STEPHANIE BETH JEFFREYS and TIMOTHY WILSON DOWNES Plaintiffs
AND
ARTHUR SYLVAN MORGENSTERN First Defendant
AND
TANYA MAY LAVAS Second Defendant
Hearing:
10 June 2013
Appearances:
K Wakelin for Plaintiffs T Joseph for Defendants
Judgment:
10 June 2013
ORAL COSTS JUDGMENT OF VENNING J
Solicitors: Meredith Connell, Auckland
Gilbert Walker, Auckland
JEFFREYS & ANOR v MORGENSTERN & ANOR [2013] NZHC 1361 [10 June 2013]
Introduction
[1] This is the plaintiffs’ application for costs following the adjournment of a fixture. The plaintiffs seek costs of the application and hearing which led to the adjournment, wasted costs which they say arose out of the vacation of the fixture and the costs of this application.
[2] The defendants submit no order for costs should be made in the plaintiffs’ favour. Alternatively, they submit that any such order should be considered by the trial Judge following the trial. They seek the costs of defending this application for costs.
Background – General
[3] It is necessary to put the application in context by providing some brief background.
[4] The plaintiffs are liquidators of a number of companies of which the first defendant was a director. The second defendant is the first defendant’s wife.
[5] The plaintiffs’ claim alleges breaches of directors’ duties, in particular in relation to three transactions: a rental underwrite; a car parking deed; and a share sale.
[6] I interpolate here that I accept the submission made for the plaintiffs that prosecuting a directors’ duties case presents particular challenges to liquidators. They have no firsthand knowledge of what took place in the period prior to liquidation. The defendant directors are the ones who have that firsthand knowledge The liquidators are therefore required to gather evidence about what took place, piece the evidence together and based upon that, consider what, if any, action should be taken, including legal proceedings in order to gain a recovery for creditors. For that reason full and faithful compliance of discovery obligations are of particular importance.
Procedural background
[7] It is necessary also to briefly refer to the procedural background of this case.
[8] The Court made timetable orders directing lists of documents to be filed and served by 18 May 2011 with inspection to be completed by 8 June 2011. Neither party complied with the direction. The parties, however, agreed to a deferral of the timetable by one week. The plaintiffs complied with that agreed deferral, filing and serving their affidavit documents on 25 May 2011. The defendants breached the agreed extension but filed and served their affidavit of documents on 29 July 2011. The defendants then filed a further supplementary affidavit of documents on 14
October 2011.
[9] The setting down date for the proceeding, (now the close of pleadings date) was 1 November 2012. It is submitted for the defendants that the setting down date was actually 5 December 2012. It appears the difference arises out of incorrect advice given by the…
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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AGLC
Jeffreys v Morgenstern [2013] NZHC 1361
Case
[2013] NZHC 1361
Decision Date
CaseChat Overview and Summary
The case of Jeffreys v Morgenstern, heard in the Auckland Registry of the High Court of New Zealand, involves a dispute between Stephanie Beth Jeffreys and Timothy Wilson Downes, the plaintiffs, and Arthur Sylvan Morgenstern and Tanya May Lavas, the defendants. The plaintiffs, who are liquidators of several companies, are suing the defendants, who were directors of these companies, for breaches of directors' duties concerning specific transactions. The central legal issues revolve around the costs incurred due to the defendants' failure to comply with discovery obligations, which led to the adjournment of a scheduled trial. The plaintiffs sought costs associated with the application for adjournment, wasted costs due to the adjournment, and the costs of the application itself. The defendants argued that the costs should either be declined or deferred until the trial's outcome, claiming the significance of the late-disclosed documents was minimal. The court ruled in favor of the plaintiffs, ordering the defendants to pay costs for the adjournment application and hearing, wasted costs for the trial preparation, and costs for the current application. The court emphasized the importance of compliance with discovery obligations and the need to sanction parties who cause fixtures to be vacated through their own default.
In reaching its decision, the court considered the procedural history of the case, highlighting the defendants' repeated failures to comply with court orders and deadlines. The court found that the defendants' late disclosure of critical documents necessitated the adjournment of the trial, leading to wasted costs for the plaintiffs. The court rejected the defendants' arguments that the costs should be deferred or that the significance of the disclosed documents was minimal. Instead, the court determined that the defendants' defaults justified an immediate award of costs to the plaintiffs. The court also addressed the issue of wasted costs, acknowledging the significant inconvenience and additional expenses caused by the adjournment. It concluded that a portion of the wasted costs, specifically those related to trial preparation, should be compensated. Additionally, the court awarded costs for the experts' work, considering the experts' estimates of additional fees. Finally, the court ruled that the plaintiffs should receive costs for the current application, including the hearing, due to the defendants' extensive opposition to the plaintiffs' claims.