Norrie v Ravikulan

[2019] NZHC 2689

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-001625

[2019] NZHC 2689

BETWEEN

MARK HECTOR NORRIE as liquidator of PAKIRI INVESTMENTS LIMITED (in

liquidation)
Plaintiff

AND

RAJENDRAN RAVIKULAN

Defendant

On the papers	[        ]
[        ]
Judgment:	21 October 2019

JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 21 October 2019 at 3.30 pm pursuant to Rule 11.5 of the High Court Rules.

…………………………………

Deputy Registrar

Solicitors:

Norrie & Daughters, Auckland Hucker & Associates, Auckland

NORRIE v RAVIKULAN [2019] NZHC 2689 [21 October 2019]

[1]        On 4 September 2019 I issued a judgment declining Mr Norrie’s application for orders setting aside transactions. In the judgment I made an order reserving costs, along with the following observation:

[56] Costs are generally not awarded against liquidators except in exceptional cases. My initial impression is that this is not a case for costs against the liquidator, but I reserve costs. If Mr Ravikulan wishes to submit on costs he may do so within ten working days.

[2]        Mr Ravikulan, as the successful party, now seeks an order for costs. In support counsel for Mr Ravikulan submits that this proceeding is not based on a “company cause of action” where the liquidator is usually entitled to the benefit of the non-party exception as to costs. Rather – as the proceeding was in pursuit of a statutory right of action solely vested in the liquidator and “only able to be exercised by the liquidator personally” – the liquidator is to be treated as an ordinary litigant and subject to the normal risks as to costs.

[3]        He relies on the Supreme Court’s observation in Mana Property Trustee v Jones Development Ltd to the effect that when a liquidator is required, or chooses to bring a proceeding or application in their own name, as in the case of an application to set aside an insolvent transaction, the liquidator may be exposed to a costs award personally – whether able or not to obtain reimbursement from available company assets.1

[4]        Sadly, Mr Norrie died shortly before my judgment was issued, and is not in a position to make submissions on the issue of costs.  Counsel  for the  executor  of  Mr Norrie’s estate has filed a memorandum advising that he will abide the Court’s decision on how it exercises its discretion on costs.

[5]        Since that memorandum was filed, a further memorandum has been filed jointly by counsel for Mr Ravikulan and the executor, which advises that they have agreed on quantum if the Court decides to exercise its discretion to award costs.

1 Mana Property Trustee Limited v James Developments Limited [2010] 3 NZLR 805 at footnote 6.

[6]        I accept that the non-party exception is not applicable here. But, on my reading of Mana, the Court has a discretion - when determining the liability of a liquidator who is party for costs - to weigh as a real and relevant factor the status of the liquidator and the fact of the liquidator’s exercising a statutory function in the course to the liquidation. The Supreme Court’s use of the word “may” is obviously not accidental, as is reinforced by its reference to Hart v Stiassny (1998) 12 PRNZ 240. In that case, Randerson J helpfully discussed the relevance of the liquidator’s status in proceedings which concerned an application to set aside a transaction as voidable. He regarded the steps taken by the liquidators in the proceeding as being in the fulfilment of a public office; and that was a factor to be weighed in determining costs.

[7]        It is understandable that Mr Norrie decided to seek the orders he was after. His efforts to access the kind of information that would normally be available to a liquidator were wholly frustrated by the wrongful removal of the server that had been used to store the start-up company’s financial information and there were no other records. Not unreasonably, he saw it as his responsibility, as liquidator of the start-up company, to pursue the matter. Driven by the belief – founded on Mr Ravikulan’s significant involvement in and knowledge of the company’s financial affairs that monies received by Mr Ravikulan that were potentially able to be clawed back in the liquidation – he pursued his case against Mr Ravikulan.

[8]        But Mr Norrie faced significant difficulties in proving key aspects of his case. Mr Ravikulan disavowed any role in the disappearance of the server. He was steadfast in his position that Mr Read, the start-up company’s director, had removed the server to a place unknown and disappeared overseas. Mr Read later died and it seems with that went any chance of recovering the server. Mr Ravikulan was also steadfast in his explanation regarding the nature and purpose of the monies he received. Mr Norrie did little to dent Mr Ravikulan’s evidence though he cross-examined him at length. Viewed overall, there was, on my view of the evidence, insufficient reason to disbelieve Mr Ravikulan.

[9]Also among the factors to be weighed in dealing with costs are:

(a)It was primarily Mr Norrie’s interests that were being served by the litigation he decided to bring. At the hearing he was candid about the fact that his own costs in the liquidation were substantial (around

$140,000) and that any monies he might recover against Mr Ravikulan would essentially be for his benefit alone.

(b)Mr Norrie was on notice that he risked costs if he should he lose. Counsel for Mr Ravikulan pointed out that this was expressly mentioned by Judge Bell in making timetable directions.

(c)Mr Ravikulan pursued every conceivable ground of opposition, which involved unnecessary argument that did not assist his case and prolonged to the hearing.

[10]      Weighing all these factors, I am satisfied there is insufficient reason to deny Mr Ravikulan an award of costs in accordance with the presumption in the statutory costs regime that the successful party is entitled to costs. The quantum that has been agreed makes some allowance for a reduction of the amount of costs as assessed on a 2B basis. That agreement is entirely appropriate in all the circumstances.

Result

[11]      I am satisfied that an order for costs against Mr Norrie (which will be borne by his estate) is appropriate, subject to any indemnity he (or his estate) may have against the assets (if any) of the company in liquidation. I make an order for costs on that basis in the agreed sum of $11,756 inclusive of disbursements.

Associate Judge Sargisson