Roebuck v Liddle Builders & Construction Limited

[2022] NZHC 277

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA

AHURIRI ROHE

CIV-2021-441-70

[2022] NZHC 277

UNDER

sections 241(4)(a) and (d) of the Companies Act 1993

IN THE MATTER

of an application to put a company into liquidation

BETWEEN

JASON GREGORY ROEBUCK and VICTORIA ANN ROEBUCK

First Plaintiffs

JASON GREGORY ROEBUCK, VICTORIA ANN ROEBUCK and

PETER JOHN ROEBUCK as trustees of the Tahi Trust

Second Plaintiffs

AND

LIDDLE BUILDERS & CONSTRUCTION LIMITED

Defendant

CIV-2021-441-82

UNDER

section 284 of the Companies Act 1993 and pt 19 of the High Court Rules

IN THE MATTER

of an application pursuant to s 284 of the Companies Act 1993 by Heath Leslie Gair of Wellington, interim liquidator, for directions as to his powers as interim liquidator in the interim liquidation of Liddle Builders & Construction Ltd

RE

HEATH LESLIE GAIR

Applicant

Hearing: On the papers

ROEBUCK v LIDDLE BUILDERS & CONSTRUCTION LIMITED [2022] NZHC 277 [24 February 2022]

Appearances:

J L Bates for Roebuck plaintiffs in CIV-2021-441-70 N Gray for defendant in CIV-2021-441-70

J D Haig for H L Gair in CIV-2021-441-82

Judgment:

24 February 2022

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[Costs]

[1]                 In the first of these proceedings (“the 70 proceeding”), the plaintiffs, the Roebuck interests, applied for an order winding up the defendant Liddle Builders & Construction. The Roebuck interests made an interlocutory application for the appointment of an interim liquidator which was not opposed, and Cull J made an order appointing Mr Heath Leslie Gair as interim liquidator on 26 October 2021.

[2]                 In the second proceeding (“the 82 proceeding”), Mr Gair as interim liquidator applied for directions concerning his responsibilities and powers. This, it was said, was necessary because Cull J had not identified these when appointing him. Again, this application was not opposed. I made the orders sought on 11 November 2021.

[3]                 Subsequently, in the 70 proceeding, the Roebuck interests application for an order liquidating the company came on for hearing and on 9 December 2021 I made such an order appointing Mr Gair as the liquidator.

[4]                 Costs are now sought in both proceedings, in the 70 proceeding by the Roebuck interests and in the 82 proceeding by Mr Gair.

Costs — some general principles

[5]                 The costs regime provided for in the High Court Rules 2016 is not especially complex. However, it does seem that from time to time it is necessary to reiterate the broad principles involved.

[6]Costs are provided for in r 14.

[7]                 The starting point is that costs are quintessentially a matter for the Court’s discretion. Like all discretions, this must be exercised on a principled basis, in order to meet the particular circumstances of the case. That said the regime is founded on a series of broad guiding principles from which the courts tend only to depart where there are particular circumstances justifying them in doing so.

[8]                 The first of those principles is that costs generally follow the event, that is to say that the successful party (whether in relation to an interlocutory step in the proceeding, or the substantive hearing) will generally be entitled to an award of costs.

[9]                 The rules are designed to facilitate the objective calculation of costs by providing for three categories of cases (categories 1, 2 and 3) based on complexity, each of which attracts a different hourly rate, and then further categorising cases by reference to the amount of time work is expected to involve (categories A, B and C).

[10]             Thus the Court’s task is to identify whether the case is one in which costs should be assessed on a 1C basis (a case which is not in itself complex but which required an unusually large amount of time) or a 3A basis (a case which is unusually complex in that it required counsel of unusual expertise and skill but which required only modest amount of time). Both of those example clarifications would be rare for obvious reasons. The overwhelming majority of cases are categorised as 2B and costs are calculated on that basis.

[11]             Consistently with the Court’s overarching discretion there is provision for the Court to award increased or decreased costs — or indeed to award indemnity costs or to deny costs altogether. But the Court does not move away from the determination of costs in accordance with the scales because of the particular complexity of the case or the particular amount of time that the Court perceives the steps in the case should have taken. Those matters are assessed objectively by reference to the two scales in the way I have already outlined. The Court will adjust costs upwards or downwards generally because of the way that one party or either has conducted the case. It is unnecessary to go into that here.

[12]             I have outlined — in the broadest possible terms — the way in which the costs regime works because it seems to me that some of the arguments advanced in this case are inconsistent with the regime. As an example, one of the contentions advanced on behalf of the plaintiffs by Mr Bates is that because certain steps in the proceeding in fact took longer than might normally be expected, the Court should adjust the costs award to accommodate this.

[13]             The difficulty with that as I hope my description of the principles illustrates is that the amount of time actually taken in any particular case is irrelevant. What matters is the Court’s objective assessment of how much time should generally be taken having regard to the nature of the case.

[14]             That introduction brings me to the particular claims made in these two proceedings which I propose to deal with relatively briefly.

The 70 proceeding

[15]             In this proceeding the Roebuck interests seek costs in relation to their winding up proceeding. As the proposed costs schedule indicates the claim includes the commencement of the winding up proceeding, the application for the appointment of an interim liquidator and ultimately the application for a winding up order and the confirmation of the interim liquidator as the liquidator of the proceeding.

[16]             I can see no issue with the categories of costs sought and nor it would appear is there any opposition from the defendant company to those categories.

[17]             However, Mr Bates contends that in two areas (in relation to the filing of the interlocutory application seeking the appointment of an interim liquidator and in relation to the filing and interlocutory application without notice seeking ancillary orders) costs should be calculated on a 2C as opposed to a 2B basis. This because, to adopt Mr Bates’ description, costs on a 2C basis are justified given the amount of time and effort that were required in respect of these two steps.

[18]I do not accept that that is an appropriate basis for an uplift.

[19]             It is not suggested that these applications require anything other than the involvement of average level of complexity, and nor do I accept, assessing the matter as objectively as I am obliged to do, that they should have taking an unusual amount of time. Given that assessment the fact that they may have taken more time than might ordinarily be expected is neither here nor there.

[20]             In relation to this proceeding I make an order that the plaintiffs are entitled to costs on a 2B basis in relation to the steps identified by Mr Bates in his memorandum of 6 December 2021 together with disbursements totalling $1,040 as particularised in that memorandum.

The 782 proceeding

[21]             In this proceeding the liquidator seeks costs in relation to his application for clarification as to his responsibilities and powers.

[22]             Mr Haig’s submission on the liquidator’s behalf is that the application for directions was necessary because Cull J in making the order appointing Mr Gair as the interim liquidator on 28 October 2021 did not specify the scope of his authority. He points to r 31.27 which says that an order appointing an interim liquidator is to, amongst other things, state the nature and provide a description of property of which the interim liquidators is ordered to take possession and the duties that he or she is to perform in his or her capacity as the interim liquidator. He goes on to refer to form C13 in sch 1 of the High Court Rules which proceeds on a similar basis.

[23]             Mr Haig submits that in the absence of a clear articulation in the Court’s order as to Mr Gair’s responsibilities and duties he was justified in making his application under s 284 of the Companies Act 1993 to clarify this and effectively protect his position.

[24]             For the Liddell interests, Mr Gray opposes any costs order. His argument is that no application was necessary because s 246(2) of the Companies Act expressly provides that a liquidator has the rights and powers of a liquidator necessary or desirable to maintain the value of assets owned or managed by the company in question.

[25]             Whilst there is some force in the point that Mr Gray makes, it is impossible to get away from the fact that the Act contemplates that an order appointing an interim liquidator will identify these with more precision, and it seems to me that an interim liquidator appointed by order that does not expressly identify the scope of his jurisdiction and powers is justified in seeking clarification of this, if for no reason is a matter of protection against future liability.

[26]             In short, the view I take is that Mr Gair was justified in seeking clarification and is entitled to a costs order accordingly. I see no reason to depart from scale costs in relation to this, and I make an order that Mr Gair be entitled to costs on a 2B basis together with such disbursements as may be allowed by the Registrar.

Associate Judge Johnston

Solicitors:

Brown & Bates, Napier for Roebuck parties in CIV-2021-441-70

Sainsbury Logan & Williams, Napier for Liddle Builders & Construction Ltd in CIV-2021-441-70 and CIV-2021-441-782

Mana Law, Porirua for H L Gair in CIV-2021-441-82