Grant v Stinson

[2013] NZHC 325

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV2008-404-008244 [2013] NZHC 325

UNDER  The Companies Act 1993

IN THE MATTER OF     Grastin Investments Limited (previously Coldmaster Industries Limited (in Liquidation)

BETWEEN  DAMIEN GRANT AND STEVEN KHOV LIQUIDATORS OF GRASTIN INVESTMENTS LIMITED (IN LIQUIDATION)

Applicants

ANDGRANT ERROLL STINSON Respondent

Hearing:         On the papers

Counsel:         R M Dillon for applicants

R B Hucker for respondent

Judgment:      26 February 2013

COST JUDGMENT OF ASSOCIATE JUDGE ABBOTT

This judgment was delivered by me on 26 February 2013 at 5 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:

R M Dillon, Queen City Law, PO Box 6908, Wellesley Street, Auckland

R B Hucker, Hucker & Associates, PO Box 3843, Shortland Street, Auckland

DAMIEN GRANT AND STEVEN KHOV LIQUIDATORS OF GRASTIN INVESTMENTS LIMITED (IN LIQUIDATION) V GRANT ERROLL STINSON HC AK CIV 2008-404-008244 [26 February 2013]

[1]      The applicants, Damien Grant and Steven Khov, are the liquidators of Grastin Investments  Ltd.    The  respondent,  Grant  Stinson,  is  the  sole  director  of  that company.

[2]      The liquidators applied for an order requiring Mr Stinson to be examined, and to produce documents regarding the records and affairs of the company.   They sought these orders so as to establish the activities of the company as the sole trustee of a trading trust established by the respondent.  Mr Stinson opposed the application on several grounds, including that the liquidators were wanting to examine him to gain evidence for a case they intended to bring against him, and that the documents they were seeking were not documents of the company, but rather were documents of the trust for which the company was a corporate trustee.

[3]      The application has been resolved, but there is a dispute between the parties over costs, with each side claiming to be the successful party.  The liquidators seek scale  costs  on  the  basis  of  a  successful  originating  application  (because  they achieved what they were seeking in the application) together with a 50% uplift on the basis that Mr Stinson acted unreasonably and unmeritoriously in opposing and then delaying the outcome.  Mr Stinson takes issue with the liquidators’ entitlement (contending that he has been successful because the liquidators did not achieve what they originally sought) and says that he should therefore receive scale costs together with a 50% uplift because the liquidators made serious allegations of misconduct (attempting to hide information and breaching his duties as a director) without providing any substantiation.  He also says that, in any event, the liquidators’ claim is overstated because this was an interlocutory application.

General background

[4]      Grastin Investments Ltd was incorporated on 13 December 2005.   On 14

December 2005 Mr Stinson (as settler) established a trading trust named the Crawford-Stinson Trading Trust.  Grastin was named as the (corporate) trustee.  In January 2006 Grastin, as trustee for the trading trust, took a loan from the Bank of New Zealand (referred to as a business and farming loan).  The loan was guaranteed

by Mr Stinson, the trustees of a family trust, and another corporate entity.   The trustees of the family trust gave mortgage security over a residential property used as Mr Stinson’s family home.   At the same time the trading trust took over the obligations of Mr Stinson and his wife under an earlier loan from the BNZ.  As part of the security arrangements, Grastin entered into a general security agreement in favour  of  the  BNZ.     Shortly  afterwards  Grastin  entered  into  another  facility agreement with BNZ.

[5]      The trading trust ceased to trade on 8 June 2007.

[6]      In July 2007 Mr Stinson’s family trust took an assignment from the BNZ of

the debt then due to the BNZ and all securities.

[7]      In December 2008 another creditor filed an application to put Grastin into liquidation. The applicant liquidators were appointed on 30 January 2009.

[8]      On 30 March 2009 the liquidators informed Mr Stinson, through his solicitor, that they were intending to exercise powers under s 261 of the Companies Act 1993.

[9]      On 7 April 2009 Mr Stinson exercised his powers as director of Grastin and settler of the trading trust (with power of appointment) to sign a deed under which Grastin retired as trustee of the trading trust and another company which Mr Stinson was director (GWAA Investments Ltd) was appointed corporate trustee.

[10]     On  16 April  2009  the  liquidators  requested,  again  through  Mr  Stinson’s solicitor, that he provide them with all records of Grastin’s trusteeship up to the date of its retirement, identifying the particular records sought.  The liquidators and Mr Stinson subsequently exchanged correspondence in which Mr Stinson contended that he did not have the documents sought in his possession or control, and that the liquidators did not have power to under s 261 to require delivery of records of the trading  trust  because    Grastin  and  the  trading  trust  were  separate  entities.    In response  the  liquidators  referred  to  Mr  Stinson’s  control  of  the  entire  structure through his directorships and shareholding, and as settler and principal beneficiary of the trading trust, and raised the contention that the trading trust was in effect an alter-

ego or self trust.   After Mr Stinson replied to those contentions by denying any liability, the liquidators requested copies of the documents under s 189 of the Companies Act 1993 and gave formal notice requiring Mr Stinson to be interviewed.

[11]     A solicitor in the employ of the liquidators interviewed Mr Stinson on 25

June 2009.  In response to a number of questions, Mr Stinson asked for the questions to be put to him in writing for a considered response.  He contends that at the end of the interview he was advised that nothing further would be required of him.

[12]     The liquidators did not present any written questions to Mr Stinson, and did not contact him again until September 2010, at which time the liquidators wrote to Mr Stinson stating that they considered his refusal to provide the financial records of the trading trust to be a breach of s 261, and that they would bring an application under s 266 if the requested records were not provided.  Mr Stinson responded by asking the liquidators to substantiate their claim that he had breached s 261, and later (through his solicitor)   expressed surprise that the liquidators were revisiting the matter and denied any breach.

[13]     The liquidators filed their application on 27 October 2010, essentially setting out as grounds the matters traversed in previous correspondence.  Mr Stinson filed notice of opposition, primarily on the grounds previously advanced but with some additional contentions.  A defended hearing of the application was scheduled for 19

April 2011.

[14]     On 14 April 2011 Mr Stinson agreed to provide documents of the trading trust, without conceding that the liquidators were legally entitled to them.   The hearing date was vacated, and documents were subsequently delivered to the liquidators.

[15]     On 4 May 2011 the liquidators wrote to Mr Stinson listing a number of documents that Mr Stinson had not provided which should have been in his possession (if he had kept appropriate accounting records) and claiming that they were entitled to them.   In response Mr Stinson provided an explanation for the missing documents not having been provided, referred the liquidators to third parties

who might hold them, and asked the liquidators to substantiate their allegation that he  has  not  kept  adequate  records.    The  liquidators  were  dissatisfied  with  that response and asked for the application to be set down again for hearing.   Shortly after the hearing commenced, I expressed the preliminary view that the documents provided by Mr Stinson were deficient in various respects and gave counsel time to confer to see whether they could reach agreement on a means of addressing the liquidators’ outstanding requirements. After doing so, counsel prepared a proposal to put to their respective clients and sought an adjournment to allow that to occur and, if accepted, to be implemented.  The terms of the arrangement were recorded in an

interim judgment.1

[16]     Several mention hearings followed as the parties worked their way through the process of exchange of information. This was ultimately completed in March

2012  after  a  series  of  exchanges  over  the  questions  put  by  the  liquidators, culminating in a second affidavit by Mr Stinson.   Directions were then given for resolving the final aspect of the dispute, namely costs.

The application and the outcome

[17]     In order to understand the different contentions as to costs, it is necessary to expand on the grounds for the application and the opposition, and the ensuing issues over costs.

[18]     The liquidators sought an examination of Mr Stinson regarding the affairs of Grastin and production of documents recording Grastin’s activities as trustee of the trading trust.   The liquidators identified, in particular, bank accounts, financial accounts, records of assets and  liabilities, tax returns, and information as to its debtors and creditors.

[19]     At the time of liquidation Grastin had significant debts.  It is common ground that Grastin’s only business was to act as trustee of the trading trust.  For that reason the liquidators took the view that Grastin’s debt could only have been run up on

behalf of the trust, and that Grastin was entitled to an indemnity in respect of them

1 Damien Grant and Steven Khov V Grant Erroll Stinson HC AK CIV-2008-404-8244 [16 August 2011].

from the assets of the trust.   They sought to examine Mr Stinson and to obtain documents to investigate the position as between Grastin and the trust.  They took the view that the records of the trading trust and the records of Grastin were co- extensive, at least for the purpose of the definition under s 266 of the Companies Act

1993.   They considered that Mr Stinson was in a position to provide all this information as he had power to control the whole structure as the sole shareholder and director both at Grastin and the subsequent trustee (GWAA), the settler and principal beneficiary of the trading trust, and the holder of the power of appointment of the trustee.

[20]     Mr  Stinson  opposed  the  application  on  the  principal  grounds  that  the documents sought were not Grastin’s records (they belonged to the trading trust) and were not records to which the liquidators were entitled under s 266, and that the liquidators were using the application inappropriately to gain an advantage in litigation they had already decided to bring against him.   In that latter respect he referred to early contentions by the liquidators that he had operated the trading trust as “an alter-ego trust”, had used the structure to defeat creditors and had breached duties to the company by resisting disclosure of information. Mr Stinson claimed that these contentions were tantamount to allegations of fraud which had not been substantiated.  In that respect he also referred to the liquidators’ wish to enquire into the transfer of securities from over the trading trust’s property from the BNZ to his family  trust,  saying  that  that  was  fully  disclosed  and  a  valid  transaction  in accordance with securities law (the liquidators had been given access to the documents and had produced no evidence to support any impropriety).  Additionally he relied on disentitling conduct by the liquidators in delay and failing to disclose to the Court at the time of making the application that Mr Stinson had already been interviewed and had cooperated (some 15 months before the liquidators started pursuing him in earnest).

[21]     Shortly before  a  defended  hearing  of  the  application  the  parties  reached agreement on a means of resolving it.  There was further dispute as to Mr Stinson’s compliance with those terms.   The liquidators maintain that there were further documents that should have been made available, and that they needed explanations from him about documents that had been produced or matters where there were no

documents.   Mr Stinson maintained that he had done what he had agreed to do (including providing documents to which the liquidators had no entitlement) and that the  examination  sought  was  to  assist  them  in  a claim  they were contemplating against him rather than to investigate the affairs of the company.

[22]     At an early stage of the hearing, counsel took up an invitation from the Court and reached agreement on a process by which the parties could resolve their differences. This included further disclosure by Mr Stinson (partly by provision of an affidavit explaining why documents were not available) in answer to the application for production, and the liquidators subsequently compiling a list of matters on which they still required answers, to which Mr Stinson would respond.  The hearing was adjourned to allow the parties to follow that process, on the basis that it would be resumed if there were any issues which the parties were unable to resolve. Although issues arose in the course of carrying out that proposal (resulting in further conferences and mention hearings) the liquidators were eventually satisfied with the information they received, both in documents and in Mr Stinson’s answers, and withdrew their application.  The only issue they could not resolve was the incidence and quantum of costs.

The respective contentions as to costs and issues arising

[23]     The parties were directed to file memoranda as to costs.   In the case of sequential filings, that would be a substantive memorandum by each party, with the first party being able to file an affidavit in reply.  Instead of this the Court received what can fairly be described as a plethora of memoranda with four from the liquidators and three from Mr Stinson.  No leave was sought to file the additional memoranda.   They have all been considered in this case, but counsel should not expect similar leniency on another occasion.

[24]     The liquidators’ position is that their substantive application was straight forward, well founded, and ultimately successful given that they obtained the information needed to allow them to carry out their statutory duties of investigating potential recovery.  They say that this was an originating application, brought under r

19.4(a),2    and  that  they  have  claimed  costs  appropriately  for  an  originating application, on a scale 2B basis.

[25]     Additionally the liquidators claimed a 50% uplift on those costs.  Given the close relationship between Grastin and the trading trust and Mr Stinson’s control of all entities, and his failure to resolve matters until faced with the possibility of a Court determination, the liquidators claim that Mr Stinson unreasonably delayed the outcome  and  put  the  liquidators  to  unnecessary  costs.    They  contend  that  his approach was in breach of his obligations to Grastin (namely that it was an attempt

to hide relevant information from the company).3.  They claimed that a substantial

uplift was appropriate in terms of the principals for increased costs.4

[26]     Mr Stinson contends that he was justified in his opposition, and that any criticism as to conduct should lie at the feet of the liquidators because the application essentially was to bolster an anticipated case against Mr Stinson personally, rather than to investigate the affairs of Grastin. The liquidators had all necessary information, or had been given access to it, and had not acted reasonably in the way they had sought information for the delays in following up on the original interview. Mr Stinson also argued that there was no evidence of any lack of cooperation on his part at the interview (it was reasonable for him to ask for questions to be put to him in writing, which did not occur) that he fulfilled the agreements reached, and that the agreements reached had precluded a determination on the merits, which the Court

should not now attempt to do.5

[27]     Mr Stinson maintained his position that he had acted perfectly reasonably initially by resisting the application. He makes this submission on the grounds that there is no clear law as to the entitlement of a liquidator to a corporate trustee to records  of  the  underlying  (trading)  trust,  and  in  agreeing  to  make  appropriate material   available  notwithstanding  that   unresolved   legal   position.     He   also

maintained that many of the difficulties in achieving resolution were a result of the

2 As required by r 31.35(4)(b) of the High Court Rules.

3 Relying on Sojourner v Robb [2008] 1 NZLR 751 (CA) at [25].
4 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400 at [155] – [167].

5 Drawing an analogy with the position on discontinuance, where it is clear that the Court determines costs without embarking on the merits: McGechan, High Court Rules HR 15.23(c); Stollery v Fruit

2Go Ltd HC Tauranga, CIV 2009-470-283, 10 March 2011 at [15].

liquidators’ failure to make sufficiently specific requests, or to analyse properly the information  that  was  provided.     Mr  Stinson  contended  that  the  liquidators’ application was founded on a continued and inappropriate theme that trading trusts were illegitimate, and maintained that the application should have been dismissed, as it was clear that they were a legitimate structure and there was no evidence that Mr

Stinson had used it inappropriately.6

[28]     Mr Stinson said that the Court should address this as a case of mixed success where the Court assesses incidence of costs on “a realistic appraisal of the end result”.7     In support of his position that he should be awarded costs, Mr Stinson maintained that he should be treated as the successful party in that the liquidators did not achieve what they had sought in their application. Rather, he had been successful in achieving significant modification of the information being sought.  He contended that he had been successful in getting conditions attached to the orders sought by the liquidators, and that that was “an indicia of success”.8     He also claimed that the

Court had accepted9 his position that the examination was inappropriate, as it was to

obtain advantage in litigation that the liquidators were contemplating against him.

[29]     Mr Stinson also claimed that he should be awarded a 50% uplift on scale costs  due  to  the  liquidators’ unsubstantiated  allegations  of  breaches  of  duty  to Grastin. He maintained that they had advanced these matters without proper foundation or having taken reasonable steps to ascertain whether they were correct, and maintained that that justified the 50% uplift.10

[30]     In the event that the Court found against him on the incidence of costs, Mr Stinson maintained that an application under s 266 is an interlocutory application brought in the liquidation proceeding,11 and that the costs claimed were significantly overstated as a result. Furthermore the costs of memoranda and appearances in the

latter stage of the proceeding (after the interim judgment) should not be awarded as

6 Relying on Levin v Ikuia [2010] 1 NZLR 400 at [101] and [102].

7 Packing Inn Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA) at [5].
8 Meltzer v Brown HC Auckland M277/01, 22 August 2003, Sargisson AJ at 16.
9 In the interim judgment of 16 August 2011.
10 Relying on Kativich v Meltzer HC Auckland CIV 2006-404-5968, 24 March 2011, Duffy J at [49].

11 Relying on r 31.35.

they were the result of the delay in the liquidators providing their list of questions for

Mr Stinson to address.

[31]     In reply to Mr Stinson’s arguments, and particularly his claim for costs, the liquidators said that they had made clear from the outset what they were seeking, and maintained  that  Mr  Stinson  had  not  attempted  to  answer  those  questions  in substance. They contend that their application had had to be widely cast in the absence of that information and Mr Stinson’s refusal to accept (at least at the outset) that the records of Grastin and/or the trading trust were co-extensive during the period of trusteeship.  They said that this was not a case of bringing the application to bolster an intended claim, but was to obtain information for an investigation (in accordance with their statutory duty) as to whether any claims lay, and a potential chose in action was an asset in the liquidation.  They noted that Grastin had not been removed as a trustee until two months after the liquidation, so that they had an entitlement as at the date of liquidation.  They contended that this was not a case of mixed success.   However, if the Court was to consider that Mr Stinson had an entitlement, he had not provided any calculation of the cost to which he said he was entitled.

[32]     The issues that arise are:

(a)       Where should costs lie?

(b)What costs are claimable – this requires consideration of whether this is an originating or interlocutory application?

(c)       Are increased costs warranted?

(d)If costs are awarded in favour of Mr Stinson, should they be against the liquidators personally or against Grastin?

[33]     The general starting point is that costs are awarded to the successful party.12

[34]     The liquidators brought this application to obtain information to help them carry out their statutory duties, and in particular to help them to determine whether there were any potential avenues of recovery for creditors.  Although there may be some justification for Mr Stinson’s view that they did not follow up on his interview promptly, there was nevertheless an opportunity for Mr Stinson to indicate a willingness  to  provide  further  information  before  the  application  was  filed. However, his initial position was clearly that the liquidators were not entitled to most if  not  all  of  the  information  they were  seeking.    On  that  basis  I find  that  the liquidators did not act unreasonably in filing the application rather than following up with a list of questions to answer and requests for further documents.

[35]     Although the application was not determined substantively by the Court, I consider that as a consequence of it the liquidators received documents and explanations from Mr Stinson which enabled them to conduct their investigations appropriately.13    On this basis the liquidators can be considered to have been successful.

[36]     I do not consider that that view of matters is altered by the view I expressed in my interim judgment of 16 August 2011 that these applications ought not to be made in order to gain collateral advantages in other litigation. That was not a finding that the liquidators were in fact seeking those collateral advantages.   Indeed, my preliminary view was that the liquidators were entitled to the information they were seeking (although I stressed that that was not a final determination on the point).

[37]     I do not accept Mr Stinson’s argument that he was successful because the

orders sought were limited by conditions.  There were no conditions imposed by the

Court.   The Court  merely provided opportunity for resolution,  and  the ultimate

12 R 14.2(a) High Court Rules.

13 This is evident from the chronology in the affidavit of the liquidators sworn on 3 May 2011, the correspondence from Mr Stinson of 17 May 2011, and the final clarification provided by Mr Stinson’s affidavit sworn on 2 September 2011.

resolution was one of agreements between the parties.   This lead to requisite documents being produced and answers and explanations being given to queries that presumably would otherwise have been put to Mr Stinson in an examination.  The fact that the specific documents and questions were not specifically identified until the application was brought, and no doubt assisted in the ultimate resolution, does not detract from the general proposition that the application achieved its purpose.

[38]     For  the  sake  of  completeness,  I  add  that  I  do  not  accept  Mr  Stinson’s argument that this application (and particularly the request to examine Mr Stinson) was for the improper purpose of eliciting information to use against him in litigation. I have no doubt that the liquidators believe that there were matters to investigate which could have led   to claims against Mr Stinson, but I am satisfied that the purpose of the application was to allow them to investigate those matters and decide whether there was a basis for a claim, rather than simply to elicit evidence for a claim that would inevitably be brought.

[39]     It follows from what I have just said that I do not consider this to be a case of the parties having had mixed success. I find that the liquidators are entitled to costs on this application.

[40]     Mr Stinson submitted that the costs claimed on a 2B scale were excessive, and the liquidators had not shown that they were less than actual costs. However counsel for the liquidators has confirmed that their actual costs are in excess of what was  claimed  (costs  on  scale  2B  plus  the  50%  uplift).  I am  prepared  to  accept Counsel’s assurance (as an officer of this Court), particularly given that I have not awarded all of the costs claimed, including the uplift.  Costs are awarded on a scale

2B basis.

[41]     I turn now to consider the costs claimed on that basis, and will then address the claim for an uplift.  Given the findings I have made I do not have to consider the liquidators’ contention that Mr Stinson has not put forward any calculation to support his claim for costs, nor the question of whether an order for costs in favour of Mr Stinson  would  be against  the liquidators’ personally,  or against  the company in liquidation.

[42]     The liquidators’ calculation of costs is based on this being an originating application under Part 19 of the High Court Rules.  It is not one of the applications under the Companies Act 1993 that the rules stipulate must be made by originating application,14 but the liquidators say that it is an application for directions which they may bring as an originating application.15

[43]     Mr Stinson says this is a miscellaneous application brought in the liquidation, and accordingly governed by r 31.35(1) of the High Court Rules. This rule says that applications  to  the Court in  respect  of  a company where a liquidator  has  been appointed by the Court are to follow the procedure for interlocutory applications. However, Mr Stinson’s submission does not take into account an exception in r

31.35(4).

[44]     Rule 31.35 reads:

31.35   Procedure in respect of miscellaneous applications

(1)       Subpart 2 of Part 7, relating to interlocutory applications, applies to applications to the court in respect of—

(a)      a defendant company sought to be put into liquidation under section 241(2)(c) of the Companies Act 1993; or

(b)      a  company  in  respect  of  which  a  liquidator  has  been appointed  under  section  241(2)(c)  of  the  Companies  Act

1993.

(c)      [Repealed]

(2)      Subclause (1) is subject to subclauses (3) and (4).

(3)       An  application  specified  in  subclause  (1)  must  have  the  same heading as the heading on the application for putting the company into liquidation.

(4)      Subclause (1) does not apply to—

(a)      an application under rule 31.36; or

(b)      an application to which Part 18 or 19 applies.

14 See r 19.2(c).

15 Under r 19.4(a).

[45]     It can be seen from this that subclause 1 does not apply in the circumstances of subclause 4, which includes an application under Part 19 (dealing with originating applications).

[46]     Although an application under s 266 is not an application that is required to be brought under r 19.2, it does appear to come under the empowering provision of r

19.4:

19.4     Certain directions may be sought by originating application

The following office holders may seek the directions of the court by originating application:

(a)      a liquidator: (b)   a receiver:

(c)      a  judicial  manager  appointed  under  Part  1A of  the  Life

Insurance Act 1908:

(d)      a  statutory  manager  appointed  under  the   Corporations

(Investigation and Management) Act 1989:

(e)      a statutory manager appointed under the Reserve Bank of

New Zealand Act 1989.

[47]     I find support for the view that an application for an order under s 266 is an application for directions, qualifying to be brought under r 19.4, from the following:

(a)      The power to order examination and production of documents has been described as an extraordinary power.16     It is appropriately considered an adversarial application (exemplified by the fact that in this case there is a contention that the examination was being sought to support intended litigation).

(b)The other exceptions mentioned in r 31.35 (applications involving allegations of fraud or malfeasances etc which require commencement by a statement of claim, and applications under Part 18 which also

require a statement of claim) are intended to deal with adversarial

16 Brookers Company Law CA266.02.

allegations, for which originating rather than interlocutory process is more appropriate.

(c)      The procedure for setting aside voidable transactions: the initial notice is filed in the liquidation proceeding, but if it is opposed (and thereupon becomes adversarial) the liquidator must bring an application, which is one of the applications prescribed under r 19.2 that must be brought by originating application.

[48]     If the liquidators were simply seeking the imprimateur of the Court when seeking directions, there may be an argument for that being brought as an interlocutory application.  However, where it is clear that the liquidators’ request for documents or for examination is to be opposed, the originating application appears to be the appropriate one.

[49]     For that reason I find that the costs in this matter must be determined on the basis of the steps and time allocations applicable to an originating application.

[50]     This   finding   disposes   of   Mr   Stinson’s   challenge   to   the   claim   for commencement of the proceeding under item 1 of the third schedule.  As these costs were incurred prior to the amendment to schedule 3 that took effect from 14 June

2012, therefore the prior schedule has been used. This finding also disposes of Mr Stinson’s challenge in respect of preparation for the hearing (item 7.2).  That item is allowed.    There  is  a  duplication,  however,  in  the  liquidators’ claim:  they  have included a claim under item 7.4 of the third schedule, which clearly does not apply.

[51]     This  leaves  as  the  only  challenges  to  the  liquidators’  calculation,  the contentions that claims for memoranda ahead of, and appearances at, conferences or mentions on 21 September 2011, 21 October 2011 and 30 November 2011 were unreasonable as they were caused by the liquidators’ delay in compiling the further questions they were seeking, and that the memorandum for a conference or mention on 14 April 2011 (as with other memoranda) was a joint memorandum which should not be charged as for a separate memorandum.

[52]     I  accept  Mr  Stinson’s  argument  in  respect  of  the  appearances  on  21

September 2011 and 21 October 2011 and the memorandum for 21 October 2011.  I regard the other memoranda and appearances as part of the overall resolution that was achieved.  I also accept that the liquidators should only be entitled to claim 50% of the time allocation for joint memoranda.

[53]     In summary I find that the liquidators are entitled to time allocations in accordance with the following allocations under the third schedule, as for an originating application:

(a)       Item 1 – commencement of proceedings – 3 days.

(b)      Item 7.2 – preparation for hearing on 19 April 2011 – 2.5 days. (c)     Item 8 – preparation for hearing on 16 August 2011 – 1 day.

(d)      Item 9 – appearance at hearing on 16 August 2011 – 0.5 day.

(e)      Item 4.10 – filing memoranda for conferences/mentions (as sought less 21 October 2011) – 0.4 day (separate memoranda 0.2, joint memoranda).

(f)       Item 4.11 – appearance at conferences/mentions (as sought less 21

September 2011, 21 October 2011 and 30 November 2011) – 0.3 day

(but  that  the memorandum  ahead  of  the  conference/mention  on  7

February 2011 was part of the overall resolution).

Is there a basis for increased costs?

[54]     The liquidators’ claim for increased costs has to be assessed on the basis of the reasonableness of the behaviour of the parties. Although I have found against Mr Stinson, in terms of standard costs, I am not persuaded that he acted so unreasonably as to warrant an uplift of costs on this basis. The issue of a liquidators' entitlement to a documents of a trust for which the company was trustee has not been determined

conclusively by a New Zealand Court.  He was entitled to raise that, notwithstanding his subsequent decision not to pursue that opposition.  I also find it reasonable for him to have been cautious in his responses given the potential for a claim to be made against him, and to ensure that he only provided what he was obliged to do.  I am satisfied that he was  cooperative in  the first  place,  and his hesitancy when the liquidators  returned  to  him  some  15  months  later  is  understandable.    I am  not persuaded that he was being unreasonably obstructive in the implementation of the agreement reached just before the first scheduled hearing (notwithstanding that I have found that further compliance was required), or after the further hearing and agreement on 16 August 2011.   He provided his affidavit in accordance with that further agreement promptly, and endeavoured to answer further queries raised by the liquidators in a reasonably timely manner.  There was some delay in responding to the liquidators’ letter to him of 1 December 2011, but I do not consider that that delay was sufficiently great to warrant increased costs.

[55]     In the circumstances I decline the liquidators’ claim for increased costs.

Decision

[56]     Mr Stinson is to pay the liquidators’ costs in respect of the application on a scale 2B basis and in accordance with the further findings that I have made as to available time allocations.

[57]     I expect counsel to be able to determine the quantum of the costs on the basis of the findings I have made as to allowable items and time allocations.   However they may file memoranda if there are any questions arising out of this judgment on which they require clarification to achieve that.

[58]     For the sake of completeness, I decline the liquidators’ claim for increased costs and Mr Stinson’s claim for costs (both scale and increased).

Associate Judge Abbott