Jones v IBC Japan Ltd - [2024] NZHC 3442

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-002070

[2024] NZHC 3442

UNDER the Companies Act 1993 and Part 19 of the High Court Rules

IN THE MATTER

of the liquidation of Autoterminal New Zealand Ltd (in Liquidation)

BETWEEN

KIERAN MICHAEL JONES, STEVEN KHOV and THOMAS LEE RODEWALD

(as liquidators of Autoterminal New Zealand Ltd)
Applicants

AND

IBC JAPAN LTD

First Respondent

KEVYN BOTES

Intervener

Judgment:

(On the papers)
19 November 2024

JUDGMENT OF BREWER J

(Costs)

This judgment was delivered by me on 19 November 2024 at 11.30 am pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors:
TWA Legal (Auckland) for Applicants Kensington Swan (Auckland) for IBC Grant & Co (Auckland) for Intervener

JONES & ORS v IBC JAPAN LTD [2024] NZHC 3442 [19 November 2024]

Introduction

[1] On 30 August 2024, I allowed, with modifications, an application under s 284 of the Companies Act 1993 (the Act) made by Messrs Khov, Jones and Rodewald (the liquidators), the liquidators of Autoterminal New Zealand Limited (ATNZ).1 The liquidators sought orders for remuneration of $1,232,801.41 plus GST and disbursements of $618,706.15 plus GST. The respondent, IBC Japan Ltd (IBC), the major creditor of ATNZ, opposed the s 284 application (the Application) on the ground that the liquidation of ATNZ had been carried out inefficiently and, consequently, the remuneration and disbursements claimed by the liquidators were excessive. Mr Botes, who replaced the liquidators as liquidator, intervened to support IBC.

[2] On a global assessment, I determined that the liquidators had, to an extent, over-worked and over-resourced the liquidation. Because of this, I fixed the liquidators’ remuneration at $1,064,429 plus GST and disbursements at $618,706.15 plus GST. In the judgment I said:

[160] I am sure there will be a dispute about remaining costs. The applicants are to file their memorandum by 27 September 2024. IBC and Mr Botes are to respond by 18 October 2024.

[3]This judgment determines costs.

Submissions

Liquidators’ submissions

[4]The liquidators seek orders that:

(a)their remuneration of $100,936.67 plus GST and their costs of
$243,586.08 plus GST (made up of $190,246.95 plus GST for solicitor and client costs, and $53,339.13 plus GST for disbursements), incurred from the date of filing their Application be paid from funds held in the liquidation of ATNZ; and

1 Jones v IBC Japan Ltd [2024] NZHC 2454.

(b)to the extent the funds held in the liquidation of ATNZ are insufficient to satisfy that award, the remuneration and costs be paid by IBC.

[5] In the alternative, the liquidators seek orders that ATNZ and IBC are jointly and severally ordered to pay the liquidators’ costs and disbursements incurred since filing the Application, which total $243,586.08.

[6] The liquidators say that the remuneration and costs incurred in relation to the Application are remuneration and costs in the liquidation of ATNZ, as ordered by Associate Judge Taylor in his minute of 26 October 2023.2 In particular, the liquidators refer to orders (a), (c), and…

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: [2024] NZHC 3442
Decision Date: 19 November 2024

CaseChat Overview and Summary

The High Court of New Zealand, Auckland Registry, heard an application under the Companies Act 1993 and Part 19 of the High Court Rules, involving the liquidation of Autoterminal New Zealand Limited (ATNZ). The liquidators, Messrs Khov, Jones, and Rodewald, applied for additional remuneration and disbursements. IBC Japan Ltd, the major creditor of ATNZ, opposed the application on the grounds that the liquidation had been inefficiently managed, resulting in excessive claims for remuneration and disbursements. Kevyn Botes, who replaced the liquidators as liquidator, intervened to support IBC. The primary legal issues were whether the liquidators were entitled to additional remuneration and whether the costs incurred were reasonable. The Court examined the nature of the Calderbank offer made by the liquidators and whether it was properly refused by IBC, which would warrant an award of increased costs. The Court also assessed whether the liquidators' conduct warranted indemnity costs. The Court ruled that the liquidators were not entitled to further remuneration as they had ceased to be liquidators and were instead pursuing litigation. The Court found that the offer made by the liquidators was not a true Calderbank offer due to its conditional terms and, as such, IBC's refusal to accept the offer was reasonably justified. The Court also held that there was no basis for awarding indemnity costs as IBC's conduct did not meet the exceptional threshold required. The Court awarded costs to the liquidators against IBC and ATNZ, jointly and severally, on a 2B basis, with IBC liable for any shortfall in the retention fund. The liquidators' costs were deemed reasonable, and IBC's opposition to the liquidators' claims for further remuneration and costs was dismissed.

Orders