Reforma Ltd v Brown - [2024] NZHC 1672

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-2190

[2024] NZHC 1672

BETWEEN
REFORMA LIMITED

Plaintiff

AND

DAVID BROWN

First Defendant

DAVID BROWN as Trustee of the Kairara Trust

Second Defendant

Hearing: 23 April 2024 and further submissions 11 and 18 June 2024

Counsel:

D M Hughes / N E Jirkowsky for the Plaintiff J T Burley / E Iliev for the Defendants

Judgment:

24 June 2024

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 24 June 2024 at 4 pm Pursuant to r 11.5 of the High Court Rules.

…………………..
Registrar/Deputy Registrar

Solicitors/Counsel: Anthony Harper, Auckland
McVeagh Fleming, Auckland

REFORMA LTD v BROWN [2024] NZHC 1672 [24 June 2024]

Introduction

[1] On 27 May 2024, I delivered an interim judgment in this proceeding, including a direction that the plaintiff file and serve further evidence relevant to quantum. That direction has been complied with, and in this judgment I grant the plaintiff’s application for summary judgment against the defendant and determine quantum. I also deal with costs.

Quantum

[2] In the interim judgment, I indicated that there would be a reduction in the quantum sought by the plaintiff to allow for interest that has accrued on the potential shortfall on the receiver’s sale of the assets of Kaukapakapa Village Centre Company Ltd (in liquidation) (KVCC) to the plaintiff, Reforma Ltd (Reforma).

[3] The amount of the interest is $77,903.73, confirmed in the further affidavit of Graham Vial affirmed 31 May 2024.

[4] Therefore, the quantum of the judgment will be $1,467,939.84, calculated as follows:

(a)the amount claimed by Reforma as at 23 April 2024 of $2,187,760.27;

(b)less deductions for:

(i)$125,794.61, being 50% of the receiver’s costs of $251,589.23, which have not been proved to the required standard;

(ii)$66,121.59, being 50% of Reforma’s legal costs of
$132,243.18, which have not been proved to the required standard;

(iii)$450,000.50, being 50% of the potential shortfall on the sale of KVCC’s assets to Reforma, assessed to be $900,001; and

(iv)$77,903.73, being the interest that has accrued on 50% of the potential shortfall on the sale of KVCC’s assets to Reforma.

Costs

[5] Reforma seeks costs on an indemnity basis with a discount to reflect partial success, together with actual disbursements.

[6] Rule 14.6(4)(e) of the High Court Rules 2016 (HCR) provides that the Court may order a party to pay indemnity costs if the party claiming costs is entitled to indemnity costs under a contract.

[7] Clause 4.1 of the guarantee provides that the defendant, Mr Brown, will pay on demand Reforma’s legal expenses on a solicitor/client basis incurred as a result of enforcing Reforma’s rights under the guarantee.

[8] The Court retains a discretion to determine whether the costs claimed are reasonable.1 The Court must make an objective assessment of the following matters:

(a)what tasks attract a costs indemnity on a proper construction of the contract;

(b)whether the tasks undertaken were those contemplated in the contract;

(c)whether the steps…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Reforma Ltd v Brown

Details

AGLC: Reforma Ltd v Brown [2024] NZHC 1672
Case: [2024] NZHC 1672
Decision Date: 24 June 2024

CaseChat Overview and Summary

Reforma Limited, the plaintiff, filed a claim against David Brown, the first defendant, and David Brown as Trustee of the Kairara Trust, the second defendant, seeking enforcement of a guarantee. The central dispute revolves around the enforcement of a guarantee related to the shortfall in the sale of assets of Kaukapakapa Village Centre Company Ltd, a company in liquidation, to the plaintiff. The court was tasked with deciding on the quantum of the judgment and the costs incurred in this litigation.

The primary legal issues were the determination of the amount owed under the guarantee after accounting for interest on a potential shortfall and the assessment of the costs that the plaintiff was entitled to recover from the defendant. The court needed to decide on the reduction of the plaintiff's claim due to interest accrued on the shortfall and the appropriateness of the costs claimed by the plaintiff. The court also had to consider whether the costs claimed by the plaintiff were reasonable and necessary, and whether any deductions were warranted due to partial success or unnecessary expenditure.

The court granted the plaintiff's application for summary judgment and determined the quantum of the judgment to be $1,467,939.84, which took into account the interest accrued on the potential shortfall in the sale of the assets. The court found that the plaintiff was entitled to recover its legal costs on a discounted indemnity basis. The court exercised its discretion to reduce the costs claimed by the plaintiff, considering the partial success of the plaintiff and the excessive time spent on certain tasks. Ultimately, the court awarded costs of $90,000 exclusive of GST and $4,422 in disbursements, reflecting a reduction for partial success and unnecessary work.

The court entered judgment for the plaintiff against the first defendant, in his personal capacity and as a trustee of the Kairara Trust, for the amount of $1,467,939.84. The defendant was ordered to pay the plaintiff's costs of $90,000 exclusive of GST and disbursements of $4,422.

Orders