Forresters Nominee Company Limited & Hubbard Churcher Trust Management Limited

[2012] NZHC 3604

THE NAMES OF ALL INVESTORS ARE PERMANENTLY SUPPRESSED.

IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY

CIV-2011-476-000642 [2012] NZHC 3604

IN THE MATTER OF     THE CORPORATIONS (INVESTIGATION & MANAGEMENT) ACT 1989

AND IN THE MATTER OF THE STATUTORY MANAGEMENT OF FORRESTERS NOMINEE COMPANY LIMITED AND HUBBARD CHURCHER TRUST MANAGEMENT LIMITED

AND IN THE MATTER OF RICHARD GRANT SIMPSON, TREVOR FRANCIS THORNTON AND GRAEME CARSON MCGLINN AS STATUTORY MANAGERS OF FORRESTERS NOMINEE COMPANY LIMITED AND HUBBARD CHURCHER TRUST MANAGEMENT LIMITED

Hearing:         Dealt with on the papers

Judgment:      21 December 2012

JUDGMENT OF CHISHOLM J AS TO MRS HUBBARD’S COSTS

[1]      In  the  judgment  delivered  on  1  June  2012  I  indicated  that  my  initial impression was that counsel for Mrs Hubbard should be paid from the Hubbard Management Fund (HMF).  This was on the basis that the contribution of counsel for Mrs Hubbard had been very significant.

[2]      The statutory managers oppose an order for costs as proposed above on the basis that it was Mr Hubbard who created a situation giving rise to the litigation and

that it would be inappropriate for an order to be made.  The amicus appointed by the

FORRESTERS NOMINEE COMPANY LIMITED & HUBBARD CHURCHER TRUST MANAGEMENT LIMITED HC TIM CIV-2011-476-000642 [21 December 2012]

Court, Mr Till QC, also suggested that there should be no order on the basis that a significant contribution, of itself, was not a sufficient reason for awarding costs from the fund.  He suggested that the Court should examine “critically and realistically” any suggestion  that  Mrs  Hubbard  was  motivated  solely by an  altruistic  aim  of assisting the Court.   He also notes that, without attributing fault or blame, it is obvious that the application to the Court would not have been required but for the actions of Mr Hubbard and that under those circumstances it would not be just for the  investors  to  have  to  meet  Mrs  Hubbard’s  costs.    Counsel  representing  the investors who favoured pooling has reported that the investors in that category are split as to whether or not costs should be awarded.

[3]      Having reflected on those submissions, and also the submissions on behalf of Mrs Hubbard supporting an order in terms of my preliminary indication, I have decided that there should be an order in favour of Mrs Hubbard. This reflects several matters.

[4]      First, notwithstanding that Mrs Hubbard was not formally a party to this proceeding, she was nevertheless served with the proceeding and under those circumstances was entitled to respond accordingly.

[5]      Secondly, I have strong reservations about approaching the matter on the basis that because Mr Hubbard caused the problem Mrs Hubbard should be denied costs.   Paper Reclaim Ltd v Aotearoa International Ltd[1]     suggests that such an approach is contrary to principle and I am not prepared to endorse it.

[1] Paper Reclaim Ltd v Aotearoa International Ltd  [2006] 3 NZLR 188 (CA) at 160.

[6]      Thirdly,  as  indicated  in  the judgment,  counsel  for  Mrs  Hubbard  made a substantial  contribution.    Indeed,  the orders that  were made  were based  on  the method of distribution advanced by her counsel.  In that respect she can be regarded as a party who has succeeded in the litigation for the purposes of Rule 14.2(a). Whether or not the outcome was favourable to her personally is beside the point.

[7]      When the substantive judgment was delivered I was contemplating costs on a solicitor/client basis for Mrs Hubbard and that was why I suggested a cap based on

the costs rendered by counsel appointed to represent investors favouring pooling. However, having reflected on the matter I have concluded that such an approach is incorrect.  Whereas counsel representing the investors was appointed by the Court, that was not the case for counsel representing Mrs Hubbard.   In effect she was a party to the proceeding, and her entitlement to costs should be approached on a party and party basis, not a solicitor/client basis.

[8]      For those reasons I have decided that Mrs Hubbard should receive costs from the HMF fund on a 3C basis which reflects the complex nature of the litigation. There will also be an allowance for a second counsel.  Mrs Hubbard will, of course, be entitled to all reasonable disbursements.

[9]      Leave is reserved to any party to apply further should any of these orders require clarification.

Solicitors:

Anderson Lloyd, P O Box 13831, Christchurch

Wynn Williams, P O Box 4341, Christchurch

Russell McVeagh, P O Box 10-214, DX ZX11189, Wellington

N A Till QC, P O Box 252, Christchurch