Easternmanor Development Limited v Yeshe Development Limited - [2025] NZHC 1971

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-2342

[2025] NZHC 1971

BETWEEN
EASTERNMANOR DEVELOPMENT LIMITED

Plaintiff

AND

YESHE DEVELOPMENT LIMITED

Defendant

Hearing: (On the papers)

Appearances:

R O Parmenter for Plaintiff

P J Wright and T M McGoldrick for Defendant

Judgment:

17 July 2025

JUDGMENT OF ASSOCIATE JUDGE LESTER

(Costs)

This judgment was delivered by me on 17 July 2025 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

………………………..

EASTERNMANOR DEVELOPMENT LTD v YESHE DEVELOPMENT LTD [2025] NZHC 1971 [17 July 2025]

[1] On 5 June 2025, I made an order placing Yeshe Development Limited (Yeshe) into liquidation.1 Mr Parmenter, counsel for the plaintiff, Easternmanor Development Limited (Easternmanor), sought a short time to file costs submissions which he has now filed.

[2] Mr Parmenter seeks costs on a 2B basis against Yeshe. So much is unremarkable and not opposed by Mr Wright, counsel for Yeshe, albeit he takes issue with costs claimed by Mr Parmenter for a strike-out application that did not proceed. I agree with Mr Wright’s submission that given that application was either withdrawn or dismissed,2 that costs for that step are not appropriate.

[3] Accordingly, there an award of costs against Yeshe in favour of Easternmanor on a 2B basis as per paragraph 7 of Mr Parmenter’s memorandum of 5 June 2025, save for the interlocutory application to strike-out.

[4] Had that been the only issue, no doubt counsel would have resolved matters directly, but Mr Parmenter also seeks a costs award against a director of Yeshe, Mr Miao. The reasons for that are as follows.

[5] Easternmanor has a separate claim against the directors of Yeshe for allowing it to enter into transactions in breach of their duties under the Companies Act 1993 (the Act). Essentially, Easternmanor says the directors caused Yeshe to trade recklessly when it contracted with Easternmanor in respect of the agreements referred to in my judgment of 5 June 2025, and my earlier judgment of 24 August 2023.3

[6] Mr Parmenter submits the defendant directors “took the point that the way the statement of claim proceeded, Yeshe needed to be put into liquidation”. This led to Easternmanor bringing its liquidation proceedings against Yeshe.

[7] Easternmanor sought the liquidation of Yeshe, relying on a judgment obtained in the August 2023 hearing, for just over $400,000. Yeshe opposed the liquidation

1      Easternmanor Development Ltd v Yeshe Development Ltd [2025] NZHC 1455.
2      Easternmanor Development Ltd (8188656) v Yeshe Development Ltd (82517678) HC Auckland CIV-2024-404-2342, 6 December 2024.
3      Easternmanor Development Ltd v Yeshe Development Ltd [2023] NZHC 2317.

application, and in doing so, raised a defence that had not been raised in the August 2023 hearing. Mr Parmenter submits it is clear that Yeshe is insolvent, and he was critical of Yeshe opposing liquidation on a basis that could and should have been raised in the August 2023 hearing.…

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 Easternmanor Development Limited v Yeshe Development Limited

Details

AGLC: Easternmanor Development Limited v Yeshe Development Limited [2025] NZHC 1971
Case: [2025] NZHC 1971
Decision Date: 17 July 2025

CaseChat Overview and Summary

The High Court of New Zealand, Auckland Registry, was presented with a case between Easternmanor Development Limited and Yeshe Development Limited, with the plaintiff seeking costs on a 2B basis against the defendant and one of its directors, Mr Miao. The plaintiff, represented by counsel R O Parmenter, sought to recover costs incurred during the litigation process, with a specific focus on the costs associated with a strike-out application that did not proceed to hearing. The defendant, represented by counsel P J Wright and T M McGoldrick, did not oppose the general awarding of costs on a 2B basis but contested the costs related to the unsuccessful strike-out application.

The central legal issue before the court was whether the plaintiff was entitled to recover costs from Yeshe on a 2B basis and if there were exceptional circumstances warranting a costs award against Mr Miao, a director of Yeshe. The court considered the nature of the litigation, the actions of the directors in defending the liquidation application, and whether the defence raised by Yeshe constituted an abuse of process. The court also examined whether the directors' actions warranted personal liability for costs.

The court concluded that the plaintiff was entitled to costs against Yeshe on a 2B basis, excluding those associated with the unsuccessful strike-out application. Regarding Mr Miao, the court found that while the directors' actions in defending the liquidation application could be seen as an abuse of process, they did not meet the exceptional criteria required for imposing personal liability on a director. The court reasoned that the directors had a legitimate interest in preventing the company's liquidation, and the issues raised in the litigation were not dealt with inappropriately.

The court dismissed the application for costs against Mr Miao, emphasizing that more than mere participation in the litigation was needed to hold a director personally liable for costs. The court's decision was based on the principle that directors of insolvent companies typically guide litigation pursued by the company, and this was especially true in cases where the company was the defendant.

In summary, the court awarded costs against Yeshe but declined to impose personal liability on Mr Miao for the costs incurred during the litigation.

Orders