Frog Rock Trust v Toon - [2020] NZHC 1407

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-002526

[2020] NZHC 1407

IN THE MATTER OF
an application to obtain leave for creditors and other entitled persons, under s 284(1) of the Companies Act 1993, to have the Court give direction to the liquidator of Social Media Consultants Ltd pursuant to

ss 284(1)(a) to (h) and s 284(2) of the Companies Act 1993 and for the Court to remove the protection that the liquidator could employ under s 284(3) of the Companies Act 1993 by the Court ruling that an order pursuant to s 284(4) should be made against the liquidator

BETWEEN

FROG ROCK TRUST, BRIAN HENRY, HOWARD TAYLOR, JUANA ATKINS and

MARC SPRING (being an authorised person of the prepaid subscription holders) Applicants

AND

VICTORIA TOON (as liquidator of Social Media Consultants Ltd)

Respondent

Hearing: (On the papers)

Judgment:

22 June 2020

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 22 June 2020 at 11.30 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors: Nicholls Law Ltd, Auckland
Heaney & Partners, Auckland

FROG ROCK TRUST v TOON (as liquidator of Social Media Consultants Ltd) [2020] NZHC 1407 [22 June 2020]

Introduction

[1] On 13 November 2019 the applicants issued an originating application seeking a number of orders against the respondent as liquidator of Social Media Consultants Limited, including an order that she resign from that office effective immediately.

[2] On 16 March 2020 the applicants discontinued the application. The respondent now seeks costs. The respondent seeks an order that her reasonable solicitor/client costs of $19,171.65 be paid on an indemnity basis. The applicants accept that an order for costs is appropriate but submit it should be to scale.

[3] The file came before two Associate Judges: Judge Andrew and Judge Sargisson. Judge Sargisson was the last Judge to minute the file. She has now retired. In her absence the Registrar has referred the file to me as Duty Judge. I propose to deal with the issue of costs as provided for by HCR 14.9.

[4] The proceedings were misconceived from the outset. The applicants are stated to be Frog Rock Trust and four named persons. The trustees of the Frog Rock Trust were not identified. It is now accepted that the Frog Rock Trust is not a legal entity. The four other named applicants all signed the application, which was stated to be made under s 284 of the Companies Act 1993 for urgent emergency orders.

Procedural history

[5] The application came before Associate Judge Andrew on 13 December 2019. Mr Spring, one of the named applicants, sought to appear on behalf of all the applicants. The Judge recorded that Mr Spring had no authority to represent parties in this Court and it would be necessary for the applicants to obtain proper legal representation. The Judge also noted there were issues as to whether the respondent Ms Toon had…

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 Frog Rock Trust v Toon

Details

AGLC: Frog Rock Trust v Toon [2020] NZHC 1407
Case: [2020] NZHC 1407
Decision Date: 22 June 2020

CaseChat Overview and Summary

The applicants in this proceeding were the Frog Rock Trust, Brian Henry, Howard Taylor, Juana Atkins, and Marc Spring. The applicants sought various orders against Victoria Toon, the liquidator of Social Media Consultants Ltd, including an order for her resignation. The applicants later discontinued the application, and Toon sought costs against the applicants. The court was required to determine whether the applicants' claims were vexatious and improperly brought, and if so, whether indemnity costs should be awarded under the High Court Rules. The court needed to assess the seriousness of the allegations made against Toon and the appropriateness of the costs claimed by Toon.

The court found that the applicants' claims were vexatious and improperly brought. The allegations against Toon were extreme and lacked any substantive basis. They included claims of secret negotiations, criminal harassment, blackmail, and false allegations of dishonest claims by major creditors. The court considered these allegations to be scandalous and improper, particularly given their serious nature and the role of Toon as a professional liquidator. The court found that the applicants acted improperly and unreasonably by bringing these proceedings without a proper basis. The court also noted that the proceedings seemed to be intended to prevent Toon from carrying out her duties as liquidator. Given these findings, the court determined that indemnity costs were appropriate.

The court awarded costs to Toon against the applicants Brian Henry, Howard Taylor, Juana Atkins, and Marc Spring, jointly and severally, in the sum of $15,983.15. The court deducted from the total costs claimed the amount already paid and the costs associated with drafting a memorandum, which the court found to be excessive. The court concluded that the applicants' claims were misconceived from the outset and that the proceedings were hopeless and would never have succeeded. The court found that the applicants acted vexatiously, frivolously, and improperly in bringing the proceedings.

Orders