Hansa Limited (in liquidation) v Hibbs

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2016-409-001214

[2018] NZHC 1832

BETWEEN

HANSA LIMITED (IN LIQUIDATION)

First Plaintiff

AND

DAMIEN GRANT AND STEVEN KHOV

as liquidators of Hansa Limited (In Liquidation)

Second Plaintiff

AND

PAUL CLIFFORD HIBBS

First Defendant

AND

CAMERON GLADSTONE INVESTMENTS LIMITED

Second Defendant

AND

HALDON RANGE VINEYARDS LIMITED

Third Defendant

AND

CONTAINERS DIRECT LEASING LIMITED

Fourth Defendant

Hearing:

23 July 2018 (On the papers)

Appearances:

A S Botterill and J Wong for the Plaintiffs

C Whitnall QC and R Kay for the Third Defendant

Judgment:

23 July 2018

JUDGMENT OF DUNNINGHAM J

HANSA LIMITED (IN LIQUIDATION) v HIBBS [2018] NZHC 1832 [23 July 2018]

Introduction

[1]                  Haldon Range Vineyards Limited (Haldon) succeeded in its application against Hansa Limited (in liquidation) (Hansa) to have a judgment obtained by default against it set aside.1

[2]                  While I expressed a tentative view at the conclusion of the judgment that costs should lie where they fall, I reserved costs. Haldon now applies for costs calculated on a 2B basis. That is opposed by Hansa which says that my preliminary view that costs should lie where they fall should prevail.

[3]                  This judgment determines the issue of costs in light of the parties’ respective submissions.

Background

[4]                  The judgment obtained by Hansa against Haldon was one of various steps taken to unravel the affairs of companies related to the first defendant, Mr Hibbs, and to recoup funds that had been misappropriated by Mr Hibbs. Hansa’s liquidators brought proceedings against Haldon, seeking repayment of $167,914.33 as monies had and received over the period 9 April 2009 to 21 January 2015. Haldon failed to file a statement of defence, despite raising its concerns with the claim with Hansa’s lawyers, and judgment by default was sought and entered.

[5]                  I set aside that judgment on the ground that Haldon had an arguable defence to the claim and that there was, or may have been, a miscarriage of justice. Nevertheless, I indicated that, as Haldon “must share some of the burden and blame for the present circumstances”, costs should lie where they fall.

1      Hansa Limited (in liq) v Hibbs [2018] NZHC 1036.

Submissions

Haldon’s submissions

[6]                  Haldon submits that it is entitled to costs in line with High Court Rules,        r 14.2(1)(a), which sets out the principle that the party who fails in a proceeding or interlocutory application should pay costs to the party who succeeds. As it succeeded in its application to set aside the judgment, Haldon submits Hansa should be liable for costs, in the usual way.

[7]                  While Haldon acknowledges the Court’s discretion on costs, it submits it is entitled to costs for the following reasons:

(a)Hansa used the default judgment procedure when the demand was not in fact a liquidated demand, as defined in r 15.7;

(b)The claim against Haldon was pleaded with a lack of reasonable clarity, incorporating pleadings which related to equitable claims into a claim for monies…