Norrie v Sutich

[2013] NZHC 2823

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-2847 [2013] NZHC 2823

UNDER  Companies Act 1993

IN THE MATTER             of an aplication under s.266 for the Production of Documents and Examination Orders re Pakiri Investments Limited (in liquidation)

BETWEEN  MARK HECTOR NORRIE AND PATRICIA van der WENDE as Joint and Several Liquidators of PAKIRI INVESTMENTS LIMITED (IN LIQUIDATION) of Greenpark Road, Auckland

Applicant

ANDIGOR SUTICH First Respondent

LARRIE NEWMAN Second Respondent

CONTINUED OVERLEAF Hearing:     24 September 2013

(on papers)

Appearances:           Mr M H Norrie as Liquidator for Pakiri Investments Limited

Mr R B Hucker for Fourth and Fifth Respondent

(on papers) Judgment:     25 October 2013

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE [on Costs]

This judgment was delivered by me on

25.10.13 at 4 pm, pursuant to

Rule 11.5  of the High Court Rules. Registrar/Deputy Registrar

Date……………

NORRIE AND Anor as Joint and Several Liquidators of PAKIRI INVESTMENTS LIMITED (IN LIQUIDATION) of Greenpark Road, Auckland v SUTICH & ORS [2013] NZHC 2823 [25 October 2013]

ANDRAJENDRAN RAVIKULAN Third Respondent

ANDEVAN JAMES READ Fourth Respondent

ANDARRON GLYN JUDSON Fifth Respondent

[1]      The liquidators sought orders under s 266 of the Companies Act 1993 for production of documents and examination of the directors of Pakiri Investments Limited (in liquidation).  One of the parties that was served with the application, the fourth respondent, was out of the jurisdiction.  The fourth respondent filed a protest to jurisdiction.

[2]      The liquidators have now decided that they will not take steps to set aside the protest to jurisdiction.   They say they do not have the financial resources to fund litigation of that kind.

[3]      The fourth respondent seeks an order that the liquidators pay the costs in respect of the protest to jurisdiction.  The liquidators oppose the making of any order for costs.  They assert that they are not liable to make an order for costs.  However, in the decision of Mana Property Trustee Limited v James Developments Limited1; after noting that a non-party to litigation such as a liquidator is not at a risk of a costs award other than exceptional circumstances the Court noted

It is different when the liquidator is required, or chooses, to bring a proceeding or application in his or her own name, for example an application to set aside an insolvent transaction under s 292 of the Companies 1993, which is a right given to the liquidator and not to the company in liquidation. In such a case, if the liquidator is unsuccessful, he or she may be exposed to a costs award personally – whether or not he or she is able to obtain reimbursement from available company assets – as happened for example in [authority redacted].

[4]      In Hart v Stiassny3  the liquidators had taken steps to set aside an insolvent transaction but the liquidators withdrew before the trial, considering that it would be not be “cost effective” to continue.  Randerson J followed the decision of Oliver J in Re Wilson Lovatt & Sons Limited4 that where a liquidator brings proceedings he/she will be liable to a costs order being made.  However, as Randerson J said:5

No doubt the fact that the liquidator has properly brought proceedings and has acted responsibly will be an important relevant factor in considering

1 Mana Property Trustee Limited v James Developments Limited 2010 [NZSC] 124.

2 See the comments at footnote 6, paragraph 10.
3 Hart v Stiassny 12 PRNZ 240, Randerson J
4 Re Wilson Lovatt & Sons Limited, [1977] 1 ALLER 274,285.

5 At p 244, line 25.

awards for costs not only as whether they should be made at all, but also in relation to quantum.

[5]      In my view the liquidators in this case have acted responsibly in attempting to obtain information about the affairs of the company, the records of which are sparse, from the directors themselves including the fourth respondent.   The fact that the liquidators sought to obtain orders against one of the directors is not converted from being a responsible to an irresponsible action solely by reason of the fact that that director has placed himself outside the jurisdiction.   It was not inevitable that the fourth respondent would take the steps that he did to resist having an order made against him.   It was always possible that the fourth respondent would place the matter  in  the  hands  of  the  Court  to  determine  whether  or  not  he  should,  in accordance with his duties as a director of the company, provide the additional documents the liquidators sought, over his objections that there was any such obligation.  It was not to be assumed that the fourth respondent as a director would pre-empt any decision being made by the Court on that subject by taking the step of filing a protest to jurisdiction.

[6]      Given that there was no impropriety as I find to be the case, the Court can in its discretion decline to make an order for costs or alternatively take that issue into account when establishing quantum.

[7]      I accept Mr Hucker’s calculation that costs on a 2B basis would come to an amount of $2,189.  I confirm that a 2B costs calculation is appropriate.

[8]      Having regard to the need to provide a partial reimbursement for the fourth respondent on the one hand and the reasonableness of the actions of the liquidator on the other, I conclude that an order for costs is called for but that the amount should be the amount  that  Mr Hucker has  calculated  as  being owing reduced  by 33.3 percent.

[4]      The liquidators point out that the terms of the order I made in the judgment applied only to the first to third respondents. That was not my intention.  Mr Hucker, responsibly, has accepted that it was appropriate for the order to include the fifth

respondent.   The judgment is therefore recalled and amended so that the orders

which I made in paragraph 63 include the fifth respondent.

J.P. Doogue

Associate Judge