Petterson v Gothard

[2012] NZHC 1378

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2011-404-7069 [2012] NZHC 1378

IN THE MATTER OF     HURLSTONE EARTHMOVING LIMITED (IN RECEIVERSHIP AND LIQUIDATION)

BETWEEN  DAVID ROSS PETTERSON Applicant

ANDPETER JAMES GOTHARD AND RYAN REGINALD EAGLE

First Respondents

ANDCOMMISSIONER OF INLAND REVENUE

Second Respondent

CIV 2011-404-7387

AND BETWEEN            PETER JAMES GOTHARD AND RYAN REGINALD EAGLE

Applicant

ANDDAVID ROSS PETTERSON Respondent

Hearing:         (on the papers)

Counsel:         B Gustafson for Mr Petterson (liquidator)

M Kersey and S C Vickers for Messrs Gothard and Eagle (receivers) Judgment:      19 June 2012

JUDGMENT (NO. 4) OF HEATH J

This judgment was delivered by me on 19 June 2012 at 10.00am pursuant to Rule 11.5 of the High

Court Rules

Registrar/Deputy Registrar

PETTERSON V GOTHARD AND EAGLE HC AK CIV 2011-404-7069 [19 June 2012]

[1]      Mr Petterson, as liquidator of Hurlstone Earthmoving Ltd (in receivership and in liquidation) seeks an order for costs against Messrs Gothard and Eagle (as receivers of Hurlstone) in respect of applications heard before me in December 2011 and  March  2012.    They  gave  rise  to  three  judgments,  delivered  on  16  and  21

December 2011 and 4 April 2012 respectively.

[2]      My judgments of 16 and 21 December 2011 arose out of cross applications by the liquidator and receivers for directions concerning the proper application of s 30 of the Receiverships Act 1993.[1]    My judgment of 4 April 2012 was delivered following  an  application  by the  liquidator  under s 37  of the  Receiverships Act, designed to compel the receivers to provide documentary evidence to the liquidator that had been sought by a formal request under s 261 of the Companies Act 1993.[2]

The request under s 261 was made to obtain documents to verify calculations made by the receivers in apportioning costs incurred between circulating and non- circulating assets, for the purposes of s 30 of the Receiverships Act.

[1] Eagle and Gothard v Petterson HC Auckland CIV 2011-404-7387, 16 December 2011 and

Eagle and Gothard v Petterson HC Auckland CIV 2011-404-7387, 21 December 2012.

[2] Petterson v Gothard and Eagle [2012] NZHC 666.

[3]      The liquidator asks that I reserve costs on the applications heard on 16 and 21

December 2012, pending receipt of all information ordered to be supplied under s 261 of the Act.   However, he seeks costs to be fixed on the s 37 application, in which the liquidator was largely successful.

[4]      The receivers contend that costs on the s 30 applications have already been fixed, as a result of my direction that the liquidator’s costs be met out of the liquidation fund, with the receivers’ costs being met out of the fund available to them.[3]

[3] Eagle and Gothard v Petterson HC Auckland CIV 2011-404-7387, 16 December 2011 at para

[73].

[5]      In relation to the s 37 application, the receivers submit that costs should be awarded to the liquidator only on a 2B basis, for an interlocutory application.  The

increased costs sought by the liquidator are said to be unjustifiable.

[6]      The issues in dispute are set out fully in the three judgments to which I have referred.  I do not repeat them here.

Costs’ determinations

(a)      The s 30 application

[7]      Neither the liquidator nor the receivers were wholly successful on the cross applications.   I considered that the costs should be apportioned between the liquidation and receivership funds.  I said:[4]

[73]    These applications have been brought to facilitate the efficient administration of both the receivership and the liquidation. The receivers’ claims have not been wholly successful. In my view, given the novel nature of the case and the need for judicial assistance in the interpretation of s

30(2B), it  is appropriate for the receivership fund to  bear  all costs and disbursements  incurred  by  the  receivers  and  for  the  fund  available  to
preferential creditors to bear the costs and disbursements incurred by the liquidator.

[4] Ibid, at para [73].

[8]      My judgment of 21 December 2011 was given orally, after I had given the parties an opportunity to formulate orders that would give effect to my judgment of

16 December 2011.[5]    There is no reason why attendances in relation to the hearing

on 21 December 2011 should be treated any differently from those relating to the hearing on 6 December 2011.

[5] Ibid, at para [75]–[76].

[9]      Although  Mr  Gustafson,  for  the  liquidator,  has  submitted  that  my  order should, effectively, be reconsidered as a result of errors in the calculations made by the receivers in schedules provided at the hearing on 6 December 2011, the receivers continue to dispute that is so.

[10]     Mr  Gustafson’s  submission  arises  out  of  the  documents  that  have  been provided to date, in response to orders made on the s 37 application.[6]    In my view, once this issue is resolved, costs can be dealt with as part of the s 37 application.  I

see no reason to revisit the order made in my judgment of 16 December 2011.

[6] Petterson v Gothard and Eagle [2012] NZHC 666 at para [65].

[11]     The liquidator was largely successful in obtaining orders that the receivers comply with their request for documents under s 261(1) of the Companies Act. While I extended the time for compliance, because of problems with receipt of correspondence forwarded by electronic means, it was clear to me, from earlier correspondence, that the receivers were not prepared to provide the information

willingly.[7]    My perception of the receivers’ stance was reinforced by the position

taken at the hearing on 2 March 2012, in which production of the documents sought was opposed.

[7] Ibid, at para [15].

[12]     In my view, the liquidator is entitled to costs on the interlocutory application under s 37.  I propose to make an interim order at this stage, so that questions arising from production of the documents (including any disputes about the correctness or otherwise of schedules provided by the receivers for the December 2011 hearings) can be addressed later.

Result

[13]     For the reasons given:

(a)       I make no further order for costs on the s 30 application.

(b)On the s 37 application, I make an order for costs in favour of the liquidator against the receivers (payable out of the receivership fund) on a 2B basis, together with reasonable disbursements, both to be

fixed by the Registrar. That order is made on an interim basis.  Leave

is reserved for the liquidator to seek an increase in those costs should he consider that appropriate, after reviewing all information provided

under the s 261 request.

P R Heath J

Delivered at 10.00am on 19 June 2012.

Solicitors:

Lowndes Jordan, PO Box 5966, Auckland

Russell McVeagh, PO Box 8, Auckland

Counsel:
B Gustafson, PO Box 1297, Shortland Street, Auckland