Kingdom United Contracting Limited v Oak Contracting Limited

[2024] NZHC 1267

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2024-441-1

[2024] NZHC 1267

UNDER

the Companies At 1993

IN THE MATTER

of an application for putting companies into liquidation

BETWEEN

KINGDOM UNITED CONTRACTING LIMITED

Plaintiff

AND

OAK CONTRACTING LIMITED

First Defendant

OAK (2015) LIMITED

Second Defendant

JOHN BAND

Third Defendant

Hearing:

On the papers

Counsel:

J D Cameron for Plaintiff

A Barnett for Third Defendant

Judgment:

21 May 2024

JUDGMENT OF ASSOCIATE JUDGE SKELTON [COSTS]

[1]                 I refer to my minute dated 29 April 2024 regarding the outstanding issue of costs in this matter. In that minute, I strongly encouraged the parties to confer and reach a resolution on costs, which I indicated may involve some compromise on the part of both parties.

KINGDOM UNITED CONTRACTING LIMITED v OAK CONTRACTING LIMITED [2024] NZHC 1267 [21 May 2024]

[2]                 Regrettably, despite that indication, the parties have been unable to resolve the issue of costs.

[3]                 Costs are ultimately a matter of the court’s discretion, the overall objective being to achieve an outcome that best meets the interest of justice.1 However, that discretion is qualified by the applicable costs rules,  contained  in  pt  14  of  the  High Court Rules 2016. The primary principle applying to the determination of costs is that costs follow the event – meaning that a party who is unsuccessful pays costs to a party who is successful.2

[4]                 In this case, the liquidation orders were ultimately made by consent and the merits of the plaintiff’s causes of action have not been determined. It is not appropriate to make findings on the merits at this stage. The third defendant has denied the allegations that he failed to comply with his statutory duties or that he conducted the affairs of the companies in a manner that was unfairly prejudicial to the shareholders of the companies, but he has ultimately agreed to the appointment of a liquidator for both companies. In cases such as this, even though the plaintiff has achieved the primary relief sought in the proceedings, it is difficult to determine success in the usual sense of the word. The Court should not be too ready to award costs when the merits have not been determined.3 Further, generally costs are to reflect how parties have acted during litigation, not before it.4

[5]                 What seems to have happened in this case is that although the parties ultimately agreed that liquidation was appropriate, there was some delay in the third defendant confirming his agreement to this proposal in the period between 1 December 2023 and 22 January 2024. While this delay may, in part, be explained by a death in the third defendant’s family, it seems to me that given the apparent need to resolve the situation the third defendant could have responded and provided instructions with regard to the liquidation proposal more promptly which would likely have avoided the need for

1      High Court Rules 2016, r 14.1; Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7] and [16]; Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [21]–[24] and [28]; and Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt Ltd) (2002) 16 PRNZ 662 (CA) at [27].

2      HCR 14.2(1)(a).

3      Maehl v Auckland Council [2017] NZHC 1902 at [43].

4      McGechan on Procedure at [HR14.1.03].

proceedings. However, there is also some merit in the third defendant’s position that the plaintiff could have held off issuing proceedings until after the Christmas break.

On balance, I consider that the third defendant should be required to bear some of the plaintiff’s costs of the proceedings. I consider that scale costs at a 2A level is appropriate.

Result

[6]                 Accordingly, I order the third defendant, John Band, to pay the plaintiff, Kingdom United Contracting Ltd, costs in the sum of $6,214.00 and disbursements in the sum of $653.20.

Associate Judge Skelton

Solicitors:

Willis Legal, Hastings for Plaintiff

Sainsbury Logan & Williams for Third Defendant

NOTICE REQUIREMENT

The solicitors on the record for the parties are to promptly provide a copy of this minute to their clients (r 5.43).