Manning v Smith - [2020] NZHC 2780

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2019-470-000069

[2020] NZHC 2780

UNDER The Companies Act 1993, s 284(1)

IN THE MATTER OF

MEDICANN HOLDINGS LIMITED (IN LIQUIDATION)

BETWEEN

PAUL THOMAS MANNING and

KENNETH PETER BROWN, as liquidators of MEDICANN NZ HOLDINGS LIMITED (IN LIQUIDATION)

Applicants

AND

ROSS HENRY SMITH and BRENDON GEORGE OGILVY

Respondents

Hearing: On the papers

Counsel:

J Burt and J Tunna for Applicants

M Macfarlane for Respondent (R Smith) B Gustafson for Respondent (G Ogilvy)

Judgment:

22 October 2020

COSTS JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by Associate Judge Andrew on 22 October 2020 at 4.00 pm
pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar

Date………………………

MANNING v SMITH [2020] NZHC 2780 [22 October 2020]

Introduction

[1] In my judgment of 31 July 2020,1 I made directions, on application by the plaintiff liquidators, under s 284(1) of the Companies Act 1993, as to whether shares held in Medicann Holdings Ltd (in liquidation) by Mr Ross Smith and interests associated with him, either became void or were validly cancelled prior to liquidation.

[2]This is my judgment on costs.

[3] The applicant liquidators seek indemnity costs totalling $61,947.86 jointly and severally against Mr Smith and interests associated with him, or alternatively, an award of increased costs and disbursements totalling $39,208.86.

[4] Mr Brendon Ogilvy also seeks indemnity costs, or in the alternative, increased costs (a 50 per cent uplift on scale).

[5] In opposition, Mr Smith contends that costs should be awarded on a 2B basis only and that this is far from an appropriate case for either indemnity or increased costs.

Relevant legal principles

[6] Increased costs and indemnity costs are provided for in r 14.6 of the High Court Rules 2016.

[7]Rule 14.6(3) provides:

(3)The court may order a party to pay increased costs if –

(a)the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or

(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by –

(i) failing to comply with these rules or with a direction of the court; or

(ii) taking or pursuing an unnecessary step or an argument that lacks merit; or

1 Manning & Brown v Smith & Ogilvy [2020] NZHC 1888.

(iii) failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or

(iv) failing, without reasonable justification to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or

(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer t o settle or dispose of the proceeding; or

(c) the proceeding is of general importance to…

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.

Continue reading Manning v Smith

Details

AGLC: Manning v Smith [2020] NZHC 2780
Case: [2020] NZHC 2780
Decision Date: 22 October 2020

CaseChat Overview and Summary

Manning v Smith concerns a costs application in a case involving the liquidation of Medicann Holdings Limited. The liquidators, Paul Thomas Manning and Kenneth Peter Brown, sought costs against Ross Henry Smith and Brendon George Ogilvy under section 284(1) of the Companies Act 1993. The primary legal issue was whether the shares held by Smith and related interests were void or validly cancelled prior to the liquidation. The court was required to decide on the appropriate costs order, considering whether increased or indemnity costs were warranted under the High Court Rules 2016.

The court assessed the conduct of the parties during the litigation to determine the appropriate costs order. Smith's claims were found to lack merit and his conduct was deemed unreasonable, contributing unnecessarily to the time and expense of the proceedings. The court ruled that Smith should pay costs on a 2B basis with a 25% uplift, while Brendan Ogilvy and Solange Kelly Mary Desire should pay costs on a 2B basis only. The liquidators were awarded increased costs of 25% above the standard scale, but indemnity costs were not awarded as the court found it was not necessary given the liquidators' position that there were genuine legal questions to be addressed.

The final orders require Ross Smith, Ross Smith and Ruahine Professional Trustee Company Ltd (as trustees of the Mohaka Capital Trust), and Ruahine Professional Trustee Company Ltd (as trustee of the Waitara Capital Trust) to pay costs and disbursements to Brendon Ogilvy on a 2B basis with a 25% uplift, and to the liquidators on a 2B basis with a 25% uplift. Solange Kelly Mary Desire is also ordered to pay costs and disbursements to Brendon Ogilvy and the liquidators on a 2B basis.

Orders