Mainzeal Property and Construction Limited (in receivership and in liquidation) v Richina Global Real Estate Limited

[2014] NZHC 3104

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-3047 [2014] NZHC 3104

UNDER

the Companies Act 1993

IN THE MATTER OF

the liquidation of Richina Global Real
Estate Limited

BETWEEN

MAINZEAL PROPERTY AND CONSTRUCTION LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION)

Plaintiff

AND

RICHINA GLOBAL REAL ESTATE LIMITED

First Defendant

RICHARD CILIANG YAN Second Defendant

Hearing:	On the papers
Counsel:	Z G Kennedy & M D Pascariu for Plaintiffs D J Chisholm QC and T Mullins for Defendants
Judgment:	5 December 2014

JUDGMENT OF BROWN J [As to costs]

This judgment was delivered by me on 5 December 2014 at 3 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:           Minter Ellison Rudd Watts, Auckland

Lee Salmon Long, Auckland
Russell McVeagh, Auckland

Counsel:            D J Chisholm QC, Auckland

MAINZEAL PROPERTY & CONSTRUCTION LTD (IN REC AND IN LIQ) v RICHINA GLOBAL REAL ESTATE LTD [2014] NZHC 3104 [5 December 2014]

CIV-2013-404-2317

UNDER  the Companies Act 1993

IN THE MATTER OF       the liquidation of Isola Vineyards Limited

BETWEEN  MAINZEAL PROPERTY AND CONSTRUCTION LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION)

First Plaintiff

KING FACADE LIMITED (previously known as RICHINA LAND LIMITED) (IN LIQUIDATION)

Second Plaintiff

ANDISOLA VINEYARDS LIMITED (previously known as WAIHEKE VINEYARDS LIMITED) Defendant

[1]      The  judgment  of  the  Court  of  Appeal  in  Yan  v  Mainzeal  Property  & Construction Ltd (in rec and in liq):1

(a)       set aside my decision putting Richina Global Real Estate Limited

(RGREL) into liquidation;

(b)      dismissed the Plaintiffs’ appeal in the Isola proceeding; and

(c)      ordered  that  costs  in  relation  to  the  High  Court  stage  of  both proceedings were to be fixed by the High Court, absent agreement between the parties.

[2]      The parties being unable to agree, the following memoranda have been filed:

(a)       Memorandum  on  behalf  of  RGREL  and  Isola  as  to  costs  dated

15 October 2014;

(b)      Memorandum of the plaintiffs in response dated 10 November 2014;

(c)       Reply    memorandum    on    behalf    of    RGREL   and    Isola    dated

14 November 2014.

[3]      Costs are sought by RGREL and Isola on a category 2B basis except in respect of their preparation for both the application for leave to defend and for the hearing itself in respect of which Band C costs are sought.  Allowance for second counsel is also sought in relation to the hearing.

[4]      The plaintiffs submit that no costs should be allowed on the leave to defend as that application involved the seeking of an indulgence from the Court.  In respect of the liquidation hearing the plaintiffs resist costs on the ground that the proceeding concerned a matter of public interest and that r 14.7(e) of the High Court Rules is engaged.  In the event that the Court elected to make an award of costs, the plaintiffs resist an award on a Band 2C basis.

[5]      So far as the application for leave to defend is concerned, I recognise that in Holdgate v Holdgate2  it was said that the grant of an indulgence conventionally is made at the expense of a costs order against the party obtaining the indulgence. However in every case the particular circumstances need to be considered.  Here the plaintiffs were aware from 3 September 2013 that the defendants intended to apply for leave to file defences out of time.   The statements of defence were filed and served.  The applications for leave to defend were opposed by the plaintiffs with a hearing date set for 4 October 2013.

[6]      It was only on 3 October 2013, the day before the application was to be heard,  that  the  plaintiffs  consented  to  the  orders  sought.     Consequently  the defendants were put to significant preparation costs on the basis that the applications were opposed, including preparation of bundles and written submissions.   In my view in those circumstances the usual rule that costs should follow the event should apply. The defendants are entitled to costs on the application for leave to defend.

[7]      So far as the liquidation hearing is concerned, the defendants accept that there is a public interest in the liquidation of insolvent companies and that the liquidation procedure itself may be considered a matter of public interest.   However I accept their submission that the plaintiffs’ interest is a private interest in the repayment of unsecured private creditors and that it is inappropriate for defendants who successfully resist liquidation proceedings to be denied costs on the basis of the public interest exception.

[8]      Consequently  the  defendants  are  entitled  to  costs  on  the  liquidation application.  I allow for second counsel.

[9]      However I do not consider that it is appropriate for costs to be awarded on a Band C basis.  Neither the nature and complexity of the case nor the amount of work which  I  consider  was  involved  justify  Band  C  costs  in  respect  of  either  the preparation for the leave application or the preparation for the liquidation hearing.

Decision

[10]     The defendants are entitled to costs on a category 2B basis.   I allow for second counsel.

[11]     Neither of the parties have been entirely successful on the issue of costs.  I

direct that costs are to lie where they fall on the application to fix costs.

[12]     As a result of standstill arrangements in place in respect of the defendants their associated company Richina Pacific Ltd (Bermuda) has met all of the legal costs and disbursements associated with these proceedings.  In order to enable RPL to be reimbursed, the defendants invite the Court to order that the defendants be released from their undertakings to the Court to the extent of the costs orders made to  enable  them  to  reimburse  RPL.     As  the  defendants  note  in  their  reply memorandum,  there  has  been  no  objection  by  the  plaintiffs  to  the  defendant’s request. Accordingly I order that the costs as approved are to be paid directly to RPL being the entity that funded the defence of the proceedings.

Brown J