Du Val Group NZ Limited v Servsync Limited - [2024] NZHC 3265

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2022-419-000232 [2024] NZHC 3265

UNDER Parts 19 and 32 of the High Court Rules 2016 and Senior Courts Act 2016

IN THE MATTER OF

A without notice originating application for freezing orders and ancillary orders under

rr 32.2 and 32.3 of the High Court Rules 2016

BETWEEN

DU VAL GROUP NZ LIMITED and DU VAL MANAGEMENT LIMITED

Plaintiffs

AND

SERVSYNC LIMITED

First Defendant

STUART GOODFELLOW

Second Defendant

RED CELL CYBER LIMITED

Third Defendant

On the papers

Counsel:

K A Lomas and L H H Hunt for Plaintiffs

C T Patterson and E J Grove for Defendants

Judgment:

5 November 2024

JUDGMENT OF VAN BOHEMEN J

[on costs]

This judgment was delivered by me on 5 November 2024 at 3:30 pm pursuant to r 11.5 of the High Court Rules 2016.

Counsel/Solicitors:
Braun, Bond & Lomas Ltd, Hamilton C T Patterson and E J Grove, Hamilton Lateral Lawyers Ltd, Auckland

Registrar/Deputy Registrar

……………………………..

DU VAL GROUP NZ LTD v SERVSYNC LTD [2024] NZHC 3265 [5 November 2024]

[1] This judgment decides an application for costs by the defendants, Servsync Ltd, Stuart Goodfellow and Red Cell Cyber Ltd following my judgment of 22 March 2024 in which I discharged a freezing order made by Lang J on 29 August 2022 on the application of the plaintiffs, Du Val Group NZ Ltd and Du Val Management Ltd (together, Du Val) over the assets of the Goodfellow entities and held that the Goodfellow entities were entitled to costs.1

[2] As set out below, determination of the application has been delayed by administrative inefficiency within the Court administration, for which I apologise.

Relevant background

[3] In the Discharge Judgment, I recorded that I was satisfied that, at the time of the application for a freezing order, the plaintiffs had established a good arguable case on a prospective cause of action and that it was clearly arguable that Mr Goodfellow had misappropriated funds from Du Val by establishing Servsync without Du Val’s knowledge and arranging for invoices to be submitted to Du Val for payment.2 In a footnote, I also acknowledged that there were obvious weaknesses and inconsistencies in Mr Goodfellow’s account of what happened with Servsync.3

[4] However, I found there had been material non-disclosure by the plaintiffs when applying for the freezing order made by Lang J. In particular, I found that affidavits filed by Du Val in support of the application for a freezing order omitted key information that was known or ought to have been known to Du Val and conveyed to the Court the impression that Mr Goodfellow’s departure for the United Kingdom was a complete surprise to most people in Du Val and that this remained the position at the time the application for a freezing order was filed. It also conveyed the impression that Mr Goodfellow had terminated his relationship with Du Val. I held that both impressions were thoroughly incorrect.4

1

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: [2024] NZHC 3265
Decision Date: 5 November 2024

CaseChat Overview and Summary

The High Court of New Zealand dealt with an application for costs in the case of Du Val Group NZ Limited and Du Val Management Limited versus Servsync Limited, Stuart Goodfellow, and Red Cell Cyber Limited. The plaintiffs sought a freezing order over the assets of the defendants, which was discharged by the Court. The defendants subsequently applied for costs following the discharge of the freezing order. The primary legal issues concerned the appropriate basis for setting costs, whether the plaintiffs' non-disclosure of material facts warranted indemnity costs, and the proportionality of the costs order in relation to the substantive claim. The Court examined the principles governing costs, including the discretion of the Court to award costs beyond the standard scale where there is vexatious, frivolous, or improper conduct. The Court also considered the defendants' submissions that the plaintiffs' conduct warranted indemnity costs due to deliberate or reckless non-disclosure and the plaintiffs' refusal to accept a settlement offer. In contrast, the plaintiffs argued that their case had merit and that the post-judgment conduct should not influence the costs order. Ultimately, the Court found the plaintiffs' conduct to be at least as improper as that in previous cases warranting indemnity costs. The Court ordered the plaintiffs to pay the defendants' actual costs and disbursements.

The final orders of the Court were that Du Val Group NZ Limited and Du Val Management Limited were to pay the actual costs of $30,158.33 and disbursements of $495.56 to Servsync Limited, Stuart Goodfellow, and Red Cell Cyber Limited.

Orders