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.

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.

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Details

Case: [2013] NZHC 403
Decision Date: 5 March 2013

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Grant v CP Asset Management Limited addressed a dispute arising from the liquidation of New Zealand Properties Holding Limited. The applicants, Damien Grant and Steven Khov, as liquidators of the company, sought to set aside a creditors' resolution and appoint alternative liquidators. The respondents, CP Asset Management Limited and others, opposed these applications. The central legal issues before the Court involved the liquidators' obligations, the propriety of their actions in challenging the creditors' resolution, and the appropriate allocation of costs in the proceedings.

The Court considered whether the liquidators were justified in their decision to oppose the creditors' resolution and appoint alternative liquidators, given their statutory obligations. The Court noted the general principle that liquidators are not ordinarily liable for costs, and that costs associated with their mandatory applications are typically treated as costs of the liquidation. However, in this instance, the Court found that the liquidators had taken an active role beyond their mandatory obligations by seeking to set aside the resolution and opposing the appointment of alternative liquidators. This active participation warranted their personal liability for costs.

The Court also evaluated the request for an uplift in costs, a form of increased costs against the unsuccessful party. The Court declined to impose an uplift, noting that while the liquidators' application was unsuccessful, their actions did not warrant additional sanctions. Finally, the Court decided against making an order for increased costs against the seventh respondents under section 45(5) of the Legal Services Act 2011, finding their involvement insufficient to warrant such an order.

As a result of the Court's decision, the applicants, Damien Grant and Steven Khov, were ordered to pay the first to sixth respondents costs in the sum of $8,955.00. This sum accounted for the costs associated with the proceedings, with specific allowances made for the time band C for the initial opposition and affidavits.

Orders