Madsen-Ries (as liquidator of Debut Homes Limited) v Cooper

IN THE SUPREME COURT OF NEW ZEALAND

I TE KŌTI MANA NUI

SC 29/2019
[2021] NZSC 104

BETWEEN	VIVIEN JUDITH MADSEN-RIES AND HENRY DAVID LEVIN AS LIQUIDATORS OF DEBUT HOMES LIMITED (IN LIQUIDATION) First Appellants
DEBUT HOMES LIMITED (IN LIQUIDATION) Second Appellant
AND	LEONARD WAYNE COOPER First Respondent
LEONARD WAYNE COOPER AND TRACEY COOPER AS TRUSTEES OF THE L & T COOPER FAMILY TRUST Second Respondents

Court:	Winkelmann CJ, Glazebrook, O’Regan, Ellen France and Williams JJ
Counsel:	N H Malarao and P V Shackleton for Appellants R B Hucker and R F Selby for Respondents
Judgment:	24 August 2021

JUDGMENT OF THE COURT

AThe application for recall of this Court’s judgment of 24 September 2020 (Madsen-Ries v Cooper[2020] NZSC 100) is dismissed.
BThe respondents must pay the appellants costs of $1,500.

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REASONS

Background

In our judgment of 24 September 2020 in Madsen‑Ries v Cooper, we made a costs order against the respondents.[1] This means that both the first and second respondents bear joint and several liability for the payment of the costs order.
[1]Madsen‑Ries v Cooper [2020] NZSC 100 at [191].
By memorandum of 1 July 2021, Mr and Mrs Cooper seek recall of this Court’s judgment to clarify that the costs order is made solely against Mr Cooper as first respondent. This is on the basis that the second respondents took no active steps either in this Court or the Court of Appeal, although they were represented by the same counsel as Mr Cooper in the High Court. Further, it was only a small part of the argument that an order should not have been made, under s 299 of the Companies Act 1993, that the security in favour of the second respondents be set aside to the extent of any compensation payable by Mr Cooper. Mr Cooper submits that it was in his capacity as director of Debut Homes Ltd that he made submissions on the s 299 issue.
The appellants say that the L & T Cooper Family Trust sought to uphold the Court of Appeal’s decision on the s 299 order and made submissions through Mr Cooper. It did not differentiate its position from that of Mr Cooper. Further, the submissions advanced in this Court on the s 299 order were inextricably intertwined with the breach of duty issues. They also say that related parties to the same appeal should be discouraged from effectively appointing one party to pursue all appeal points in order to try and shield themselves from costs awards.

Our assessment

It is true that the second respondents were not recorded as being represented in this Court. However, it would be artificial to allow Mr Cooper to compartmentalise his roles in this manner and assert he was acting in only one capacity when making submissions on the s 299 issue. We also accept the appellants’ submission that the issues of breach of duty and s 299 were inextricably intertwined.

Result

The application for recall of this Court’s judgment of 24 September 2020 (Madsen‑Ries v Cooper [2020] NZSC 100) is dismissed.
The respondents must pay the appellants costs of $1,500.

Solicitors:
Meredith Connell, Auckland for Appellants
Hucker & Associates, Auckland for Respondents

CaseChat Overview and Summary

The Supreme Court of New Zealand considered an application for recall of its earlier judgment in Madsen-Ries v Cooper. The first and second appellants, as liquidators of Debut Homes Limited, sought to have the costs order clarified so that it would apply solely to the first respondent, Leonard Wayne Cooper. The respondents, including Cooper and Tracey Cooper as trustees of the L & T Cooper Family Trust, argued that they should not bear liability for the costs order because they were not actively involved in the proceedings. They further argued that the security in favour of the second respondents should not be set aside to the extent of any compensation payable by Cooper under section 299 of the Companies Act 1993. The central issue before the court was whether the costs order should be apportioned between the respondents, and if the security in favour of the second respondents should be set aside.

The court considered the submissions made by the respondents and the arguments presented by the appellants. The court noted that while the second respondents were not represented in the Supreme Court, their interests were represented by the same counsel as Cooper in the High Court. The court found that it would be artificial to compartmentalise Cooper's roles and that the issues of breach of duty and section 299 were inextricably intertwined. The court also accepted the appellants' argument that related parties to the same appeal should not be able to appoint one party to pursue all appeal points to shield themselves from costs awards. Based on these findings, the court dismissed the application for recall and upheld the original costs order.

The Supreme Court of New Zealand dismissed the application for recall of its earlier judgment in Madsen-Ries v Cooper. The respondents, including Cooper and the L & T Cooper Family Trust, were held jointly and severally liable for the costs order of $1,500. The court found that the issues of breach of duty and section 299 were inextricably intertwined, and it would be artificial to allow Cooper to compartmentalise his roles. The security in favour of the second respondents was not set aside under section 299 of the Companies Act 1993. The respondents were ordered to pay the appellants' costs of $1,500.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established