McCullagh v Robt Jones Holdings Limited
[2016] NZHC 1221
•8 June 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-3475 [2016] NZHC 1221
UNDER Sections 292, 294 and 295 of the
Companies Act 1993
IN THE MATTER OF
the liquidation of Northern Crest
Investments Limtied (in liquidatation)BETWEEN
ANTHONY JOHN MCCULLAGH AND STEPHEN MARK LAWRENCE Applicants
AND
ROBT. JONES HOLDINGS LIMITED Respondent
Hearing: 23 May 2016 Counsel:
B Keene QC for Applicants
D Chesterman for RespondentJudgment:
8 June 2016
JUDGMENT OF DUFFY J
This judgment was delivered by me on 8 June 2016 at 3.00 pm pursuant to
Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Solicitors:
Anthony Harper, Auckland
Gillespie Young Watson, Lower Hutt
Counsel:
David Chesterman, Auckland
Brian Keene QC, Auckland
MCCULLAGH AND LAWRENCE v ROBT. JONES HOLDINGS LIMITED [2016] NZHC 1221 [8 June 2016]
[1] The applicants, who are the liquidators of Northern Crest Investments (in
liquidation) (“the liquidators”) seek recall of the judgment I delivered on 24
February 20161 insofar as that judgment makes a determination awarding costs to the
respondent, Robt Jones Holdings Ltd (“RJH”). The recall application is opposed.
[2] The substantive proceedings relating to the present interlocutory applicationare brought by the liquidators who seek an order under s 292 of the Companies Act 1993 setting aside payments by the company in liquidation to RJH on the ground the payments are voidable transactions.
[3] The judgment of 24 February 2016 dealt with two interlocutory applications, each of which was brought by RJH. They were: (a) an application to amend the notice of opposition to the originating application brought by the liquidators; and (b) an application for leave to adduce further evidence in support of RJH’s application for High Court review of a decision of Bell AJ. RJH was successful in both applications, which were strenuously opposed by the liquidators. At [45] of the judgment I found that as the “successful party RJH [was] entitled to costs.” I then gave the parties leave to file memoranda on the quantum of the costs award.
[4] The liquidators’ written submissions in support of their opposition to RJH’s two applications included a request for an award of “wasted costs” by which the liquidators meant indemnity costs. They also requested that the Court set a timetable for filing further submissions on costs.
[5] The liquidators sought indemnity costs because RJH had withdrawn two of its grounds in its notice opposing the originating application. The abandoned grounds of opposition were: (a) this court lacked jurisdiction to determine if the relevant payment was a voidable transaction; and (b) the appropriate law for determining if the payment was a voidable transaction was Australian law. The liquidators never said in their submissions that they sought an award of indemnity
costs even in the event that they were unsuccessful.
1 McCullagh v Robt Jones Holdings Ltd [2016] NZHC 263.
[6] At the hearing of the recall application it became clear to me that the liquidators believe that by deciding to award costs to RJH I had left their costs application dangling, and so they thought they could not appeal my decision. I do not understand the decision I gave to have this effect, nor does RJH. The decision I made to award costs to the successful party necessarily also disposed of any request for costs made by the liquidators. The dismissal of their costs claim was implicit. Thus, I reject the idea that the liquidators have no alternative but to request the recall of the costs judgment.
[7] In terms of the merits of the recall application, I do not consider that it qualifies for recall under the well settled tests. The relevant test under which the application falls for consideration is the third category identified in Horowhenua County v Nash (No2):2
… where for some other very special reason justice requires that the
judgment be recalled.
[8] Courts have held that “special reasons” include: (a) where a Judge failed to determine an issue properly put to him or her or misapprehended counsel’s submissions;3 (b) the Court overlooked a matter properly put to it, for example that a party had applied to amend the orders sought or that a party had sought indemnity costs against counsel;4 and (c) judgment has been given without consideration of the interests of an affected person.5
[9] The liquidators set out in some detail the onerous impact they contend they suffered through expending time and effort on addressing RJH’s now abandoned grounds of opposition to the originating application. They also contend that their wasted efforts in attempting to respond to the now abandoned grounds of opposition
warrant them being awarded indemnity costs, despite the success of RJH.
2 Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC).
3 Brake v Boote (1991) 4 PRNZ 86; Synotech Securities Ltd v People Ltd (No 2) HC Auckland
CIV-2008-404-1559, 04/03/09.
4 Marac Finance Ltd v Bank of New Zealand HC Auckland CP490/04, 4 August 1995; Y v Foulkes
[2014] NZCA 396.
5 MacDonald v Symonds (1994) 8 PRNZ 12.
[10] The liquidators referred to r 7.77 which provides that where an amended pleading has been filed costs referable to the original (replaced) pleading and to the application for leave to file the amended pleading (if any) are to be borne by the party amending unless the court otherwise orders. In Jones v Norterra Rural Resources Ltd the Court noted that there was no presumption that costs will be fixed when the application for leave is determined and that it may be more appropriate to
wait until after the trial before fixing costs.6
[11] Rule 7.77 refers specifically to the amendment of pleadings. The replacement of an original cause of action or an original defence may have caused the other party to incur considerable costs both in relation to interlocutory steps taken, evidence obtained and trial preparation.
[12] I do not consider that the abandonment of two grounds of opposition to an originating application that raise questions of law going to jurisdiction and the applicable law can be equated with the abandonment of an original cause of action or pleading. So I do not find that r 7.77 is applicable to the present circumstances.
[13] Instead I see the present circumstances as being more analogous to the situation where a party runs a number of issues before the court and succeeds on some only. For example in Zhao v New Zealand Law Society KósJ described Mr Zhao as having succeeded “somewhat modestly against the bold palette of
grounds originally advanced” by him.7 Mr Zhao had succeeded in his judicial
review of the New Zealand Law Society, but only in relation to one of three decisions impugned and on the basis of one out of seven causes of action advanced. KósJ found that Mr Zhao was still entitled to costs but given the scale of his success as against the breadth of his claim those costs were reduced from what he would
have received by way of scale costs.8
6 Jones v Norterra Rural Resources Ltd [2014] NZHC 2855 at [32].
7 Zhao v New Zealand Law Society [2012] NZHC 2169 at [106].
8 Zhao v New Zealand Law Society [20120] NZHC 3112.
[14] In the course of his decision in Zhao, KósJ acknowledged that in general it is the “overall result that matters most of all”9 and referred to Shotter v Westpac Banking Corporation where Wylie J said:10
…it is not uncommon for a party to succeed on one issue and to fail on several others and in the ordinary course not to suffer in costs for that reason alone…
[15] Here the abandonment of the two legal grounds of opposition which formed part of the amendment of the notice of opposition sought by RJH saved the liquidators from having to face those arguments when the originating application comes to be heard. Had those grounds remained as part of RJH’s case, and it lost on those grounds but won on others there may well have been no impact on costs awarded to RJH.
[16] Even if the liquidators may have had some cause for complaint about RJH’s abandonment of the legal grounds of opposition there was nothing in those complaints to suggest that RJH’s conduct was so egregious that it should not be awarded costs despite its success with two interlocutory applications. Let alone that the liquidators as the unsuccessful party nonetheless be awarded costs.
[17] The liquidators also argued that by permitting RJH to amend its notice of opposition to the originating application and for leave to adduce further evidence in support of its application for review of Bell AJ’s decision, this Court was granting RJH an indulgence, and accordingly it was appropriate that a costs award be made against the party that obtained the indulgence. I note that under r 14.7(g) the obtaining of an indulgence can be a reason for refusing or reducing an award of costs.
[18] The liquidators’ submission overlooks the fact that RJH was successful in two applications and in my view that outcome was reasonably predictable. Nor do I consider that RJH obtained the benefit of an indulgence of the type that would see it
deprived of a costs award.
9 At [6].
10 Shotover v Westpac Banking Corporation HC Auckland A995/85, 5 June 1991.
[19] The recall application may well be premature as, whilst I have decided to award RJH costs, I have not determined the quantum of those costs. Accordingly, no costs order has been formally made as yet. In short, the liquidators are asking me to recall a finding that I have made rather than an actual order or judgment. It may be that the liquidators should first have made submissions on the quantum of costs (which they can still do) and, once a costs order was formally made, to then take the step of seeking recall or to appeal against it.
[20] I have carefully considered whether there is any proper basis for recalling the decision expressed in [45] of the 24 February 2016 judgment to award costs to RJH on the basis that costs follow the event. I can see no basis for doing so. It follows that the liquidators’ application for recall is dismissed.
[21] The parties have leave to file memoranda on costs.