Meltzer (Blue Chip Liquidation) HC Auckland CIV-2009-404-001511

[2011] NZHC 444

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-404-001511

IN THE MATTER OF     an application for orders under Section

284(1)(a) of the Companies Act 1993

AND IN THE MATTER OF BLUE CHIP NEW ZEALAND LIMITED (IN LIQUIDATION), BRIBANC LIMITED, ART APARTMENTS LIMITED, AUCKLAND RESIDENTIAL TENANCIES LIMITED, BLUE CHIP JOINT VENTURES LIMITED, BLUE SKY HOLDINGS LIMITED, LARNARK LIMITED, BECROFT LIMITED, KINGSLEY LIMITED

BETWEEN  JEFFREY PHILIP MELTZER, AARON LESLIE HEATH AND LLOYD JAMES HAYWARD

Applicants

Judgment:      3 May 2011 at 12:15 PM On the papers

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 3 May 2011 at 12.15 p.m. pursuant to Rule 11.5 of the High

Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Lowndes Associates, PO Box 7311, Wellesley Street, Auckland 1141 (M Whale) Carter & Partners, PO Box 2137, Shortland Street, Auckland 1140

Ellis Law, PO Box 4516, Shortland Street, Auckland 1140

Brookfields,  PO  Box  240,  Shortland  Street,  Auckland  1140  Fax  [phone] (D Neutze)

Keegan Alexander, PO Box 999, Shortland Street, Auckland 1140

McElroys, PO Box 835, Shortland Street, Auckland 1140 (Ms R Scott)

Simpson Grierson, Private Bag 92518, Wellesley Street, Auckland 1141 (M V Robinson/B Upton)

CMS Legal, PO Box 105887, Auckland 1143 (C Smith)

Copy to:            P J Dale/D W Grove, PO Box 130 Shortland Street, Auckland 1140

B Keene QC, PO Box 879, Shortland Street, Auckland 1140

D Chisholm, PO Box 2629, Shortland Street, Auckland 1140

G P Blanchard, PO Box 1235, Shortland Street, Auckland 1140

MELTZER, HEATH AND HAYWARD HC AK CIV-2009-404-001511 3 May 2011

Introduction

[1]      In  a  judgment  delivered  on  23  April  2009  I  declined  the  liquidators’ application that their application for directions be heard at the same time as the developer’s  proceedings.    In  the  Reasons  Judgment  issued  on  27 April  2009  I reserved the issue of costs noting that if counsel were unable to agree I would deal with costs by way of memoranda.

[2]      Counsel have not been able to agree costs.   They have filed memoranda. Regrettably none of those memoranda were referred to me.   The matter was only drawn to my attention when counsel for Turner and Waverley Ltd made a recent inquiry through the Registry.

[3]      I have now obtained and considered the various memoranda by counsel for the parties seeking costs, the liquidators’ response and the successful parties’ reply memorandum.

The parties’ positions

[4]      The application by the liquidators was successfully opposed by Turner & Waverley Ltd (formerly Turn & Wave Ltd), Greenstone Barclay Trustees Ltd and Icon Central Ltd.

[5]      The successful parties seek costs on the application calculated on a 3C basis

(in the case of Icon reduced to actual costs) as follows:

Turner & Waverley Ltd:  $19,434

Greenstone Barclay  $19,434 (in their reply memorandum Greenstone Barclay

waives the challenged claim for photocopying)

Icon Central  $16,500

Total:  $55,368

[6]      The liquidators submit that costs should be calculated on a 2B rather than a

3C basis and further that only one set of costs should be awarded relying on r 14.15. The result would be one costs order of $5,120  to be shared  between  the three successful parties.

[7]      The issues for the Court are:

the appropriate categorisation;

the appropriate time band;

the effect of r 14.15.

[8]      In relation to the above Mr Keene submits that the overriding jurisdiction provided for in r 14.1(2) confirms the more detailed provisions as to costs are subject to the general discretion.

Categorisation

[9]      Mr Keene noted that no order had been made for the categorisation of the present proceedings under r 14.3 and submitted that in the sense that the proceedings which the liquidators were involved in was an issue as to whether there should be a conjoint hearing or not category 2 was the appropriate step.

[10]     Counsel  for  Turn  &  Wave,  Greenstone  Barclay  and  Icon  submit  the appropriate categorisation for these proceedings is category 3.   Category 3 was clearly the appropriate category for the related substantive proceedings.  However, this was a separate application to the Court directed specifically at orders under s 284(1)(a) of the Companies Act 1993.  Proceeding is defined in the rules as:

any application to the court for the exercise of the civil jurisdiction of the court other than an interlocutory application.

[11]     The application was an originating application rather than an interlocutory application within existing proceedings.   It was effectively an application for the substantive relief of the Court.

[12]     As an independent proceeding it falls for determination separately to the substantive proceeding.   However, the application was important and, if granted, would have led to a joinder with the substantive proceedings.   Category 3 is the appropriate costs categorisation in the circumstances, given the importance of the application to the parties.

Time band

[13]     Counsel for Turn and Wave, Greenstone Barclay and Icon sought to support time band C on the basis they were required to consider not only the evidence filed with the originating application itself but also the many issues in the substantive developer’s  proceeding.     However,  given  the  stage  at  which  this  particular application was made, counsel inevitably would already have had substantial knowledge and understanding of the substantive proceedings and the issues involved in it.  I can see no basis upon which time band C, which is only appropriate where a comparatively large amount of time for the particular step would be reasonable, should apply.  Rather, in this case, I consider time band B is appropriate.

[14]     In summary to this point then I consider that costs on a 3B basis would be appropriate.

The r 14.15 point

[15]     Rule 14.15 provides:

The court must not allow more than 1 set of costs, unless it appears to the court that there is good reason to do so, if—

(a)       several defendants defended a proceeding separately; and

(b)      it appears to the court that all or some of them could have joined in their defence.

[16]     Mr Keene submitted that the substantive work  in relation to settling the notice  of  opposition  and  affidavits  was  carried  by  Turn  and  Wave  and  that Greenstone Barclay and  Icon largely replicated in their notice of opposition the grounds of opposition initially set out by Turn and Wave.  Mr Keene also noted that

the affidavits were strictly unnecessary and that during the course of the hearing Mr Neutze and Mr O’Callahan for Greenstone Barclay and  Icon had, in large part, adopted Mr Chisholm’s submissions for Turn and Wave.

[17]     Mr Keene referred to the decision of Jordan & Vance v O’Sullivan & Ors[1] in which Clifford J confirmed the objective in relation to r 14.15:

[7]       The objective underlying this rule is to minimise costs by requiring a Court “to exercise some caution before awarding costs, without more, in favour of multiple parties, particularly when there is some overlap or community of interest in the litigation position of those parties”: Norfolk Trustee Co Ltd v Tattersfield Securities Ltd HC AK CIV-2004-404-3668 30

March 2005 at [51] per Priestley J.

[1] Jordan & Vance v O’Sullivan & Ors HC Wellington CIV-2004-485-002611, 1 May 2009.

[18]     As counsel for the successful developers submit, the developer parties were entitled to be separately represented on this application, including at the hearing. However, the practical reality of the position is that in large part there was a common thread running through the submissions both in the structure of the oppositions and the submissions in opposition.  Undoubtedly it was appropriate for the developers to have separate advice but they were able practically to rely upon the notices of opposition and certain submissions made by counsel for Turn and Wave Ltd.

[19]     Having regard to the principle in 14.15 and the Court’s overall discretion in relation to costs I consider a just outcome in the present case to be to reduce the time allowed for structuring the formal initial opposition by a half in the case of Greenstone Barclay and Icon Central.

[20]     The result is that Turner and Waverley Ltd are to have costs against the liquidators in the sum of $7,548.00 and Greenstone Barclay and Icon are each to have costs against the liquidators in the sum of $5,214.00 in each case.  The total

costs award against the liquidators is $17,976.00.

Venning J