Grant v Pope
[2015] NZHC 2551
•16 October 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-001726 [2015] NZHC 2551
BETWEEN DAMIEN GRANT AND STEVEN KHOV
AS LIQUIDATORS OF EASY GROUP LIMITED (IN RECEIVERSHIP AND LIQUIDATION)
Plaintiff
AND
LAURENCE ROBERT POPE First Respondent
AND
CASSANDRA GREENFIELD Second Respondent
On thepapers: 5 October 2015 Appearances:
B Norling and A Ho for the Applicants
A Nicholls for First Respondent
D B Beard for Second RespondentJudgment:
16 October 2015
COSTS JUDGMENT OF ASSOCIATE JUDGE SARGISSON
This judgment was delivered by me on 16 October 2015 at 4.45 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
Solicitors:
Waterstone Insolvency, Auckland Legal Street Ltd, Auckland Edwards Clark Dickie, Auckland
A Nicholls, Auckland
GRANT & KHOV v POPE [2015] NZHC 2551 [16 October 2015]
[1] On 29 July 2015 the applicants, who are the liquidators of Easy Group
Limited, filed an originating application pursuant to s 266 of the Companies Act
1993 for an order requiring the first and second respondents to attend the liquidators’
offices for a formal interview.
[2] The first respondent, Mr Pope, was adjudicated bankrupt on 13 August 2014. At the date of Easy Group’s liquidation he was the sole director of the company, and as such, its controlling mind. The second respondent is a former employee of Easy Group.
[3] The respondents did not file any documents in opposition to the application. However, on 20 August 2015 a joint memorandum was filed by counsel for the parties advising that the respondents had agreed to attend an interview, and that the hearing for 21 August 2015 could be vacated accordingly.
[4] The only issues that remain therefore are issues as to costs. The liquidators seek an order for 2B costs against the respondents which they say total $6,690. The respondents oppose any such order. The second respondent seeks reasonable travel and other expenses pursuant to s 261.
[5] The liquidators’ case for costs is essentially that they were put to unnecessary cost by having to make the application when the various notices they sent to the respondents over the period 27 November 2014 to July 2015 went unanswered. Their evidence indicates they gave notice as follows:
(a) 27 November 2014, by post and email to Ms Greenfield, the second respondent;
(b)28 November 2014, by post and email to Mr Pope, the first respondent;
(c) 5 December 2014, by letter addressed to both, hand-delivered to
65 Magma Crescent, Stonefields, Auckland, being Ms Greenfield’s
last known address, and the address provided by the Official
Assignee’s office for Mr Pope;
(d) 11 December 2014, by post and email to both;
(e) 17 December 2014, by Facebook message to both;
(f) 1 July 2015, by email to Mr Aaron Nicholls, solicitor, inquiring as to whether he had authority to receive correspondence for Mr Pope;
(g) On 15 July 2015, by further email sent to Mr Nicholls.
[6] As none of these communications produced a response, on 29 July 2015 the liquidators filed their application.
[7] On 30 July 2015 counsel for the liquidators emailed Mr Pope advising that “because of your continued non-compliance we have filed proceedings against you pursuant to s 266 Companies Act 1993”. That same day, Mr Pope emailed counsel for the liquidators advising:
I apologise, as Aaron has not been in touch with me regarding your request. I am more than happy to attend an interview to assist the liquidation. I will follow up Aaron now, and we can make a time next week if that is suitable?
[8] An exchange of correspondence followed. It included an email that Mr Pope sent to counsel for the liquidators on 7 August 2015 confirming that he and Ms Greenfield were both available to attend an interview on 19 August 2015.
[9] The interview of Mr Pope took place on 27 August 2015. It took half an hour.
[10] The interview of Ms Greenfield took place on 14 September 2015.
[11] Counsel for both sides say that if the Court is considering adopting the position of the opposite side then a timetable for evidence and submissions should be allowed.
[12] I do not propose to allow the parties a further opportunity to file evidence and submissions. I think the additional costs involved would be disproportionate to what is at issue, given that the parties have made submissions and have had the opportunity to put such evidence as might be truly relevant to the issue of costs before the Court. Further, nothing additional of that nature has been identified as warranting the further opportunity that each seeks, and I am far from satisfied that there would be any real injustice if such opportunity is not allowed.
Discussion
[13] The liquidators’ case for costs is essentially founded upon the fact that notices went unanswered and that formal orders were required to compel the respondents to attend an interview. The grounds of the application do not, however, expand on the reasons why interviews were considered necessary – that is left to be inferred. No particular lines of inquiry are identified as necessary to assist the liquidators in the liquidation.
[14] For the respondents’ part, they argue that formal orders were not needed and that they agreed to attend interviews as soon as they became aware of the liquidators’ requirement for an interview. They suggest that they simply did not know they were required because they did not get the notices. Ms Greenfield also suggests that there was no reason to interview her.
[15] On the issue of notice the Court’s finding in Grant & Khov v Pandey & Ors
[2013] NZHC 3330 at [25] is apposite. The Court said:
Section 261 does not specify a mode of service of notices issued under it. All that is required is that the addressee is “required … by notice” to either attend for interview or to produce documents.
[16] Relevantly, the respondents make no suggestion that the liquidators used incorrect email addresses for the purpose of giving them notice. They also make no
claim that they did not reside at the address that the liquidators used for the purpose of giving notice by postal delivery or hand delivery.
[17] I find as a matter of fact that the liquidators gave notice in writing to Mr Pope as required by s 261. Any doubt about that is removed by Mr Pope’s own communications. His emails of 30 July 2015 and 7 August 2015 identify his email address as the same address that the liquidators had used in November and December 2014. It can properly be inferred that the communications the liquidators sent to that email address came to his attention.
[18] I also find that under s 266 the application was necessary for the purpose of securing Mr Pope’s compliance with the earlier notices. He showed no inclination to attend an interview until the liquidators took Court action and served the application. Further, he does not suggest that it was unreasonable to require him to attend an interview, or that compliance would be unduly burdensome, and I am prepared to infer that as former director interviewing him was appropriate and reasonably necessary for the discharge of the liquidators’ functions.
[19] I also agree with the liquidators’ submission that his bankruptcy does not relieve him of potential liability for costs incurred after the commencement of his bankruptcy.
[20] I find in these circumstances that the liquidators have an entitlement to costs against Mr Pope. They are effectively the successful parties on the application against him.
[21] In Ms Greenfield’s case I do not think the position is quite so clear cut. I am unable to be certain on the material before me that she did get the prior notices. There are no emails from her that put the point beyond doubt, but even if I am wrong about that and this is a case of her choosing to ignore the original notices, as against that I am not satisfied on the material before me that there was a real justification for her interview.
[22] It is unclear from the material before the Court why the liquidators wanted to examine her. There is no suggestion that they anticipated on reasonable grounds that she may have information that would assist them in the liquidation. The duration of the interview suggests the contrary. She says it took 8 minutes, and suggests it was perfunctory. In her case, I consider the liquidators should bear their own costs. However I see no basis to award expenses to Ms Greenfield. The Court has discretion under s 266 to make an order for expenses if an application is made. There is no formal application before the Court for such an order, and if even if I were to allow an informal application to be made by way of memorandum, there is no supporting material that would justify an order. The request is declined.
[23] I turn then to deal with the question of quantum, as it affects Mr Pope. The liquidators seek 2B costs on their originating application. Applications for liquidation generally attract scale costs on a 2B basis. The allowance is for 0.6 of a day at a daily rate of $2,230. This present application, though made as an originating application, is akin to an interlocutory application made in the liquidation, and does not warrant the much higher allowance of 2 days that the scale allows for originating applications. I consider costs calculated as if for an interlocutory application would provide a fair level of compensation.
Result
[24] I make orders as follows:
(a) There will be an order for costs on the liquidators’ application against Mr Pope on a 2B basis, plus disbursements as fixed by the Registrar. Pursuant to High Court Rule 14.7 costs are to be reduced costs, and are therefore to be calculated as if the application were an interlocutory application.
(b) There will be no order for costs on the application against
Ms Greenfield.
(c) There will be no order for expenses in favour of Ms Greenfield.
Associate Judge Sargisson
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