its claim brought against Anthony Arnerich (the defendant) in which it alleged that as the director of Vaco Investments (Lincoln Road) Ltd, he breached his duty of good faith owed to the plaintiff as a creditor of the company. By my judgment delivered on 2 October 2019 the defendant, Anthony Arnerich was ordered to pay the plaintiff the sum of $367,768.12 together with interest from the date of the adjudication, compounding monthly at the rate of 12.4 percent.1

[2]In its claim the plaintiff alleged that it was an unpaid creditor of Vaco for

$1,088,156 together with interest. Accordingly it has succeeded in establishing just over a third of the amount it claimed.

[3] The plaintiff seeks an award of costs calculated on the basis that all steps taken by it following the pre-trial rulings made by Associate Judge Bell on 26 July 2018 be reclassified from Category 2 to Category 3. In the alternative, the plaintiff applies for many of the steps taken after 26 July 20182 to be classified on a Band C basis. The plaintiff also seeks increased costs by way of a 50 per cent uplift to be applied to all steps taken in the proceeding, or alternatively to be applied to a number of specific steps taken in the proceeding.

[4] While accepting that the plaintiff is entitled to an award of costs, the defendant disputes the amounts claimed by the plaintiff. The defendant says that at a pre-trial stage the proceedings were classified as Category 2, and that the parties had thereafter proceeded to trial on that basis. The defendant opposes any reclassification of the proceeding or any steps as Category 3, and opposes any uplift of the plaintiff’s scale costs. To the contrary, the defendant says that the Court should reduce the plaintiff’s costs by 25 percent. The defendant also disputes several of the amounts claimed as disbursements by the plaintiff relating to expert witness costs, and the outsourcing of work related to discovery and the engagement of assistance to operate the electronic bundle during the trial. Applying this approach, the defendant says that the plaintiff is

1 DHC Assets Ltd v Arnerich [2019] NZHC 1695 at [353].

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: [2020] NZHC 1133
Decision Date: 29 April 2020

CaseChat Overview and Summary

DHC Assets Limited (plaintiff) sought costs and disbursements from Anthony Arnerich (defendant) in the amount of $578,139, following the plaintiff's successful claim against the defendant for breach of director's duties. The plaintiff alleged that it was an unpaid creditor of Vaco Investments (Lincoln Road) Ltd, and that the defendant, as the director of Vaco, breached his duty of good faith owed to the plaintiff. The plaintiff sought an award of costs calculated on the basis that all steps taken by it following the pre-trial rulings made by Associate Judge Bell on 26 July 2018 be reclassified from Category 2 to Category 3. The plaintiff also sought an uplift of the costs by 50 per cent. The defendant disputed the plaintiff's claims for costs and disbursements, and argued that the proceedings should remain classified as Category 2. The defendant also opposed any uplift of the plaintiff's scale costs, and argued that the Court should reduce the plaintiff's costs by 25 per cent. The Court declined the plaintiff's application for reclassification of the proceeding as Category 3, finding that the plaintiff had not advanced any justification for not having raised the issue of the appropriate classification prior to trial. The Court found that the matters relied on by the plaintiff as supporting reclassification of the proceeding as Category 3 were evident to the parties prior to trial, and there was therefore the opportunity for either party to seek to have the proceeding reclassified had they considered that it was appropriate to do so. The Court found that the plaintiff was entitled to an uplift of scale costs by 50 per cent, and approved the plaintiff's disbursements, other than the disallowed scheduling fees and the expert witness fees which were reduced by 50 per cent.

Orders