Nayacakalou v Minister of Education

[2017] NZHC 1210

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2016-419-000279 [2017] NZHC 1210

BETWEEN

KELERA NAYACAKALOU

Applicant

AND

MINISTER OF EDUCATION Respondent

Hearing:	On the papers
Appearances:	D Hayes for Applicant N H Malaroa and W Potter for Respondent
Judgment:	6 June 2017

COSTS JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie

On 6 June 2017 at 11.00am Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

Date:…………………………

Solicitors/Counsel:

Hunwick Law Ltd/D Hayes, Hamilton

Crown Solicitor, Auckland

NAYACAKALOU v MINISTER OF EDUCATION [2017] NZHC 1210 [6 June 2017]

Introduction

[1]      I refer to my reserved judgment dated 27 April 2017.   I recorded that the Minister was seeking costs against Ms Nayacakalou, and I directed that memoranda should be filed in that regard.  I have now received those memoranda.

The Minister’s memorandum

[2]      The Minister seeks costs against Ms Nayacakalou personally.  She argues that the  proceeding  was  brought  about  as  a  result  of  Ms  Nayacakalou’s  failure  to discharge  her  duties  under  the  Companies Act  1993,  and  that  the  creditors  of Osborne Building 2000 Ltd (in liquidation) should not be required to bear the costs of Ms Nayacakalou’s failures. The Minister seeks costs on a 2B basis.

Ms Nayacakalou’s memorandum

[3]      Ms Nayacakalou denies that the Minister was successful in the proceeding. She asserts that she obtained directions in relation to the matters raised by her, and that that was the purpose of her application.  She argues that she is entitled to costs, also calculated on a 2B basis.

Analysis

[4]      The general principles relating to costs are well settled.  Pursuant to r 14.1(1) of the High Court Rules 2016, the Court has an overriding discretion.   The rules, however,  contain  various  principles  intended  to  inform  the  exercise  of  that discretion.   In particular, the party who fails with respect to a proceeding or an interlocutory application should generally be required to pay costs to the party who succeeds – r 14.2(a).

[5]      In the context of applications brought under the Companies Act in respect of company liquidations, success or failure is assessed by a realistic appraisal of the end result rather than by focussing on who initiated what step, and the extent to which that step succeeded or failed.1

[6]      Here, both Ms Nayacakalou and the Minister sought directions.   In some respects the applications overlapped, because Ms Nayacakalou was seeking to be

1      Packing In Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA) at [6].

excused from discharging various duties imposed on her by the Companies Act, and the Minister was seeking directions requiring Ms Nayacakalou to comply with those duties.

[7]      The five directions sought by Ms Nayacakalou were rejected in their entirety in my reserved judgment. The directions sought by the Minister were granted in full, save as to one order, which I declined.   The Minister’s submissions succeeded in very large part.  I concluded in my reserved judgment that Ms Nayacakalou’s actions in failing to deal with the Minister’s claim in refusing to call a creditors’ meeting were  wrong,  and  that  they were also  unreasonable,  given the preponderance of authority and the clear wording of the Act.

[8]      The Minister was the successful party.

[9]      As noted, the Minister seeks costs against Ms Nayacakalou in her personal capacity.   Ordinarily, where proceedings are brought by or against a company in liquidation, liquidators have the right to an indemnity out of the company’s assets.2

However, in this case, Ms Nayacakalou brought the application in her personal capacity as liquidator, and not on behalf of the company.  Further, liquidators who act unreasonably, contrary to law, and/or are in breach of their duties, can be liable to personally pay the costs of creditors who are required to apply for orders requiring them to comply with their duties.3

[10]     In the present case, and as noted in my reserved judgment, Ms Nayacakalou had indicated that she was unwilling to comply with her statutory duties, and she commenced the proceedings seeking orders absolving her from the need to do so.  In those circumstances, the Minister’s only reasonable option was to oppose the application     and     to     seek     orders    confirming    Ms Nayacakalou’s     duties. Ms Nayacakalou’s  breaches  of  her  duties,  and  her  application  which  sought  to excuse those breaches, were not in the interests of the company, and it would be unfair to creditors to require that they should bear the costs of the liquidator’s failure

to carry out her duties.

2      Mana Property Trustees Ltd v James Developments Ltd [2010] NZSC 124, [2011] NZLR 25 at

[10].

3      Whitireia Community Polytechnic v McLennan HC Auckland CIV-2010-404-3378, 10

September 2010 at [26]; Stojkov v Kamal [2015] NZHC 2513 at [11].

[11]     I conclude that the costs order should be against Ms Nayacakalou in her personal capacity.

[12]     The Minister seeks costs on a 2B basis.  A schedule of those costs has been presented. They total $10,592.50.

[13]     Mr  Hayes,  on  Ms  Nayacakalou’s  behalf,  does  not  take  issue  with  the schedule, with one exception.  He submits that it is inappropriate for the Minister to seek a time allowance of two days for filing a notice of opposition and supporting affidavits in respect of Ms Nayacakalou’s applications.  Mr Hayes points out that no affidavits were prepared in support of the Minister’s opposition.

[14]     With respect to Mr Hayes, the Minister has not claimed an allowance of two days for filing a notice of opposition and supporting affidavits.   Rather, she has claimed a two day allowance for filing the notice of opposition, and her own application for directions.  That is appropriate.  It is a step recognised under item 38 in the Second Schedule to the High Court Rules.

[15]     All other steps claimed by the Minister were taken, and the time allowances claimed, and the amounts claimed for each step, are in accordance with the relevant rules and schedule. As a result, I award costs of $10,592.50 to the Minister.

[16]     The disbursements the Minister claims are also reasonable.  They total $660, and I approve the same.

[17]     It follows that the total award of both costs and disbursements is in the sum of $11,252.50.  An award in that sum is made in favour of the Minister and against Ms Nayacakalou in her personal capacity.

Wylie J