Norrie v Sutich

[2015] NZHC 2913

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

CIV 2013-404-002847

[2015] NZHC 2913

IN THE MATTER OF

AND

Companies Act 1993

IN THE MATTER OF

An application under s 266 for production of documents and examination of respondents

BETWEEN

MARK HECTOR NORRIE AS LIQUIDATOR OF PAKIRI INVESTMENTS LIMITED (IN LIQUIDATION)

Applicant

AND

IGOR SUTICH

First Respondent

LARRIE NEWMAN

Second Respondent

RAJENDRAN RAVIKULAN

Third Respondent

ARRON GLYN JUDSON

Fourth Respondent

Hearing:

On the papers

Counsel:

M H Norrie the Liquidator

R B Hucker for the Respondent

Judgment:

20 November 2015

JUDGMENT AS TO COSTS OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on

20.10.15 at 4:30pm, pursuant to Rule 11.5 of the High Court Rules.

MARK HECTOR NORRIE AS LIQUIDATOR OF PAKIRI INVESTMENTS LIMITED (IN LIQUIDATION) v I SUTICH AND ORS AND TIME3 GLOBAL LIMITED [2015] NZHC 2913 [20 November 2015]

Registrar/Deputy Registrar Date……………

CIV 2013-404-003305

BETWEEN

MARK HECTOR NORRIE AS LIQUIDATOR OF PAKIRI INVESTMENTS LIMITED (IN LIQUIDATION)

Applicant

AND

TIME3 GLOBAL LIMITED

Respondent

Introduction

[1]        Mr Norrie, the liquidator of Pakiri Investments Ltd (in liq) applies for costs in relation to two proceedings.

[2]        The first of these proceedings, CIV-2013-404-2847, concerned an application under s 266 of the Companies Act 1993 for an examination order of a person involved in the management of Pakiri. That application was successful and the examination was concluded on 16 June 2014 before Judge Doogue. Mr Norrie was represented by independent counsel during the examination itself, but not at any other time during this proceeding. After the examination had been carried out, Mr Norrie applied to Associate Judge Doogue for costs in relation to the examination proceeding, but that application was adjourned until the outcome of the second proceeding was known.

[3]        The second proceeding, CIV-2013-404-3305, concerned an application seeking orders that certain property be transferred back to Pakiri. Mr Norrie brought these proceedings in his own name and he was not represented, except at one mentions hearing. By its judgment dated 21 May 2015, the Court allowed this application and ordered the property returned. That decision has now been appealed to the Court of Appeal.

[4]        Mr Norrie seeks costs on a 2B basis in both proceedings. In relation to the first proceeding, this application is limited to the examination itself. Both applications are opposed.

CIV 2013-404-002847

[5]        Mr Norrie seeks costs for the conducting of the examination itself. This task was performed by counsel. Mr Hucker opposes this application. He argues that the proceedings came to an end when the examination order was conducted and there are therefore no proceedings in motion to which a costs order could attach. This argument is inherently attractive given that the High Court Rules make no express provision for costs for the conducting of an examination.

[6]        Further, Mr Hucker correctly points out that the examined person is not truly a litigant in the proceedings from this point. Rather they are a detained person and their only role is to answer questions. There is no situation in which the examined person could expect to receive costs for such a proceeding. As such, it is difficult if not impossible to cast either party as the “successful” one, as regards the examination itself.

[7]        The Court also accepts Mr Hucker’s argument that there is a close analogy between a court ordered examination and an examination conducted before a liquidator. In either circumstance, the appropriate course for costs is that set out in the provisions of the Companies Act 1993, Liquidation Regulations 1994.

[8]        For these reasons the Court considers that there should be no order for costs in relation to the s 266 proceedings.

CIV 2013-404-003305

[9]        In relation to this proceeding, the primary objection to Mr Norrie’s application is that he was self represented in the proceedings. It is a well established rule, which Mr Norrie accepts, that a self-represented litigant is not entitled to costs, although disbursements may be payable.1 However, Mr Norrie submits that his role as an officer of the Court makes this an exceptional case, such that costs should be awarded. The central question then is what impact Mr Norrie’s role as a liquidator has on his eligibility for costs.

Costs for liquidators

[10]      Liquidators are in a similar position to directors in terms of costs awards. As with directors, there are situations where liquidators may bring proceedings in their own name or in the name of the company. When they elect to do so in their own name, they will be liable for costs, although the company may indemnify them. When they elect to do so in the name of the company, generally it is the company that will be

1      High Court Rules, r 14.2(f); Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400 at [162]; Re Collier (a bankrupt) [1996] 2 NZLR 438 (CA); Transit NZ v Cook HC Greymouth CP6/93, 30 June 1994.

liable. As is often the case with costs, there is a symmetry between the liquidator’s liability for costs and their right to claim costs in their own account.

Costs in the absence of independent counsel

[11]      Costs are generally awarded to compensate a party for the cost of retaining independent counsel. The principle behind this is that successful parties should not be out of pocket for bringing or defending proceedings.2 As such, the unsuccessful party is required to make a reasonable contribution to the costs which have been incurred.3 Since 1 January 2000, this contribution has been fixed by a scale estimated to be two- thirds of the reasonable cost.4

[12]      A difficulty arises, however, when a party is not represented by independent counsel but rather represents itself, or appoints in-house counsel for this task. There is a principle that a party may not profit from an award of costs.5 Hence those who receive legal services free of cost or who perform the work themselves are not entitled to receive costs.6 The position with in-house counsel is somewhat different, however. While in many cases in-house counsel will not be suitable representatives, in other cases, their services will be entirely adequate. These services also come at a cost and so the Courts have repeatedly accepted that an award of costs may be made to cover the expenses associated with in house counsel. Nor are companies required to provide detailed evidence of salaries and time cards in order to qualify. Just as Courts are willing to accept the assurances of counsel that scale costs do not exceed the costs actually billed, they are willing to accept that the cost of in-house counsel exceeds scale costs without evidence to support this conclusion.7

[13]      Where an insolvent company elects to continue to employ in-house counsel there is no reason why this rule should not also apply to them. Similarly, a liquidator

2      Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [8] per Hammond J for the Court.

3 At [8].

4      At [10]-[11], High Court Rules, r 14.2(d).

5      High Court Rules, r 14.2(f).

6      Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400 at [162]; Re Collier (a bankrupt) [1996] 2 NZLR 438 (CA); Transit NZ v Cook HC Greymouth CP6/93, 30 June 1994.

7 Henderson Borough Council v Auckland Regional Authority [1984] 1 NZLR 16 (CA) at 23, per Cooke J.

would be entitled to use in-house lawyers and receive scale costs for their work. Where a liquidator is a trained lawyer, it may also be possible for him to seek costs in relation to legal work he, himself has performed when acting for the company.

[14]      However, where the liquidator brings proceedings in his own name, the situation is somewhat different. Here, the liquidator who chooses to act for himself is properly viewed as a pro se litigant. There are clear rules that a pro se litigant is not entitled to an award of costs. Especially where he is not legally trained, this rule will prevent a liquidator from obtaining an award of costs for his own work in bringing proceedings in his own name.

The present case

[15]      This brings us to the present case. The situation in relation to the second proceeding is exactly that described above. Mr Norrie, who is not a trained lawyer, has elected to bring proceedings in his own name. He has also elected not to retain counsel, but has prosecuted the proceedings himself. While he is successful, he has not expended any cost on the proceeding and is not entitled to an award of costs. His only remedy is the costs which he is entitled to take in the liquidation.

[16]      The situation in the first proceeding is similar. Mr Norrie was only represented once by independent counsel for a single mentions hearing. Mr Hucker accepts that costs may be payable for that appearance, but argues that such costs should be refused pursuant to rule 14.7 of the High Court Rules, because of the delays caused by Mr Norrie’s own actions.

[17]      The Court agrees with this submission. The costs in relation to this element of the proceeding are very minor. By contrast, Mr Norrie’s late filing of affidavits led to an adjournment part way through a fixture and his failure to produce Mr Piper for cross-examination also put the respondent to additional expense. In these circumstances, the Court considers that it is just to let costs lie where they fall in relation to this proceeding.

Disposition

[18]      For the reasons set out above, the Court makes no award of costs. Costs are to lie where they fall.

Associate Judge Christiansen