Rahman v Shepherd

[2025] NZHC 3515

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2025-485-146 CIV-2024-485-629

[2025] NZHC 3515

UNDER

Part 15A of the Companies Act 1993

IN THE MATTER

of the voluntary administrations of Wellington Combined Taxis Ltd (administrators appointed), Combined Finance Ltd (administrators appointed) and Wellington Combined Properties Ltd (administrators appointed)

BETWEEN

AZAD RAHMAN

First Applicant

KRISHNA SAMY GOUNDAR
Second Applicant

RAJESHWAR SINGH

Third Applicant

CHELVAKHANTHAN KRPILLAI

Fourth Applicant

AND

IAIN SHEPHARD and JESSICA KELLOW

Respondents

Hearing:

On the papers

Counsel:

D P MacKenzie for Applicants

D Kalderimis KC, C T Jolliffe for Respondents J Marcetic for Interested Parties

Judgment:

19 November 2025

JUDGMENT OF BOLDT J

(Costs)

RAHMAN v SHEPHARD [2025] NZHC 3515 [19 November 2025]

Introduction

[1]    On 5 June 2025, I dismissed an application brought by Mr Rahman and his fellow applicants to terminate the administration  of Wellington Combined Taxis Limited (WCT) and two closely related companies.1 On the administrators’ application, I also made a series of directions regarding the conduct of the forthcoming watershed meeting.2

[2]    The respondents, the administrators Mr Shephard and Ms Kellow, now apply for the costs of their successful defence of Mr Rahman’s application, along with the costs of their own (strongly opposed) application for directions.

[3]    Mr Rahman and his fellow applicants oppose any award in favour of the administrators and seek costs on an urgent injunction they obtained in March this year. On Thursday 6 March 2025 Mr Rahman and his colleagues learned the administrators were planning to sell WCT to Auckland Cooperative Taxi Society Ltd (ACT) the following Monday. On Monday 10 March Mr Rahman filed an application to prevent the sale until after the watershed meeting or further order of the Court, and McQueen J formalised the injunction the next day by consent.

[4]    Both proceedings are longstanding, bitterly fought and ongoing. Unsurprisingly, the parties were not able to resolve the question of costs among themselves.

[5]    The parties agree both proceedings are properly placed in category two for costs purposes and that all relevant steps are in band B. It also appears there is no dispute about the steps which make up the overall calculation. The parties agree on little else. Mr Rahman says the administrators should not receive any award despite their having been substantially successful in both proceedings.

1      Rahman v Shepherd [2025] NZHC 1452.

2      The administrators’ application for directions was referred to in the judgment as the “ -629 proceedings”, while Mr Rahman’s application to terminate the administration was referred to as the “-146 proceedings”.

[6]    Mr Rahman submits the fact the administrators will be fully indemnified by WCT means they have not incurred any costs in connection with the litigation. In addition, he submits it is relevant that he and his fellow applicants represent a group who  command  the  support  of  around   44   per  cent   of  WCT’s   shareholders. Mr MacKenzie, on Mr Rahman’s behalf, submits that the 44 per cent minority “does not want [Mr Rahman and his fellow applicants] to pay costs”. He suggests, if  costs are to be awarded, that they are discounted by 44 per cent to reflect the cohort which (in Mr Rahman’s submission at least) believes costs should lie where they fall.

[7]    Mr  MacKenzie  submits  the  litigation   between   the   administrators  and Mr Rahman’s group of shareholders should be treated as analogous to proceedings brought by trustees to obtain the Court’s guidance on the construction or administration of a trust. In those circumstances, the trustees’ costs are normally be met out of trust property.

[8]    Finally, while there is no dispute that Mr Rahman is entitled to an award to reflect his success in securing the injunction, Mr MacKenzie seeks a 50 per cent uplift to reflect the fact the application had to be prepared with haste over a weekend. The administrators say that is a normal feature of an application for an urgent injunction and does not warrant a discrete uplift.

Discussion

[9]    There is no reason to depart from the normal principle that costs should follow the event.3 Both applications were complex and heavily contested. They required the assembly of a significant body of evidence, as well as extensive legal argument.

[10]   The cost of the litigation was borne by WCT as a company and will ultimately be met by its shareholders. While now in liquidation,  the company remains an undivided legal entity. The respective positions of groups of shareholders  are irrelevant for present purposes. There is no basis to discount a costs award in proportion to the numbers of shareholders that took a particular  position at the watershed meeting. The costs, once paid, will form part of the payment all

3      High Court Rules 2016, r 14.2(1)(a).

shareholders receive, majority and minority alike, when the company’s assets are distributed.

[11]   The fact the administrators will not be exposed personally to the costs of the litigation is also irrelevant. All their actions were taken on behalf of the company and its shareholders, who will ultimately bear the loss if costs are not awarded. The administrators’ indemnity is no more relevant in this context than the fact that in some litigation one or more of the parties is insured. Insurance does not  affect  costs liability.4 Provided there is no element of double recovery, the fact the administrators would not themselves have been out of pocket is irrelevant.

[12]   In support of his contention that the litigation should have been treated, for costs purposes, as akin to an application for directions by a trustee, Mr MacKenzie relies on the observations of Kós J in Woodward v Smith:5

[23]      In Re Buckton, Kekewich J divided trust litigation into three broad categories:

(a)        The first category involves proceedings brought by trustees to obtain the Court’s guidance on the construction of the trust deed or some aspect of the trust’s administration. In such cases, the costs of all parties necessarily participating are treated as incurred for the benefit of the estate and ordered to be paid out of the trust fund.

(b)        The second category involves a similar application, but by someone other than a trustee (such as a beneficiary). However, it is a case which would have justified application by a trustee. The same approach is taken to costs in the second category as to the first.

(c)        The third category, however, is where a beneficiary is making a “hostile claim” against the trustees, or another beneficiary. The claim may still involve a point of construction, or administration. It will often involve a claim to a beneficial interest or entitlement to a part of the trust fund. In the third category, involving a hostile claim against trustees or another beneficiary, the usual principles as to costs apply. Ordinarily they will follow the event.

[24]      As Kekewich J in Buckton, and Hoffman LJ in Mcdonald, noted, these categories can often overlap. Kekewich J noted that it can be difficult to discriminate between the second and third categories, but said:

…when once convinced that I am determining rights between adverse litigants I apply the rule which ought, I think, to be rigidly enforced in adverse litigation, and order the unsuccessful party to pay the costs.

4      Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [26].

5      Woodward v Smith [2014] NZHC 407, [2014] 3 NZLR 525 at [23].

[13]   Mr Rahman submits that even if his application to terminate the administration falls within category (c) from Woodward, the administrators’ application for directions about the watershed meeting is similar to a conventional category (a) application by trustees.

[14]   The administrators respond that Mr Rahman’s application to terminate the administration is plainly analogous to a hostile proceeding brought by the beneficiary of a trust. They also submit that the time and expense required to resolve the application for directions was directly attributable to the unsuccessful efforts by Mr Rahman and his fellow applicants to pursue a different approach.

[15]   Even assuming the trust analogy is appropriate,  I agree.  There is  no reason Mr Rahman and his fellow applicants should not meet the costs either of their unsuccessful application to terminate the administration or of the administrators’ application for directions. This was not a case where trustees or beneficiaries were jointly seeking the Court’s guidance. Rather, the administrators proposed a series of steps — ironically designed to give shareholders a greater  say than would ordinarily be the case for a company in administration — which Mr Rahman and his colleagues fiercely opposed. That application and the application to terminate the administration were closely linked. In both cases I was “determining rights between adverse litigants”. There is no reason to treat the administrators’ application and Mr Rahman’s application differently for costs purposes.

[16]   In both proceedings I award costs to the administrators on a 2B basis. I discount the administrators’ award by ten per cent to reflect the failure of their application for a direction invalidating all existing proxy votes for the  shareholders vote at the watershed meeting.

[17]   I decline Mr Rahman’s application for a 50 per cent uplift on his award for obtaining the injunction. Increased costs may be awarded where there has been a failure on the part of the paying party to act reasonably. Even if unreasonable conduct is established, the Court should consider “the extent to which any failure … to act

reasonably … contributed to the time or expense of the proceeding. Only to that extent can any percentage uplift from scale be justified.”6

[18]   The fact counsel were required to work under urgency over the weekend makes little obvious difference to Mr Rahman’s entitlement to costs. He and his fellow applicants will still receive a meaningful award. Mr Rahman has not established that the short notice of the proposal to sell to ACT increased the costs of seeking the injunction. Mr Rahman claims 3.15 days for preparing the application, drafting submissions in support and counsel’s appearance at the resulting teleconference. There were less than five calendar days between Mr Rahman learning of the proposed sale (late on the afternoon of 6 March) and the administrators consenting to the injunction (11 March). There is no general principle that work done in the weekend warrants a higher rate of recovery than work done during the week.

Result

[19]   I award costs to the administrators in the sum of $29,683.80, together with disbursements of $1,118. That sum is offset by an award in favour of Mr Rahman in the sum of $7,528.50 plus disbursements of $1,027.

Boldt J

6      Commissioner of Inland Revenue v Chesterfields Preschools Limited [2010] NZCA 400 at [165].