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Finnigan v Ellis

Finnigan v Ellis

Case [2018] NZHC 2440 17 September 2018

Costs

Limitation Periods

Liquidation

Unconscionable Conduct

Civil Litigation & Procedure

Company Law

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2016-404-001590

[2018] NZHC 2440

BETWEEN PERI MICAELA FINNIGAN and BORIS VAN DELDEN
Plaintiffs

AND

BRIAN ROBERT ELLIS

First Defendant

GERALD NORMAN WILLIAMS
Second Defendant

JAMES NEIL BLACK

Third Defendant

Hearing: 12 September 2018

Appearances:

J K Boparoy for Plaintiffs

W C Pyke for First Defendant G N Williams in person

J N Black in person

Judgment:

17 September 2018

RESERVED JUDGMENT OF WYLIE J [COSTS]

This judgment was delivered by Justice Wylie On 17 September 2018 at 12.30 pm
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

Date:…………………………

Solicitors/counsel:
Shieff Angland, Auckland
Ellis Law/W C Pyke, Auckland

Copy to:
G N Williams J N Black

FINNIGAN v ELLIS [2018] NZHC 2440 [17 September 2018]

Introduction

[1] I refer to my reserved judgment of 22 May 2018.1 I found in favour of the plaintiff liquidators and held that the first, second and third defendants, as directors – whether de jure, de facto or shadow – of Wenztro Co-operation Limited (in liquidation) (Wenztro), had breached ss 135, 136 and 137 of the Companies Act 1993. I made orders requiring them to repay to the company the amount claimed by the liquidators in the fourth amended statement of claim together with interest. Further, I recorded that the plaintiff liquidators, as successful parties, were entitled to costs and I put in place a timetable for the filing of memoranda in that regard.

[2] On 6 June 2018, the liquidators through counsel filed a lengthy memorandum with voluminous schedules seeking costs on a 2B basis, together with a 50 per cent uplift. The amounts sought were as follows:

(a)the costs of the proceeding – $134,676 (including uplift);

(b)disbursements – $19,709;

(c)costs incurred by the liquidators in the administration of Wenztro’s affairs – $236,409.84;

(d)disbursements incurred by the liquidators – $3,343.73;

(e)the liquidators’ costs in reconstructing the financial accounts of Wenztro – $1,495; and

(f)interest on the judgment debt from the date of liquidation and post- judgment – $216,682.08.

The total amount the liquidators sought to recover by way of a costs order, including interest as at 6 June 2018, amounted to $612,315.65.

1 Finnigan v Ellis [2018] NZHC 1146.

[3] Mr Pyke filed a memorandum in reply on behalf of the first defendant, Mr Ellis, on 21 June 2018. Nothing was filed by either Mr Williams or Mr Black.

[4] Given the scope of the orders sought, and some of the concerns raised by Mr Pyke, I directed a further hearing in relation to costs.

[5] The liquidators then filed yet a further memorandum through counsel, with more voluminous schedules, seeking to clarify some of the sums sought.

[6]The hearing proceeded on 12 September 2018.

[7] I deal first with the costs of the proceedings, then with the costs of the liquidation and then with interest.

Costs of the proceeding

[8] Costs of a proceeding are, of course, at the discretion of the…

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 Finnigan v Ellis

Details

AGLC: Finnigan v Ellis [2018] NZHC 2440
Case: [2018] NZHC 2440
Decision Date: 17 September 2018

CaseChat Overview and Summary

The case of Finnigan v Ellis before Justice Wylie in the High Court of New Zealand Auckland Registry involved a dispute between the plaintiffs, who were liquidators of Wenztro Co-operation Limited (in liquidation), and three defendants who were directors of the company. The liquidators sought to recover costs incurred in the liquidation and proceedings against the directors, who had been found to have breached several sections of the Companies Act 1993. The court was tasked with determining the appropriate costs to be awarded to the liquidators, including any increase in costs due to the conduct of the defendants, as well as the liquidators' claim for costs incurred in the administration of the company's affairs.

Justice Wylie began by addressing the costs of the proceedings, which are at the discretion of the Court under the High Court Rules. The court determined that the liquidators were entitled to costs as they had succeeded in their action against the defendants, despite only partially achieving the intended result. The court then proceeded to examine the specific costs claimed by the liquidators, making adjustments based on the defendants' objections and the court's own discretion to reduce costs where unnecessary expenses were incurred due to the liquidators' actions. The court also awarded an uplift in costs due to the defendants' conduct, which unnecessarily prolonged the proceedings.

Regarding the liquidators' claims for the costs of the liquidation, Justice Wylie found that these costs were not properly sought in the pleadings and that the defendants were not on notice of this claim. The court held that such costs could not be recovered from the defendants as part of the costs of the proceedings but could be recovered from the company itself under different provisions of the Companies Act. Consequently, the court declined to award these costs to the liquidators against the defendants.

Finally, the court noted that the calculation of interest on the judgment debt was a matter for the parties and would not be determined in the context of the costs application.

In conclusion, Justice Wylie awarded the liquidators the costs of the proceedings as detailed in the judgment, while declining to award the liquidators' costs of the liquidation against the defendants.

Orders