NF Global Limited (in liquidation) v Oberto
[2025] NZHC 2432
•27 August 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-2594 [2025] NZHC 2432
BETWEEN NF GLOBAL LIMITED (IN LIQUIDATION)
First Plaintiff
JOHN HOWARD ROSS FISK and CRAIG
ALEXANDER SANSON as liquidators of NF Global Limited (in liquidation) Second Plaintiffs
AND CLAUDE SANDRO OBERTO
Defendant
Hearing: 22 August 2025
Appearances: T Fitzgerald / J A Rudell for the Plaintiffs
B Henry/ K Elcoat for the Defendant
Judgment: 27 August 2025
JUDGMENT OF ASSOCIATE JUDGE BRITTAIN
This judgment was delivered by me on 27 August 2025 at 11 am. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
Solicitors:
Bell Gully, Auckland Shanahans, Auckland
B Henry, Auckland
NF GLOBAL LTD v OBERTO [2025] NZHC 2432 [27 August 2025]
Introduction
[1] The second plaintiffs are the liquidators of the first plaintiff, NF Global Ltd (in liquidation) (NF Global). In this proceeding, the liquidators and NF Global seek an order against NF Global’s director, Claude Oberto (Mr Oberto), requiring Mr Oberto to compensate NF Global for the benefit of its creditors. The liquidators allege that Mr Oberto breached various duties that he owed to NF Global, causing a loss to NF Global’s creditors.
[2] Mr Oberto has applied for an order for the preliminary determination of questions arising in the proceeding, and for an order than the proceeding be stayed (including the proposed split trials) until the liquidators have completed the statutory process for admitting or rejecting creditors’ claims. Mr Oberto’s applications are opposed and determined in this judgment.
Background
[3] NF Global was part of a group of companies that provided investment services to high net-worth customers in Europe. NF Global’s role was to provide customers with an online payment platform through which they could deposit funds, make international payments in different currencies, and invest with other entities and funds.
[4] The High Court placed NF Global into liquidation on 23 April 2021. NF Global had failed to repay four of its payment platform customers the money they had deposited with the platform, when they demanded it.1
[5] NF Global and its liquidators allege that Mr Oberto breached various directors’ duties and seek orders under s 301 of the Companies Act 1993 (the Act) that Mr Oberto contribute:
(a)an amount equal to the shortfall between the aggregate of the creditors’ claims filed by customers and NF Global’s assets; and
(b)an amount equal to loans made by NF Global to related parties.
1 Arjang v NF Global Ltd [2021] NZHC 903.
[6] Mr Oberto applied for summary judgment as a defendant.2 He claimed that none of the causes of action in the plaintiffs’ statement of claim could succeed because:
(a)NF Global did not have a debtor/creditor relationship with the users of its payment platform or investment services, so the customers who have made claims in the liquidation are not creditors of NF Global;3 and
(b)the alleged loans by NF Global to related parties were shams, and NF Global did not in fact advance any funds to the related parties under the purported loans.4
[7] Mr Oberto’s application for summary judgment was declined.5 Associate Judge Gardiner (as she then was) summarised the background facts, which I adopt:6
[7] NF Global was part of the Starboard Group of companies. The Group has a sophisticated corporate structure. It appears to include separate entities for the separate services that the Group provides and the jurisdictions in which they are provided.
[8] A diagram of the Group structure put in evidence by Mr Oberto shows that the parent company of the Group is Starboard Capital SA (Starboard Capital). Starboard Capital is owned by a Mario Gesue and is registered in Switzerland.
[9] Starboard Capital is the 100 per cent owner of five subsidiaries. Four of these subsidiary companies are registered in the United Kingdom (UK). The fifth is NF Global, a New Zealand registered company.
[10] One of the UK subsidiaries is NF Money Ltd (NF Money). Another is Northern Fides Ltd (Northern Fides), which is described as a holding company. Northern Fides holds 100 per cent ownership in seven trustee companies registered in the UK, Italy, New Zealand, Monaco, Switzerland, and Luxembourg. There are also two further companies part-owned by Northern Fides which provide consultancy services.
[11] As noted, NF Global’s role in the Group was to provide a payment platform service, and investment and money management services. Customers of the payment platform service deposited funds into their “NF Global account” by transferring funds to a bank account nominated by NF Global, either directly or via a Starboard Group entity, such as NF Money. Customers would then issue instructions to NF Global in respect of their funds via the payment platform. Customers were entitled to close their accounts by
2 NF Global Ltd (in liq) v Oberto [2024] NZHC 3116.
3 At [31].
4 At [32].
5 At [80].
6 At [7]–[18] (footnotes omitted).
providing written notice to NF Global, at which point NF Global was obliged to pay them the balance of their NF Global account, less any charges. The investment service appears to have operated in a similar way, with the intention that investments would be made on behalf of customers with other entities and funds.
[12] NF Global did not receive or hold funds from customers directly. Rather, it worked with other companies in the Group, including NF Money and Northern Fides, to provide services to customers.
[13] NF Money provided online payment (or “remittance”) services. It held a remittance licence from the UK’s Financial Conduct Authority (the FCA), which allowed it to transfer funds to European banks. NF Global appears to have used NF Money to transfer funds within Europe. The relationship between NF Global and NF Money was governed by a services agreement dated 1 May 2018. I return to this agreement later.
[14] Northern Fides’ function appears to have been to provide administrative and other support to NF Global. The relationship between NF Global and Northern Fides was recorded in two services agreements, again discussed later.
[15] In many cases, NF Money appears to have used customers’ money to purchase e-money from lpagoo LLP (lpagoo), rather than depositing funds into traditional bank accounts. Ipagoo was a limited liability partnership incorporated in the UK. It held an authorisation from the UK’s FCA pursuant to the Electronic Money Regulations 2011 (UK). This means that it was permitted to issue e-money and to provide multi-country and cross-currency payment account services.
[16] It is not disputed that Ipagoo was ultimately controlled by the same people who were associated with the Starboard Group.
[17] Ipagoo was placed into administration on 1 August 2019. One of the liquidators of NF Global, John Fisk, explains that the administrators of Ipagoo undertook a reconciliation process to identify the customers to whom the e- money in the various accounts could be ascribed. During this process, the liquidators of NF Global were in contact with the administrators to try to secure for NF Global funds originating from its customers as a recovery in the liquidation. Some of the accounts listed in a schedule provided by the administrators to the liquidators of NF Global included “NF Global” in the name, but none were owned by NF Global. They were instead owned by NF Money. Mr Gesue provided a letter confirming that the funds in the Ipagoo accounts were held for NF Global and its customers, and authorising distribution of the funds to the liquidators of NF Global, rather than NF Money. Consequently, NF Global received a distribution from the administration of Ipagoo of foreign currencies to the value of approximately NZD2,931,922.
[18] Liquidators were appointed to NF Global by the High Court on 23 April 2021. The applicant was one of NF Global’s payment platform customers. NF Global had not made a payment directed by the customer and then refused to repay the customer’s funds because NF Global suspected that they were laundering money. The customer served a statutory demand on NF Global which it did not meet. Three other customers supported the
liquidation application. In an interim decision, Associate Judge Bell found that NF Global was obliged to pay the customers the amounts they had demanded. When neither NF Global nor its shareholder paid the customers, NF Global was put into liquidation.
[8] Associate Judge Gardiner’s key findings were:
[50] I find that Mr Oberto has not proven that none of the plaintiffs’ causes of action can succeed. Fundamentally, he has not put up evidence that proves, on the balance of probabilities, that NF Global did not owe payment platform/investment service customers legal obligations in relation to the funds held in the accounts, and that the arrangements in relation to the funds were solely between the customers and UK entities.
…
[71] … Mr Oberto has not proven that the claims relating to the loans cannot succeed. His affidavit evidence is that the loans were shams designed to deceive UK and European regulators and that NF Global did not in fact advance any funds under these purported loans. This explanation, given for the first time according to Mr Fisk, gives rise to a factual conflict with the contemporaneous loan documents that he signed. This issue of fact cannot be determined without cross examination. That will include cross-examination on NF Global’s financial statements, which do show a substantial intra-Group accounts receivable. It will also involve questions about the flow of funds that the liquidators have identified from NF Global to the Group. The evidence discloses an arguable case at the least, and the inconsistency between the contemporaneous documents and Mr Oberto’s evidence requires ventilation at trial.
[72] … Mr Oberto has not established that an order for compensation under s 301(1)(b) of the Act is not available if the customers are not creditors of NF Global. The claim for compensation in the amount of “the shortfall” between the claims made by customers and NF Global’s assets is not sustainable if the customers are not in fact creditors and are instead beneficial owners of the funds. However, Mr Oberto has not shown that the alternate claim to compensation in another amount cannot succeed if Mr Oberto is found to have breached his duties as a director causing NF Global loss, such as liability to the customers for breach of its trustee duties.
The proposed preliminary question and Mr Oberto’s argument
[9] Mr Oberto continues to argue that all the plaintiffs’ claims rest on the false premise that NF Global owed debt obligations to its customers and, consequently, NF Global has creditors.
[10] The proposed preliminary question is stated in Mr Oberto’s interlocutory application:
… the question of whether the First Plaintiff has any unsecured creditors and if so, their identity and the circumstances (including timing) of the formation of such debtor-creditor relationship(s) with the First Plaintiff …
[11] The proposed preliminary question has several components and comprises more than one question. The component questions have consequences for liability and quantum.
[12] Counsel for Mr Oberto, Mr Henry, submits that, if the proposed preliminary question is answered in the negative, it will determine the proceeding in its entirety and Mr Oberto will be entitled to judgment. If the question is answered in the positive, the Court will have determined who the unsecured creditors are and the terms of the agreement which resulted in the debts owed by NF Global to the customers. The matters to be determined at a second trial would be limited to the issues related to the alleged breaches of duty by Mr Oberto.
Legal principles — determination of separate questions
[13]Rule 10.15 of the High Court Rules 2016 (HCR) provides:
10.15 Orders for decision
The court may, whether or not the decision will dispose of the proceeding, make orders for—
(a)the decision of any question separately from any other question, before, at, or after any trial or further trial in the proceeding; and
(b)the formulation of the question for decision and, if thought necessary, the statement of a case.
[14] Split trials are not undertaken lightly. There is at least a moderate presumption against splitting trials.7 Case law contains numerous references to the pitfalls of a split trial.8
7 Haden v Attorney-General (2011) 22 PRNZ 1 (HC) at [46].
8 See Clear Communications Ltd v Telecom Corporation of NZ Ltd (1998) 12 PRNZ 333 (HC) at 335; and Body Corporate 126001 v Hannam [2022] NZHC 2746 at [37].
[15]In Haden v Attorney-General, Kós J set out five questions to be considered: 9
(a) Will there be difficult demarcation questions between those issues to be addressed at the first trial and those left for the second?
(b)Will the separate question bring the proceedings to an end?
(c)What potential time saving does the separate question offer?
(d)How will appeals be dealt with?
(e)Are there any practical considerations tending one way or the other?
[16]Kós J explained that the first question is the most important issue:10
The interaction between issues in split trials is said to be the single most important question for consideration by a Court considering a Rule 10.15 application. This question requires the Court to look at: (1) what is pleaded,
(2) what issues arise on the separate question, (3) what issues remain for the second hearing, and (4) in each case, what evidence is required to dispose of those issues. Issues in the two hearings desirably should be discreet. If they are not, or if there is significant evidential overlap, separate determination is far less likely to be appropriate. Particular consideration must be given to potential difficulties from issue estoppels. In a multi-party proceeding, inefficiencies associated with parties with limited connection to the initial question being required to attend the first hearing, simply in order to protect their position. The risk of a Judge dealing with the first trial being inadvertently disqualified from conducting the subsequent hearing must also be considered.
[17] The burden lies on the applicant seeking a split trial. It has been described as “not insignificant”11 and “heavy”.12 However, the possibility of a split trial should not be dismissed out of hand, and the most important consideration is the interaction between the issues intended to be traversed at the first hearing and those that remain to be traversed at the second hearing.13
9 Haden v Attorney-General, above n 7, at [50].
10 At [50(a)] (footnotes omitted).
11 KPMG New Zealand v Gemmell HC Auckland CIV-2008-404-4288, 27 March 2009 at [20].
12 Clear Communications Ltd v Telecom Corporation of NZ Ltd, above n 8, at 335; and Turners & Growers Ltd v Zespri Group Ltd HC Auckland CIV-2009-404-4392, 5 May 2010 at [20].
13 Clear Communications Ltd v Telecom Corporation of NZ Ltd, above n 8, at 335.
The plaintiffs’ causes of action
[18] The plaintiffs’ four original causes of action were summarised by Associate Judge Gardiner in the summary judgment decision:14
[24]The plaintiffs have brought four causes of action against Mr Oberto.
Breach of s 137 duty to exercise care, diligence and skill
[25] The plaintiffs claim that Mr Oberto breached the duty which he owed to NF Global under s 137 of the Act by:
(a)causing or allowing NF Global to incur liabilities to customers in circumstances where he did not have a reasonable basis to believe that these liabilities could be met when due;
(b)failing to ensure that NF Global had sufficient information, certainty, and control over funds deposited by customers into accounts with corresponding banks to ensure that NF Global could meet its obligations to customers when due;
(c)failing to ensure that NF Global maintained adequate records to identify:
(i)amounts owed to each customer;
(ii)the location of funds deposited by each customer; and
(iii)investments made in respect of each customer;
(d)causing or allowing NF Global to make loans to related parties in the sum of at least GBP4,815,027.67 and EUR4,290,765.39 in circumstances where he:
(i)knew or ought to have known that it was not in the best interests of NF Global to make the loans;
(ii)did not have a reasonable basis to believe that the loans would be repaid when due; and
(iii)knew or ought to have known that if each of the borrowers did not repay their loans, NF Global would be unable to repay its own creditors, or a serious risk of NF Global being unable to repay its creditors would arise.
(e)causing or allowing NF Global to continue to trade in reliance on financial support from its shareholder in circumstances where he knew or ought to have known that NF Global did not have:
14 NF Global Ltd (in liq) v Oberto, above n 2, at [24]–[30].
(i)any legally enforceable right to support from its shareholder;
(ii)any practical control over its shareholder;
(iii)sufficient financial information about its shareholder to enable it to form a reasonable belief that the shareholder would be able to provide financial support to NF Global to meet its obligations to customers; or
(iv)reasonable grounds to believe that Starboard Capital would provide the financial support necessary for NF Global to repay its debts to customers when due;
(f)failing to exercise the care, skill and diligence that a reasonable director would have in relation to the preparation of NF Global’s financial accounts, including by failing to ensure that appropriate provision was made for bad and doubtful debts arising from the related party loans and failing to write off related party loans that were irrecoverable.
Breach of s 135 duty to not agree to, cause or allow reckless trading
[26] The plaintiffs claim that Mr Oberto breached the duty under s 135 of the Act by:
(a)entering into contracts with customers under which NF Global committed to repaying funds deposited by customers into accounts nominated by NF Global without ensuring that NF Global:
(i)retained legal or practical control over those funds;
(ii)retained the power to require those funds to be kept in segregated accounts;
(iii)retained the power to require correspondent banks or investment entities/funds to repay those funds to customers or NF Global;
(iv)received any security in respect of the accounts held with various correspondent banks or investment entities/funds;
(v)maintained adequate records to identify or recover investment service customers’ funds; and/or
(vi)had sufficient information to enable it to:
(i)identify which customer’s funds were deposited with which account with which correspondent bank or investment entity/fund; or
(ii)reconcile its record of the amount in each customer’s NF Global account with the amounts held by correspondent banks or investment entities/funds.
[27]The result was that at all relevant times, Mr Oberto:
(a)did not have reasonable grounds to believe that the correspondent banks or investment entities/funds would repay payment platform service customers or investment service customers (respectively) when required to do so; and
(b)did not have reasonable grounds to believe that NF Global would repay investment service customers when required to do so.
[28] The plaintiffs claim that Mr Oberto also breached the duty under s 135 of the Act by:
(a)making loans to various related parties in circumstances claimed to be unsatisfactory for various reasons, including that Mr Oberto agreed to NF Global making, or caused or allowed NF Global to make, these loans:
(i)without properly considering whether making the loans was in the best interests of NF Global and/or in circumstances where he knew or ought to have known that it was not in NF Global’s best interests to make the loans;
(ii)without conducting (or requesting that others conduct) any due diligence on behalf of NF Global in relation to the loans;
(iii)without conducting (or requesting that others conduct) negotiations on behalf of NF Global in relation to the terms of the loans;
(iv)without requesting that security be provided to NF Global under or in relation to the loans;
(v)without having reasonable grounds to believe that the loans would be repaid when due; and/or
(vi)in circumstances where he knew, or ought to have known, that if the borrowers did not repay the loans, NF Global would be unable to repay its own creditors, or a serious risk of this outcome would arise;
(b)agreeing to NF Global continuing, or causing or allowing NF Global to continue, to trade in reliance on financial support from its shareholder without having:
(i)any legally enforceable right to support from its shareholder;
(ii)any practical control over its shareholder;
(iii)sufficient financial information about its shareholder to enable it to form a reasonable belief that the shareholder would be able to provide financial support to NF Global to meet its obligations to customers; or
(iv)reasonable grounds to believe that Starboard Capital would provide the financial support necessary for NF Global to repay its debts to customers when due.
Breach of s 131 duty to act in good faith and in the best interests of the company
[29] The plaintiffs claim that Mr Oberto breached the duty which he owed to NF Global under s 131 of the Act by making loans to various related parties in circumstances claimed to be unsatisfactory for various reasons, including that Mr Oberto agreed to NF Global making, or caused or allowed NF Global to make, these loans:
(a)properly considering whether making the loans was in the best interests of NF Global and/or in circumstances where he knew or ought to have known that it was not in NF Global’s best interests to make the loans;
(b)without conducting (or requesting that others conduct) any due diligence on behalf of NF Global in relation to the loans;
(c)without conducting (or requesting that others conduct) negotiations on behalf of NF Global in relation to the terms of the loans;
(d)without requesting that security be provided to NF Global under or in relation to the loans;
(e)without having reasonable grounds to believe that the loans would be repaid when due; and/or
(f)in circumstances where he knew, or ought to have known, that if the borrowers did not repay the loans, NF Global would be unable to repay its own creditors (or a serious risk of this outcome would arise).
Breach of s 136 duty to not agree to obligations that cannot be performed
[30] The plaintiffs claim that Mr Oberto breached the duty which he owed under s 136 of the Act by causing or allowing NF Global to incur liabilities to customers in circumstances where it did not have a reasonable basis to believe that these liabilities could be met when due.
[19] Since summary judgment was declined, the plaintiffs have filed an amended statement of claim dated 5 June 2025, which repeats the four original causes of action and adds a fifth, relying on the same particulars as the previous four causes of action. The plaintiffs now plead, in the alternative, that, if NF Global was acting as a trustee for its customers, then:
(a)NF Global owed duties to the customers under the Trusts Act 2019 and/or in equity;
(b)NF Global breached those duties; and
(c)Mr Oberto caused NF Global to commit those breaches, and, in doing so, breached his duties as a director under ss 131, 135, 136 and 137 of the Act.
Analysis
[20] Section 301 of the Act permits a flexible remedial response for breach of a director’s duties, responding to the facts of a particular case.15 Relief may be calculated by reference to the losses to a creditor or creditors.16
[21] Relief can be compensatory or restitutionary.17 It must take account of all the circumstances, including the nature of the breach, the culpability of the director, causation, duration of the breach, holding the director to account and reversing the harm to the company.18 In cases of multiple breaches of duty, any redress under s 301 must be tailored towards the combination of breaches found.19
[22] Relief is not designed to be punitive, but it can take into account factors tending to provide for more general deterrence.20
15 Yan v Mainzeal Property and Construction Ltd (in liq) [2023] NZSC 113, [2023] 1 NZLR 296 at [351].
16 At [242] and [296].
17 Companies Act 1993, s 301(1)(i) and (ii).
18 Madsen-Ries v Cooper [2020] NZSC 100, [2021] 1 NZLR 43 at [182].
19 At [162].
20 At [162].
[23] In Yan v Mainzeal Property and Construction Ltd (in liq), the Supreme Court recognised that the granting of relief can be a complicated exercise. In that case, the scope for argument was “practically limitless” and it was “unrealistic to expect precise calculations of loss”.21
[24] In the present case, demarcation of issues is the critical factor in determining whether a preliminary trial of a separate question, or questions, is appropriate.
[25] The plaintiffs’ allegations that relate to NF Global incurring substantial liabilities to its customers are central to all five causes of action and the claim for compensation from Mr Oberto under s 301 of the Act.
[26] The plaintiffs plead that NF Global incurred obligations to its customers of at least $50,643,162.12, resulting in a shortfall to creditors (after applying recoveries by the liquidators) of $47,711,240.12. This alleged shortfall is cross-referenced in each of the five causes of action.
[27] One of the liquidators, Mr Fisk, has given affidavit evidence confirming that the liquidators have now completed the statutory process of assessing and determining creditors’ claims. He says:
(a)34 unsecured creditors gave notice of a claim;
(b)31 claims were by customers of NF Global, with an aggregate value of
$74,699,325.22;
(c)three claims were by parties who were not customers of NF Global, with an aggregate value of $23,323.96; and
(d)the liquidators have now admitted in full, or in part, 29 claims by creditors with an aggregate value of $59,131,189.10.
21 Yan v Mainzeal Property and Construction Ltd (in liq), above n 15, at [309]. See also Classic Flights Ltd (in liq) v Li [2025] NZHC 1063 at [118].
[28] There has been no application to the Court by any affected party for a review of the liquidators’ decisions related to creditors’ claims.
[29] The extent of NF Global’s pool of unsecured creditors is a matter to be proven by the plaintiffs at trial. If NF Global has unsecured creditors and Mr Oberto is liable under s 301 of the Act, then the extent of NF Global’s pool of unsecured creditors will be a factor that the Court will consider as part of an assessment of whether Mr Oberto should pay compensation.
[30] The circumstances that led to any liability of NF Global to its customers, and the nature of that liability, are put in issue by Mr Oberto’s proposed preliminary question. These issues are the nub of the plaintiffs’ claim. They are not discrete questions that can be severed from other issues arising under s 301 of the Act.
[31] I do not accept Mr Henry’s submission that the proposed question can be determined without a detailed consideration of Mr Oberto’s role in the transactions. Mr Oberto was the sole director on NF Global. What Mr Oberto did or didn’t do, and his state of knowledge, will be relevant to the proposed preliminary question and the issues arising in respect of his liability.
[32] The circumstances that led to any liability of NF Global to its customers, and the nature of that liability, are matters that are relevant to the issue of whether Mr Oberto breached his duties as a director.
[33] The evidence relevant to the proposed preliminary question is also relevant to the issues arising from the allegations of breach of duty by Mr Oberto. The evidential overlap between the proposed preliminary question and the issues in respect of breach and causation is significant, if not a total overlap. If Mr Oberto’s approach was accepted, the Court would need to traverse the same circumstances twice.
[34] As Kós J noted in Haden, there are particular difficulties in fragmenting issues in negligence cases.22 This case includes allegations of breach of a duty of care and similar fault-based duties. The proposed preliminary question is wholly unsuitable for preliminary determination in a separate trial.
[35] Mr Henry estimates that a trial of the proposed preliminary question would require four weeks’ hearing time, and there would be discovery in the usual way. He estimates that one trial of all issues would require six weeks’ hearing time. Even if Mr Henry’s estimates are accurate, the interests of justice are best served by one trial due to the overlap in the evidence that would occur over two trials and the delay in obtaining a trial fixture for the second trial.
Mr Oberto’s application for a stay
[36] Since the application was filed, Mr Fisk has confirmed that the liquidators’ statutory process of considering and determining creditors’ claims has been completed. Even if an affected party seeks a review of a decision by the liquidators in respect of a creditor’s claim, that will not justify a stay of this proceeding. This proceeding will likely require a trial fixture of at least two weeks’ duration, unlikely to be until well into 2027. Any separate proceeding challenging a decision by the liquidators on a creditors’ claim could proceed in tandem with this proceeding.
Costs
[37] The liquidators seek an award of costs on an indemnity basis. Mr Oberto says that 2B costs are appropriate.
[38] The Court may make an order for increased costs or indemnity costs in the circumstances provided for under r 14.6(3) and (4) of the HCR.
[39] Under r 14.6(3)(b)(ii), the Court may order a party to pay increased costs if the party opposing costs has contributed unnecessarily to the time or expense of the
22 Haden v Attorney-General, above n 7, at [50(e)].
proceeding or step in it by taking or pursuing an unnecessary step or an argument that lacks merit.
[40] Under r 14.6(4)(a), the Court may order a party to pay indemnity costs if the party has acted vexatiously, frivolously, improperly or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding.
[41] In Bradbury v Westpac Banking Corporation, the Court of Appeal summarised the circumstances where scale costs, increased costs and indemnity costs might be ordered:23
(a)standard scale applies by default where cause is not shown to depart from it;
(b)increased costs may be ordered where there is failure by the paying party to act reasonably; and
(c)indemnity costs may be ordered where that party has behaved either badly or very unreasonably.
[42] Indemnity costs are reserved for egregious conduct.24
[43] When making an order for increased costs, the Court uplifts from scale, rather than awarding a percentage of actual costs.25 A 50 per cent uplift on scale is at the upper end.26
[44] I do not accept that this is one of those cases where a party has acted so unreasonably as to warrant an award of indemnity costs. However, Mr Oberto’s argument lacked merit. In my view, there was no prospect of the Court ordering separate trials on the basis he contended for. A 25 per cent uplift on 2B costs is justified.
23 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27].
24 AFI Management Pty Ltd v Lepionka & Company Investments Ltd [2018] NZHC 1285 at [17].
25 Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [40].
26 At [46]–[48].
Orders
[45] The defendant’s application for the decision of a separate question is declined.
[46]The defendant’s application for a stay of this proceeding is declined.
[47] The defendant shall pay the plaintiffs’ costs on this application, calculated on a 2B basis with a 25 per cent uplift, together with disbursements as fixed by the Court. If the parties are unable to agree on the quantum of costs, then they may file a joint memorandum setting out the points of difference, and I will fix costs.
Associate Judge Brittain
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