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 counsel of skill and experience considered average in the High Court”,9 and its steps required only “a normal amount of time” for their performance.10

[7]                  Neither do I accept Evan’s contentions Rex’s success in the proceeding was “slight”, and the proceeding can be justified by Evan obtaining the companies’ business documents in discovery. To the contrary, my judgment is clear: Rex’s success in the proceeding was comprehensive and overwhelming,11 and Evan had no right to possession of the documents.12 But that only entitles Rex to scale costs.

[8]                  Evan has not ‘contributed unnecessarily to the time and expense of the proceeding’ by any of the constituent elements. The only material ones here are “taking or pursuing an unnecessary step or an argument that lacks merit”, and “failing, without reasonable justification, to accept an offer of settlement”.13 But:

(a)there is nothing in Evan’s conduct of the proceeding that could have been prevented in advance of its determination on such grounds, and

(b)I am unclear about the acceptability of Rex’s offer to liquidate Sailor’s Corner, which appears in any event to have been withdrawn—

such that I do not take either into account as a ground for increased costs.

[9]                  I order Evan to pay Rex 2B costs in the amount of $22,300.00, plus disbursements in the amount of $336.84.

—Jagose J

8      HCR 14.3(1).

9      HCR 14.3(1).

10     HCR 14.5(2)(b).

11     Substantive judgment at [30]-[31].

12 At [32].

13     HCR 14.6(3)(b)(ii) and (v).