Innes-Jones v Innes-Jones - [2018] NZHC 2185

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2018-404-0493

[2018] NZHC 2185

UNDER section 174 of the Companies Act 1993

BETWEEN

EVAN DUNCAN INNES-JONES

Plaintiff

AND

REX ARTHUR INNES-JONES

First Defendnt

SAILORS’ CORNER LIMITED
Second Defendant

IJAY PROPERTIES LIMITED

Third Defendant

Hearing: On the papers

Appearances:

J D Turner for the plaintiff

A E Hansen for the defendants

Judgment:

24 August 2018

JUDGMENT OF JAGOSE J

[Costs]

This judgment is delivered by me on 24 August 2018 at 11.30am pursuant to r 11.5 of the High Court Rules.

.....................................................
Registrar / Deputy Registrar

Solicitors:
McVeagh Fleming, Albany Heimsath Alexander, Auckland

INNES-JONES v INNES-JONES [2018] NZHC 2185 [24 August 2018]

[1] My judgment of 27 July 2018 dismissed Evan’s application for orders under s 174 of the Companies Act 1993.1 Evan failed to establish Rex was conducting the affairs of Sailors’ Corner and/or Ijay Properties in a manner oppressive, unfairly discriminatory, or unfairly prejudicial of him. While I thought an award of costs was not likely to be constructive in the brothers’ relationship, Rex is entitled to such an award.2

[2] Costs are awarded in accordance with principle – including “the party who fails with respect to a proceeding … should pay costs to the party who succeeds”, in accordance with scale, in reasonable and not disproportionate amount, no greater than was incurred by the successful party – to the end “so far as possible the determination of costs should be predictable and expeditious”.3

[3] Despite such desirable predictability and expedition, increased costs are relevantly payable “if … the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it”, or otherwise are justifiable.4 By ‘increased costs’ is meant an uplift from scale, the Court of Appeal accepting the uplift “logically” should not be more than 50 per cent.5

[4] Rex claims his 2B scale costs of $22,300.00 should be uplifted by 50 per cent to $33,450.00 in reflection of Evan’s unnecessary contribution to the time and expense of the proceeding or steps in it.

[5] Certainly the proceeding was run on a speculative basis, with limited evidence of the companies’ history or structure, or of Evan or Rex’s reasonable expectations as to their operation.6 Serious allegations were made without evidentiary underpinning, including of Evan’s contended “unjust detriment” at Rex’s hands.7

1      Innes-Jones v Innes-Jones [2018] NZHC 1889 (“substantive judgment”) at [34].
2 At [35].
3      HCR 14.2.
4      HCR 14.6.
5      Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [46]-[48].
6      Substantive judgment at [16], [20] and [25].
7 At [27].

[6] I do not accept Evan’s contention the proceeding was “of a straightforward nature able to be conducted by counsel considered junior in the High Court”.8 That certainly was not evident in the approach either party brought to the proceeding. Instead, I consider 2B scale appropriate, as Evan’s claim was a proceeding “of average complexity requiring…

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: [2018] NZHC 2185
Decision Date: 24 August 2018

CaseChat Overview and Summary

In the High Court of New Zealand, Auckland Registry, the case of Innes-Jones v Innes-Jones involved a dispute between Evan Duncan Innes-Jones and Rex Arthur Innes-Jones, with Sailors’ Corner Limited and Ijay Properties Limited as additional defendants. Evan sought orders under section 174 of the Companies Act 1993, alleging oppressive, unfairly discriminatory, or unfairly prejudicial conduct by Rex in managing the affairs of the companies. The court was required to determine whether Evan's claims were substantiated and, if not, whether Rex was entitled to an award of costs.

The court found that Evan had not successfully demonstrated that Rex was conducting the affairs of the companies in a manner oppressive, unfairly discriminatory, or unfairly prejudicial to him. The allegations made by Evan were largely speculative and lacked evidentiary support. The court emphasised that while an award of costs might not be constructive for the relationship between the brothers, Rex was entitled to such an award due to Evan's unsuccessful application. The court considered the principles governing the award of costs, including the notion that the party who fails should pay costs to the party who succeeds. The court further considered whether increased costs were justifiable given Evan's contribution to the time and expense of the proceeding.

Ultimately, the court ruled that Rex was entitled to his 2B scale costs of $22,300.00, plus disbursements of $336.84. The court rejected Evan's arguments that the proceeding was straightforward or that Rex's success was slight. The court determined that the proceeding was of average complexity and that Rex's success was comprehensive and overwhelming. Evan's conduct did not contribute unnecessarily to the time and expense of the proceeding, and the court did not consider Rex's offer of settlement as a ground for increased costs.

Orders