Grant v CP Asset Management Limited

[2013] NZHC 403

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-005014 [2013] NZHC 403

UNDER  sections 243(7) and 245A of the Companies Act 1993 and Part 19 of the High Court Rules

IN THE MATTER OF     the liquidation of NZ Properties Holding

Limited (in Liquidation)

BETWEEN  DAMIEN GRANT AND STEVEN KHOV AS LIQUIDATORS OF NZ PROPERTIES HOLDING LIMITED (IN LIQUIDATION) Applicants

ANDCP ASSET MANAGEMENT LIMITED First Respondent

ANDASIA PACIFIC HOTEL INVESTMENTS LIMITED

Second Respondent

ANDC P RETAIL HOLDINGS LIMITED Third Respondent

ANDRAISONS PACIFIC INVESTMENTS LIMITED

Fourth Respondent

ANDSOUTH ISLAND HOTEL INVESTMENTS LIMITED Fifth Respondent

ANDYEIL C & M LIMITED Sixth Respondents

ANDBRIAN AND BRIDGIT LAWRENCE Seventh Respondents

Hearing:         (On the papers)

Counsel:         B J Norling for Applicants

R B Hucker and D Lang Siu for First to Sixth Respondents

G A Keene for Seventh Respondents

GRANT & KHOV AS LIQUIDATORS OF NZ PROPERTIES HOLDING LTD IN LIQN) V CP ASSET MANAGEMENT LTD HC AK CIV-2012-404-005014 [5 March 2013]

Judgment:      5 March 2013

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 5 March 2013 at 4.00 pm, pursuant to Rule 11.5 of the High

Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Waterstone Insolvency, Auckland Hucker & Associates, Auckland Pidgeon Law, Solicitors, Auckland

Copy to:            G A Keene, Auckland

[1]      In  a  decision  delivered  on  18  December  2012  this  Court  dismissed  the plaintiff liquidators’ application to set aside a creditors’ resolution and made an order appointing alternative liquidators to New Zealand Properties Holding Limited (in liquidation).  Costs were reserved.

[2]      The parties have been unable to agree costs.  The first to sixth respondents seek costs against the liquidators.  They seek costs on a category 2 band B basis for all steps in the proceedings except the initial opposition and affidavits for which they seek the allocation of time band C.  They then seek an uplift of the resultant scale costs by way of an order for increased costs against the applicants.

[3]      The first to sixth respondents note the seventh respondents are legally aided but seek an order under s 45(5) of the Legal Services Act 2011 in relation to them.

[4]      The liquidators accept  that the first to sixth respondents were successful parties for the purposes of r 14.2 but note they made the application for appointment of alternative liquidators pursuant to their statutory obligation.   Further, the application to set aside the resolution was, in their submission, necessary because of the relationship between the first to sixth respondents to the company.  They make the point that generally liquidators are not liable for costs.  The liquidators also argue that because this was the first case they were aware of with respect to the interface between related party voting and the resolution to force liquidators to apply to the Court, the Court should refuse to make an order for costs.

[5]      Finally, the liquidators submit they acted reasonably in the conduct of the proceedings so that if any costs are awarded they should be treated as costs in the liquidation.

[6]      The seventh respondents oppose the application for an order under s 45 of the

Legal Services Act 2011.

Costs against the liquidators personally

[7]      While I acknowledge the general proposition that there is a long standing principle liquidators are not ordinarily liable for costs and that, where liquidators are required  by  resolution  of  creditors  to  make  applications  to  the  Court  the  costs awarded are usually treated as costs of the liquidation,[1]  the applicant liquidators in this case did more than simply make the application they were required to make as liquidators.   Rather the liquidators took an active role by seeking to set aside the

resolution and vigorously opposed the appointment of the proposed liquidators in their place.   Rather than taking a neutral role arising out of their obligations as liquidators, they took an active role as participants in the hearing.   As such it is appropriate in this case that the liquidators pay costs to the successful party personally.

[1] Ireland Developments Ltd v 123 Global (NZ) Ltd (in liq) [2010] NZCCLR 5.

[8]      Nor, despite Mr Norling’s submission is this a case where there could be said to be a public interest of general importance beyond the interests of the particularly unsuccessful litigant:  Taylor v District Court at North Shore (No 2).[2]    The matter was fact intensive.

[2] Taylor v District Court at North Shore (No 2) HC Auckland CIV-2009-404-002350, 13 October

2010; 33 TCL 44/5 at [9] per White J.

[9]      Further, I accept Mr Hucker’s submission that the application under s 245A

was not an application the liquidators were required to bring. They elected to do so.

[10]     As noted, with the exception of the application in relation to the preparation of affidavits, the first to sixth respondents seek costs on a 2B basis.  I accept that, given the volume of information put before the Court on the application, it was necessary for the first to sixth respondents to respond with detailed affidavits and on that basis allow time band C for the filing of the notice of opposition and supporting affidavits in opposition.

[11]     However, I reject the first to sixth respondents’ argument for an uplift in this

case.  While the applicant liquidators must bear the cost consequences of bringing the unsuccessful application they nevertheless considered they were acting in the

interests of the seventh respondents in particular.   The liquidators’ conduct in the proceedings falls short of requiring any sanction by way of uplift in costs.

[12]     That  leaves  the  issue  of  the  seventh  respondents.    While  the  seventh respondents  supported  the applicant  liquidators,  they did  not  play a particularly significant  role.     In  light  of  the  background  to  this  matter  and  the  seventh respondents’ position I do not consider it is necessary or appropriate to make a further order under s 45(5) of the Legal Services Act 2011.  I decline the application for such an order.

Result

[13]     The applicants are to pay the first to sixth respondents costs in the sum of

$8,955.00.  Order accordingly.

Venning J