Ruscoe v Cattermole

[2025] NZHC 631

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2024-485-080

[2025] NZHC 631

BETWEEN

DAVID IAN RUSCOE and MALCOLM RUSSELL MOORE
Applicants

AND

THOMAS VICTOR HENRY RONALD CATTERMOLE

Respondent

Hearing:	On the papers
Appearances:	S A Barker and B E Marriner for Applicants R A Hearn for Respondent
Judgment:	25 March 2025

JUDGMENT OF McHERRON J

(Costs)

[1]    In my judgment of 18 December 2024, I dismissed the application of David Ruscoe and Malcolm Moore (the liquidators of Cryptopia Ltd) for orders holding Thomas Cattermole in contempt of court under s 16 of the Contempt of Court Act 2019.1 For convenience I set out a summary of my findings taken from the final paragraphs of my judgment:

[117]          The  liquidators  have  established  the  following   incidences   of Mr Cattermole’s knowing failure to comply with Court orders:

(a)Mr Cattermole failed to disclose that he provided partial extracts of the Spreadsheets to Mr Serafimov and Mr Chaudhry in July and September 2020. In failing to do so, he failed to comply with the Orders of 21 October 2020.

1      Ruscoe v Cattermole [2024] NZHC 3883.

RUSCOE v CATTERMOLE [2025] NZHC 631 [25 March 2025]

(b)Mr Cattermole failed to bring the emails dated 15 July 2020 and 26 September 2020 to Court. In failing to do so, he failed to comply with the 20 November 2020 Orders.

[118]          However, in each case, I do not accept that other methods of enforcement were inappropriate or were tried unsuccessfully by the liquidators. Having reached this conclusion, according to s 16(3)(a) of the Act, the Court “must not proceed further” under s 16.

[119]          Relevant to “other methods of enforcement”, at the hearing I expressed the preliminary view that many of the orders at (f)–(h) of the liquidators’ application ought to be able to be made by consent. Mr Hearn appeared to indicate Mr Cattermole might be amenable to consent orders. However, I note that many of those orders are formally opposed, and they mostly duplicate orders already made. I direct the parties to discuss what further orders might be able to be made by consent and to file a joint memorandum if possible (or separate  memoranda  if  not),  no  later  than  31 January 2025.

[2]    I reserved costs and encouraged the parties to resolve any questions of costs between themselves.2 If they were unable to do so I allowed them to file and serve memoranda of no more than two pages.

Mr Cattermole’s submissions seeking costs

[3]    On behalf of Mr Cattermole, his lawyer Mr Hearn filed a brief memorandum dated 11 February 2025 seeking costs and disbursements, calculated on a 2B basis as set out in the following schedule:

Step	Days	Amount
38/12: Attendance at case management teleconference	0.2	$478
39/12: Attendance at case management teleconference	0.2	$478
38 – Filing notice of opposition	2.0	$4,780
40 – Preparation of submissions	1.5	$3,585
42 – Appearance at hearing	1.0	$2,390
Total	4.9	$11,711.00

Disbursements

Travel and accommodation for hearing  $1,042.00 (inc GST)

2 At [121].

The liquidators’ response

[4]    On 13 February 2025, the liquidators filed their costs memorandum in response. Though acknowledging the usual principle that the party who fails should pay costs to the party who succeeds, the liquidators submit that the “unique circumstances of this case justify a refusal of costs to the respondent, even though he is technically the successful party”. For this argument they ask that the Court, exercising its overall discretion as reflected in r 14.1(1) of the High Court Rules 2016, reduce costs because several of the reasons set out in r 14.7 apply.

[5]    As the judgment records, the Court was satisfied beyond reasonable doubt that Mr Cattermole knowingly failed to comply with Court orders dated 21 October 2020 and 20 November 2020.3 Counsel note that the Court’s finding was “another iteration of Mr Cattermole deliberately breaching Court orders and demonstrating a lack of respect for Court processes”. They refer to the order made by consent in previous Cryptopia proceedings holding Mr Cattermole in contempt.4

[6]    Counsel refer to other proceedings in which Mr Cattermole has failed or refused to comply with injunction orders. Mr Cattermole has filed submissions in these other proceedings which the liquidators consider demonstrate Mr Cattermole’s “contumacious disrespect for the Court and its orders, including the Court’s repeated order that Mr Cattermole delete the confidential information.” Counsel for the liquidator included extracts from Mr Cattermole’s submissions and attached a copy of those submissions to their costs submissions. I have not had regard to those submissions or findings in other proceedings in making the present costs determination. According to the usual approach, an award of costs relates to the proceeding in which costs are being determined. Conduct outside the proceeding (whether before, subsequently, or in other proceedings) is generally not a basis for

3 At [117].

4      Orders of the Court by consent dated 14 July 2021 in CIV-2019-409-544.

increasing or decreasing costs.5 The costs regime is not a means of punishing a party for its substantive conduct.6

[7]    Further, counsel for the liquidators point out that Mr Cattermole was unsuccessful on a key issue, being that the liquidators established beyond reasonable doubt that he knowingly failed to comply with two Court orders. Counsel submit that the matter of knowingly failing to comply was the key issue in the proceeding, with the bulk of the evidence and hearing time devoted to it. Mr Cattermole failed on this key issue, for two out of the four orders alleged to have breached. Accordingly, counsel submit Mr Cattermole should also be refused costs pursuant to r 14.7(d).

[8]    Counsel also submit that the contempt application is a matter of public interest beyond the interests of the liquidators.7 They submit that they always acted reasonably in their conduct of the proceeding and in the performance of their statutory role. Therefore, counsel submit that costs should be refused pursuant to r 14.7(e).

[9]    Further, counsel for the liquidators submit that Mr Cattermole has caused enormous interference in, and costs to, the Cryptopia liquidation. Counsel submit that the present contempt proceeding was entirely justified given Mr Cattermole’s flagrant breaches of Court orders that were acknowledged in the Court’s judgment. This, counsel submit, has contributed unnecessarily to the time and expense of the proceeding and indeed has brought the proceeding about. Counsel submit that costs should therefore also be refused pursuant to r 14.7(f)(i).

[10]   Counsel for the liquidators also submit that Mr Cattermole’s “contumacious behaviour of breaching court orders for several years justifies a refusal of costs pursuant to r 14.7(g)”.

5      Braeburn Dairies Ltd v McGregor & White  Electrical Ltd  HC Dunedin  CIV-2009-412-668,  16 December 2011 at [14] and Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [160].

6      David Bullock and Tim Mullins The Law of Costs in New Zealand (LexisNexis, Wellington, 2022) at [5.5] citing Taylor v Roper [2019] NZHC 16 at [19]–[22].

7      Citing Siemer v Solicitor-General [2010] NZSC 54; [2010] 3 NZLR 767 at [26].

My assessment

[11]   Having considered the liquidators’ submissions, I am not persuaded that they have established a basis for the Court to depart from the usual rule, which is that a party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.8

[12]   In the present proceeding, the liquidators’ contempt of court application under s 16 of the Contempt of Court Act was largely unsuccessful. The fact that they established elements of the contempt in respect of some of Mr Cattermole’s conduct, or that there is a public interest in ensuring compliance with Court orders, does not outweigh the fact that the application failed overall.

[13]   Accordingly, Mr Cattermole would ordinarily be entitled to costs in respect of his successful defence of the contempt application against him.

[14]   However,  for  two  reasons  I  propose  to  reduce  the   costs   payable   to Mr Cattermole.

[15]   First, I consider that Mr Cattermole contributed unnecessarily to the time or expense of the proceeding by failing to comply with the rules and a direction of the Court. He did so in two main respects:

(a)Mr Cattermole failed to file his notice of opposition by the deadline of 4 March 2024.9

(b)Mr Cattermole left the country without warning in early April 2024. Following that, his lawyer sought leave to allow Mr Cattermole to attend the contempt hearing remotely. Isac J was reluctant to grant leave for a remote appearance, but after counsel agreed that a hearing could be deferred until mid to late August 2024 when Mr Cattermole was expected to return, the hearing that had been set down for 6 May 2024 was vacated and a new hearing was scheduled for 26 August

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

9      Contrary to r 7.24.

2024. In his minute dated 30 April 2024, Isac J recorded that the hearing had been delayed because of Mr Cattermole’s extended absence from New Zealand and that should he not return for the hearing the Court may consider striking out his opposition and hearing the liquidators’ application as a matter of formal proof.10 However, in August 2024, about two weeks before the rescheduled hearing, the liquidators filed a memorandum indicating their understanding that Mr Cattermole no longer intended to return to New Zealand but would instead   be   available   for   cross-examination   by    video    link.  Mr Cattermole had not notified the Court of this. Nor had he notified the liquidators until counsel made enquiries. Mr Cattermole had not offered any explanation as to why he would not  be  returning  to  New Zealand, contrary to his previous indication made in support of vacating the 6 May 2024 hearing in favour of a new hearing scheduled in August. In my minute of 9 August 2024,11 I indicated that it remained the Court’s expectation that Mr Cattermole return for the hearing as promised. However, if he remained overseas he could give his evidence via VMR. Mr Cattermole’s failure to return caused resolution of the proceeding to be delayed by several months and involved a failure to meet a commitment his counsel made to the Court on his behalf.

[16]   The second relevant failure by Mr Cattermole to comply with the rules and direction of the Court concerns the direction at [119] of my 18 December 2024 judgment that the parties must discuss which of the further orders sought at (f)–(h) of the liquidators’ application might be able to be made by consent, and to file a joint memorandum or separate memoranda no later than 31 January 2025.12

[17]   In the liquidators’ costs submissions, counsel record that they have enquired with Mr Cattermole’s counsel which of  the  orders  in  (f)–(h)  of  the  application Mr Cattermole might consent to. However, no response has been received.

10     Ruscoe v Cattermole HC Wellington CIV-2024-485-080, 30 April 2024 (Minute of Isac J) at [6].

11     Ruscoe v Cattermole HC Wellington CIV-2024-485-080, 9 August 2024 (Minute of McHerron J).

12     Ruscoe v Cattermole, above n 1, at [119].

[18]   Given his failure to comply with the direction at [119] of my judgment, I decline to award Mr Cattermole any costs at this stage. I remind Mr Cattermole it is in his interests to comply in making such orders by consent.

[19]   If these orders are complied with, or additional material is filed to explain the delay, I will further consider the amount of any costs payable, having regard to both reasons I have identified in the present judgment for reducing the amount to which Mr Cattermole would otherwise be entitled.

McHerron J

Solicitors:

Buddle Findlay, Wellington for Applicants Corcoran French, Christchurch for Respondent