Kea Investments Limited v Wikeley Family Trustee Limited (in interim liquidation)

[2023] NZHC 2412

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-2086

[2023] NZHC 2412

BETWEEN

KEA INVESTMENTS LIMITED

Plaintiff

AND

WIKELEY FAMILY TRUSTEE LIMITED (IN INTERIM LIQUIDATIN)

First Defendant

KENNETH DAVID WIKELEY
Second Defendant

ERIC JOHN WATSON
Third Defendant

WIKELEY INC.
Fourth Defendant

USA ASSET HOLDINGS INC

Fifth Defendant

Hearing:

On the papers

Counsel:

JBM Smith KC, M C Harris, JLW Wass and S T Coupe for the Plaintiff

M D Arthur for the interim liquidators of the First Defendant

Judgment:

31 August 2023

JUDGMENT OF GAULT J

(Costs)

This judgment was delivered by me on 31 August 2023 at 3:30 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

KEA INVESTMENTS LTD v WIKELEY FAMILY TRUSTEE LTD (IN INTERIM LIQUIDATIN) [2023] NZHC 2412 [31 August 2023]

[1]                 The plaintiff (Kea) seeks costs and disbursements following my judgment of 10 March 2023 dismissing an application by the first and second defendants to dismiss or stay the proceeding on jurisdiction or forum non conveniens grounds, setting aside their protests to jurisdiction, continuing interim orders against the first to third defendants and dismissing Kea’s application for further interim orders.1

[2]                 Kea seeks scale costs of $57,009.50 on a category 3 basis, with band C allowances for some steps, plus disbursements made up of expert costs of $187,665.17 and hearing and filing fees of $1,560, totalling $246,234.67.

[3]                 The judgment provided that if costs on the applications could not  be agreed,  I would receive brief memoranda within 28 days and determine costs on the papers.2 The defendants did not file costs memoranda within that timeframe (or at all except as noted in the next paragraph). Indeed, the third defendant, Mr Watson, has taken no steps in the proceeding.

[4]                 On 6 April 2023, I made an order placing the first defendant into interim liquidation. On 16 May 2023, counsel for the interim liquidators advised that they abide the Court’s decision in relation to costs.

[5]                 Following memoranda filed on behalf of the second defendant in June seeking a stay of the proceeding, I deferred consideration of Kea’s costs claim pending determination of the stay application. That has now occurred.

Discussion

[6]                 The costs sought relate to Kea’s initial without notice application for interim orders, which was granted on 4 November 2022 with costs reserved,3 and the on-notice phase of Kea’s application for the continuation of interim orders, which was heard together with the first and second defendants’ application to dismiss or stay the proceeding on jurisdiction or forum non conveniens grounds.

1      Kea Investments Ltd v Wikeley Family Trustee Ltd [2023] NZHC 466.

2 At [103].

3      Kea Investments Ltd v Wikeley Family Trustee Ltd [2022] NZHC 2881 at [82]–[83].

[7]                 Kea was the substantially successful party, only failing in respect of further interim orders sought at the on-notice hearing.4 Kea is entitled to costs.

[8]                 I accept that costs category 3 is appropriate. The complexity and significance of the proceeding required counsel to have special skill  and  experience  in  the  High Court, the classification of category 3 proceedings.5 The applications raised factual and legal complexities, as is evident from the two judgments. The factual background addressed in the detailed evidence was extensive, multi-jurisdictional and complex. The legal complexity included the basis for granting an unusual anti-enforcement injunction. Both sides instructed US law professors to provide expert evidence by affidavit. The dispute involves significant sums. Urgency was required.

[9]                 Band C applies if a comparatively large amount of time for the particular step is considered appropriate.6 I accept that Band C allowances for the steps indicated in the schedule to Kea’s memorandum of counsel are appropriate. These steps would have required a comparatively large amount of time.

[10]             Turning to disbursements, the hearing and filing  fees sought are accepted.  As to expert costs, both sides served expert evidence and I consider that Kea’s expert evidence from Professor Silberman, Phillip Jones KC and Donald Kelly was reasonably necessary given the arguments raised by the first and second defendants.7 In the circumstances of this case involving complexity and specialised issues of foreign law addressed under urgency, I am satisfied that the expert costs claimed are reasonable in amount and not disproportionate.8

[11]             Accordingly, I accept that Kea is entitled to recover costs and disbursements totalling $246,234.67.

4      Kea Investments Ltd v Wikeley Family Trustee Ltd [2023] NZHC 466 at [99]-[102].

5      High Court Rules 2016, r 14.3(1).

6      Rule 14.5(2)(c).

7      Rule 14.12(2)(c).

8      Rule 14.12(2)(d) and (3).

[12]             Kea seeks an order that the first to third defendants be held jointly and severally liable for costs. It is submitted that while Mr Watson has not taken any steps, Kea is not aware of any reason in principle why he should not be held liable for costs together with the first and second defendants.

[13]             As indicated, Mr Watson has taken no steps in the proceeding. He should be jointly and severally liable for the costs of Kea’s application in both the without notice and on-notice phases. However, the on-notice phase involved not only Kea’s application but the application by the first and second defendants to dismiss or stay the proceeding on jurisdiction and forum grounds. Mr Watson did not join in that application albeit it may well have been in his interests too. In any event, there was obvious overlap between the respective applications since jurisdiction (in terms of a good arguable case) is necessary for interim relief. The time and cost involved in Kea’s applications would have been reduced substantially if jurisdiction and forum were not challenged by the first and second defendants but a good deal of the evidence and submissions would still have been relevant. Having regard to the issues and the expert evidence, I consider the reduction would have been in the order of 50 per cent. Accordingly, Mr Watson should be jointly and severally liable for the costs of the without notice application ($22,768.50) and 50 per cent of the costs of the on-notice phase ($17,120.50),9 together with 50 per cent of the expert witness costs ($93,832.58)10, plus the hearing and filing fees ($1,560). Thus, Mr Watson should be jointly and severally liable for costs and disbursements of $135,281.58.11

[14]             Finally, I note that Kea reserves its right, if it is successful in the proceeding overall, to seek indemnity costs for the whole proceeding including in relation to the interim steps for which scale costs are currently sought.

Result

[15]             I make orders that the first and second defendants are jointly and severally liable for Kea’s costs and disbursements in the sum of $246,234.67 and the third

9      50% of $34,241.

10     50% of $187,665.17.

11     $22,768.50 + $17,120.50 + $93,832.58 + $1,560.

defendant is jointly and severally liable for Kea’s costs and disbursements in the sum of $135,281.58.

Gault J

Solicitors / Counsel:

Mr JBM Smith KC and Mr JLW Wass, Barristers, Wellington Mr M C Harris and Mr S T Coupe, Gilbert Walker, Auckland Mr M D Arthur, Chapman Tripp, Auckland

Copy to:

Mr T Mullins and Ms E Armstrong (second defendant’s instructing solicitors), LeeSalmonLong, Auckland