Ranolf Company Limited v Bhana

[2019] NZHC 2557

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE

CIV-2014-463-000201

[2019] NZHC 2557

UNDER

Part 20, Subpart 3 of the High Court Rules 2008

IN THE MATTER

of a stay of enforcement

BETWEEN

RANOLF COMPANY LIMITED

(In liquidation) Applicant

AND

ASHOK DENNIS BHANA, JASU MATI BHANA and STEPHEN BHANA

First Respondents

GEYSERLAND LIMITED

Second Respondent

Hearing:

On the papers

Counsel:

A Botterill for the Applicant

J Bhana and S Bhana in person

Judgment:

8 October 2019

JUDGMENT OF WOOLFORD J

[As to costs]

This judgment was delivered by me on Tuesday, 8 October 2019 at 4:00 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

Solicitor:            A S Botterill, Auckland

Copy to:            Respondents

RANOLF COMPANY LIMITED (In liquidation) v BHANA [2019] NZHC 2557 [8 October 2019]

[1]                  The applicant seeks costs of $7,136 and disbursements of $170 following my judgment of 22 November 2017 in which I refused to stay a judgment of Gilbert J dated 12 June 2017, pending an appeal by the first respondents to the Court of Appeal.

Background

[2]                  On 12 June 2017, Gilbert J gave judgment for the applicant, Ranolf Company Limited (In liquidation), against Ashok Dennis Bhana and Jasu Mati Bhana as first respondents and Geyserland Limited as second respondent.

[3]                  Gilbert J made a declaration that the applicant was a trustee of the Ranolf Trust from 25 May 2004 to 22 July 2015. He also made an order that the fee simple estate held in the name of Ashok Bhana and Jasu Bhana as trustees of the Ranolf Trust in a block of 12 residential units in Ranolf Street, Rotorua, was to stand charged with payment of the debts due to the applicant’s creditors and the liquidators’ costs. If the sum was not paid within 30 days, the Judge also made an order for the sale of the property and directing payment of the sum to be made to the applicant out of the net sale proceeds.

[4]                  Ashok Bhana and Jasu Bhana appealed to the Court of Appeal by notice of appeal dated 4 August 2017. They applied to stay the judgment of Gilbert J pending appeal. In a judgment dated 22 November 2017, at the request of Ashok Bhana and Jasu Bhana, I added Mr Stephen Bhana as another first respondent to the High Court proceeding. In effect, I also refused to stay the judgment when I ordered that the funds paid into Court by the first respondents were to disbursed to the applicant on the liquidators’ undertaking that the funds would be repaid in the event that the first respondents’ appeal was successful.

[5]                  I advised the first respondents that I was not in a position to make an order as requested terminating the liquidation of Ranolf Company Limited (In liquidation) and that if they wished to pursue that application they needed to make a formal application under the Companies Act 1993 with supporting affidavit evidence.

[6]                  In the Court of Appeal, the first respondents failed to file their case on appeal and to seek the allocation of a fixture. Their appeal was, therefore, deemed abandoned

and automatically struck out on 27 July 2018. The first respondents were ordered to pay costs of $4,683 and disbursements of $435 in a judgment of the Court of Appeal dated 29 March 2019.

Progress of application for costs

[7]                  Following my judgment dated 22 November 2017, counsel for the applicant filed a memorandum dated 7 December 2017 seeking costs of $7,136 and disbursements of $170. The application for costs remains undecided. The first respondents were granted extensions of time to respond to the memorandum as to costs, firstly to 31 May 2019, then to  17 June 2019,  before  a further extension  to 24 June 2019. No further extensions of time have been granted.

[8]                  On 24 June 2019 the first respondents sought a third extension to file their memorandum on costs. No extension has been granted. They also filed a further memorandum dated 1 July 2019 in response to a memorandum of counsel for the applicants dated 27 June 2019. Apart from claiming that affidavit evidence (which was not yet able to be filed) was essential for any determination of costs, they claimed that the applicant had been overpaid by $26,000.

[9]                  Then on 11 July 2019, the first respondents filed a memorandum seeking leave of the Court for Ashok Bhana to be removed as a respondent. This was on the basis of his resignation as a trustee of the Ranolf Trust by letter dated 15 May 2018. The first respondents submitted that leave was required before they filed their memorandum on costs. Counsel for the applicant responded by memorandum dated 15 July 2019, in which he denied any overpayment of $26,000 and opposed the removal of Ashok Bhana as a trustee.

[10]              On 18 July 2019, the first respondents filed a further memorandum in which they reiterated their intention to file an affidavit in opposition to the costs sought by the applicant. They also requested that Geyserland Limited be removed as the second respondent.

[11]              Then on 6 August 2019, the first respondents filed a further memorandum in which they advised the Court that they would be shortly filing a memorandum without

notice for the termination of the liquidation of Ranolf Company Limited (In liquidation). The memorandum as to costs was also said to be intended to be without notice when it was filed.

[12]              On 8 August 2019, the first respondents filed a 16-page memorandum without notice for the termination of the liquidation. They concluded:

The Respondents are awaiting upon an Affidavit from a solicitor in order to complete the application for Ranolf’s termination without notice and for the cost determination as well.

[13]              Finally, on 26 September 2019, the first respondents filed a further memorandum in which they produced evidence of payments of $8,000 and $5,000 made to the Rotorua High Court by Stephen Bhana and Jasu Bhana respectively to pay fines imposed by Brewer J in a separate proceeding (CIV-2014-463-169), for contempt of Court in failing to obey orders of the Court. Again, the first respondents submit that before any distribution of the fines, the Court should take into account that the liquidators hold $9,398.71 on behalf of the Ranolf Company Limited (In liquidation) and that they have also been overpaid $26,000. They concluded:

Because of the fines payments matters and other matters intervening, there is a further delay in filing the application without notice, for termination of Ranolf Company Limited (In liquidation) with supporting affidavit and for the orders seeked upon termination.

Discussion

[14]              I cannot accede to the request to remove Ashok Bhana as a first respondent. Ashok Bhana was a trustee of the Ranolf Trust as at the date of both the substantive judgment of Gilbert J on 12 June 2017 and my stay judgment on 22 November 2017. Accordingly, he remains jointly and severally liable for the actions of the trustees. On the other hand, Geyserland Limited was never a trustee and is not mentioned in the judgment of Gilbert J. It was not directed to, nor did it make any contribution to the settlement funds. In those circumstances, I make an order striking out Geyserland Limited as the second respondent pursuant to r 4.56 of the High Court Rules as having been mistakenly joined.

[15]              As to the respondents’ application for termination of the liquidation of Ranolf Company Limited, I repeat my advice contained in my judgment of 22 November 2017 that a formal application under the Companies Act 1993 with supporting affidavit evidence is required. Such an application cannot be made without notice by memorandum filed in the present proceeding. A separate on notice application is required. It must be a fresh proceeding.

[16]              The applicant should not wait any further for a determination of its application for costs. The respondents have had ample time to file a comprehensive memorandum (and affidavit evidence) on costs for the stay hearing. They have not done so. They have however pointed to funds held by the liquidator and also assert (without any affidavit evidence) that the applicant has been overpaid $26,000. All payments made by the respondents in the substantive vesting order matter were, however, made by the respondents by way of settlement and related to a judgment debt and enforcement costs, which were approved by the Deputy Sheriff. Pursuant to that settlement, the applicant discontinued the sale process. The respondents have not been able to establish to my satisfaction that there has been any overpayment .

[17]              The application for costs is straightforward. The respondents did not succeed on their application to stay the judgment of Gilbert J dated 12 June 2017. Costs should follow the event. The applicant claims 2B costs as set out in items 23 to 26 of Schedule 3 of the High Court Rules. I am satisfied that the costs are properly claimed.

[18]              I therefore direct  the  respondents,  Ashok  Bhana,  Jasu  Bhana  and  Stephen Bhana to pay the applicant $7,136 plus disbursements of $170 as costs of the hearing before me on 15 November 2017.

Woolford J