Groves v TSSN Limited (in liquidation)

[2012] NZHC 3532

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2011-485-2643 [2012] NZHC 3532

BETWEEN  ELLIOT MUNRO GROVES Applicant

ANDTSSN LIMITED (IN LIQUIDATION) Respondent

Hearing:         On the papers

Counsel:         K P Sullivan for Applicant

K J Crossland for Respondent

Judgment:      19 December 2012

In accordance with r 11.5 I direct that the delivery time of this judgment is 11am on the 19th day of December 2012.

COSTS JUDGMENT OF MACKENZIE J

[1]      In my judgment delivered on 17 September 2012 I reserved costs and invited the parties to submit memoranda.   Counsel for the liquidators has filed a memorandum seeking costs and counsel for the applicant has filed a memorandum in response.

[2]      The liquidators seek category 3 costs, in band B for the leave application and in band C for the substantive application.  Counsel for the liquidators says that the application is made because an offer to settle the substantive and procedural applications was not accepted.

[3]      Counsel for the applicant opposes an award of costs to the liquidators, and seeks category 2 band B costs.  Counsel for the applicant is critical of the actions of

the liquidators in opposing the application.   He submits that if the liquidators had

GROVES V TSSN LIMITED (IN LIQUIDATION) HC WN CIV-2011-485-2643 [19 December 2012]

taken a neutral stance, it may be appropriate for costs to lie where they fall but submits that the active opposition by the liquidators should lead to an award of costs to the applicant as a successful party.

[4]      The first general principle to be applied in determining costs, under r 14.2 of the High Court Rules, is that the party who fails should pay costs to the party who succeeds.

[5]      Both parties claim success.  The application sought permission under s 386A of the Companies Act 1993 “to be a director/manager” of the company.   In my judgment I refused permission for the applicant to be a director but granted permission for him to take part in the management.   Counsel for the liquidators claims victory in the first part of that order.  Counsel for the applicant claims victory in the second.

[6]      I consider that the liquidators are entitled to costs.   There are two main reasons.  The first is that, to the extent that it is necessary to determine success or failure, I assess the liquidators as having been more successful than the applicant. The second is that I consider this is a case where the basic general principle, that costs follow the event, should not be determinative.   The proceeding was one in which the applicant was seeking a permission from the Court which he was required to  obtain.    In  other situations  where that  is  necessary,  it  is  not  unusual  for an applicant to be ordered to pay costs of an opponent, even where the applicant is successful.

[7]      I consider that it was appropriate for the liquidators to take an active part in the hearing of the application.  The liquidators were the party best able to perform the adversarial role necessary to ensure that the issues were fully addressed before the Court.  It is not appropriate for me to make any comment beyond that as to the way in which the liquidators conducted that opposition.

[8]      This is not a case where refusal of an offer to settle should influence costs. The making or refusal  of the order sought was a matter for the Court, not for agreement between the parties.

[9]      As to the categorisation of the proceedings, I consider that category 2 is appropriate.  While the legal issues involved were novel in the sense that the section had not been previously considered by this Court, the proceedings themselves did not have any particular degree of complexity.

[10]     As to the banding, I consider that band B is appropriate for all steps.

[11]     There will be an order for costs in favour of the liquidators on a 2B basis, with disbursements to be fixed by the registrar.

[12]     Counsel for the applicant, in his submissions, points out an error in my substantive judgment.  At [20] to [25] I discussed the procedure for the application and expressed the view that this proceeding may have been better dealt with under Part 18 than Part 19 of the High Court Rules. Among the reasons that I gave, in [22], was a difference in rights of cross-examination in Part 18 and Part 19 proceedings. Mr Sullivan has pointed out that in the analysis in [22], I overlooked r 19.14 of the High Court Rules.  Mr Sullivan is correct.  I dealt with the point in a ruling given at trial.   I was not referred to the r 19.14, and in the limited time available  I did overlook  that  rule.    Paragraph  [22]  of  the  judgment  later  delivered  essentially recorded my earlier ruling, without further research.

[13]     I do not consider that the point is of sufficient moment to justify my recalling and correcting the judgment.  Mr Sullivan is right to have raised the point.  He has done so in case it was a significant factor in what he describes as my endorsement of the Part 18 procedure.  While it is not appropriate for me to add to my reasoning as expressed in the judgment, I think I may properly say that the point as to cross- examination was not a critical factor in my decision as to the appropriate procedure. The main reasons were as expressed in [24] and [25].

“A D MacKenzie J”

Solicitors:         Kevin Sullivan, Barrister, Wellington for Applicant

Stace Hammond, Hamilton for Respondent