Nobilo v Nobilo

[2014] NZHC 654

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-3925 [2014] NZHC 654

BETWEEN

JOHN SAMUEL NOBILO

Applicant

AND

DEBORAH KATHLEEN NOBILO Respondent

Hearing:	On the papers
Appearances:	G L Harrison for applicant G M Cameron for respondent
Judgment:	3 April 2014

JUDGMENT OF LANG J [Costs]

This judgment was delivered by me on 3 April 2014 at 2.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

NOBILO v NOBILO [2014] NZHC 654 [3 April 2014]

[1]      On 7 March 2014, Associate Judge Abbott declined an application by Mr Nobilo for an order granting him leave under s 165 of the Companies Act 1993 (“the Act”) to issue a derivative proceeding on behalf of Nobilo & Co Limited (“NCL”).1

The Associate Judge expressed the preliminary view that costs should lie where they fall, but reserved leave to counsel to file memoranda addressing the issue in the

event that they could not reach agreement. That has now transpired to be the case.

[2]      Because of other work commitments, Associate Judge Abbott is not available conveniently to determine the issue of costs.   Rule 14.9 of the High Court Rules therefore applies.  I propose to address the issue of costs in light of the judgment and

the memoranda filed by counsel.

Brief background

[3]      Mr and Mrs Nobilo are the directors and equal shareholders in NCL.  They are also both chartered accountants.  They each operated their respective accounting practices through the auspices of NCL.

[4]      After Mr and Mrs Nobilo separated, Mrs Nobilo set up a new accounting practice.  At that point she wrote to those of NCL’s clients for whom she had been the principal point of contact.  She informed those clients of the steps they needed to take in the event that they wished her to continue to undertake their accounting work. Many of those clients have now transferred their business to Mrs Nobilo’s new accounting practice.

[5]      Mr Nobilo believes the letters that Mrs Nobilo sent to NCL’s clients have caused considerable loss to NCL.  NCL could not issue proceedings itself, because Mrs Nobilo would obviously not agree to that being done.  He therefore sought to issue a derivative proceeding on NCL’s behalf so that the company could recover

those losses.

1      Nobilo v Nobilo [2014] NZHC 401.

The judgment

[6]      The Associate Judge declined Mr Nobilo’s application after weighing the mandatory factors in s 165(2) of the Act.  He reserved leave to Mr Nobilo, however, to  reinstate  his   application  in  the  event  that  existing  relationship  property proceedings in the Family Court did not resolve all outstanding issues for the parties, or if a derivative action became the only means by which significant outstanding issues between the parties can be addressed.

[7]      In dealing with costs, the Associate Judge said:

[43]      Although Mrs Nobilo has succeeded in her opposition, I take the view that an overall resolution of the unfortunate differences between these parties will not be assisted by a costs order.   However, as counsel did not address me explicitly on costs, I reserve costs, with leave for either party to bring that issue back before the Court by filing and service of a written memorandum.   Should that occur, the other party is to file and serve any memorandum in response within a further 10 working days.

The arguments

[8]      Counsel for Mrs Nobilo submits that his client was the successful party in relation to the application and that, as such, she should receive an award of costs in her favour.  He also points out that his client incurred significant costs in opposing the application, and that it also had the effect of stalling the proceedings in the Family Court.

[9]      Counsel for Mr Nobilo submits that costs should lie where they fall.   He submits that Mrs Nobilo was only “provisionally successful” in her opposition to the leave application, and that Mr Nobilo has incurred significant costs as well.   He rejects the argument that in pursuing the present application Mr Nobilo caused the proceedings in the Family Court to become stalled.

Decision

[10]     I consider the approach taken by the Associate Judge reflects his concern that an award of costs would hinder resolution of outstanding issues by driving a deeper wedge between the parties than already exists.  This is obvious from the observations he made in the paragraph set out above.

[11]     In the absence of agreement, however, the issue of costs must be determined in accordance with orthodox principles.   To the forefront in this context are the principles that the unsuccessful party should contribute to the costs of the successful party,2 and that the determination of costs should be predictable and expeditious.3

[12]     There can be no doubt that Mrs Nobilo was the successful party in the present case, because her counsel persuaded the Associate Judge that Mr Nobilo should not be granted leave at this point to issue a derivative proceeding on behalf of NCL.  The fact that the Associate Judge reserved leave to Mr Nobilo to reinstate his application in the future does not affect that fact.  I do not consider that the Associate Judge’s decision can properly be described as being provisional in nature.   The remaining grounds relied upon by counsel for Mr Nobilo also fail to persuade me that Mrs Nobilo’s application for costs should be declined.

[13]     I therefore make an award of costs to Mrs Nobilo on a Category 2B basis, together with disbursements as fixed by the Registrar.

Lang J

Solicitors:

Langdon & Co, Auckland

Donnell & Associates, Auckland
Counsel:

G L Harrison, Auckland

G M Cameron, Auckland

2      High Court Rules, r 14.2(a).

3      Ibid, r 14.2(g).