Sage v Somers-Edger HC Auckland CIV-2006-404-7717

[2007] NZHC 1752

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2006-404-7717

BETWEEN  BRIAN JOHN SAGE Plaintiff

AND  DOUGLAS LLOYD SOMERS-EDGAR First Defendant

AND  MALKEAT SING Second Defendant

AND  MURRAY GEORGE ALLOTT Third Defendant

Appearances: D A Garrett for Plaintiff

R A Fraser for First, Second and Third Defendants

Judgment:      23 May 2007 at 12:00 noon

RESERVED JUDGMENT OF COURTNEY J AS TO COSTS

This judgment was delivered by Justice Courtney on 23 May 2007 at 12:00 noon

pursuant to r 540(4) of the High Court Rules

Registrar / Deputy Registrar

Date……………………….

Solicitors:           R A Fraser & Associates, P O Box 163, Christchurch

Fax: [phone]

Counsel:            D A Garrett, P O Box 302576, North Harbour

Fax: [phone]

BRIAN JOHN SAGE V DOUGLAS LLOYD SOMERS-EDGAR AND ORS HC AK CIV-2006-404-7717  23

May 2007

Introduction

[1]      On 27April 2007 I delivered a judgment (subsequently re-issued on 2 May

2007 to correct a slip in the judgment) in which I declined Mr Sage’s application for an interim injunction restraining the receiver of Ginseng NZ Limited (GNZ) from disposing of assets pending the resolution of the substantive claim against the defendants.

[2]      The main ground on which Mr Sage had brought  his application was no longer live by the time of the hearing and I gave him leave to amend the application. The application therefore proceeded on the issues of whether the debenture was valid, whether the time for repayment allowed prior to the appointment of a receiver was unreasonable and the assertion that Mr Sage had been subjected to acts of oppression as a minority shareholder.

[3]      I found that there was no serious issue as to the validity of the debenture and that reasonable time had been given for repayment of the loan and that although there was a serious question to be tried regarding the assertion of acts of oppression against Mr Sage, the relief sought was an order that Mr Sage’s shares be purchased from him.   Self-evidently, this meant that damages would be an adequate remedy. Finally, the balance of convenience did not favour Mr Sage because the company’s financial position was so bad that failure was inevitable if steps were not taken to dispose of the company’s assets while there was still some value in them.

[4]      The defendants seek costs against Mr Sage.  Under r 46(1) High Court Rules costs are at the Court’s discretion.   However, save in the most unusual case, costs will be determined by reference to rr 47-53.

Categorisation

[5]      Both counsel are agreed that the appropriate category is 2.   However, the defendants seek to have Band C applied in respect of the appropriate daily rate whereas the plaintiff seeks to have Band B applied.  I consider that this application is appropriately dealt with on a 2B basis.

[6]      In relation to the steps required (identified in section 2 of the schedule to Mr Fraser’s  first  memorandum)  this  would  mean  1.8  days  at  $1,600  per  day equalling $2,880.

Additional preparation claimed

[7]      In addition to the costs calculated by reference to the Second and Third Schedules to the High Court Rules the defendants also seek an additional allowance of one day which they say reflects the additional work required because of the disjointed nature of the application.  Mr Sage resists this on the basis that, although the application was originally brought for the purpose of seeking answers to certain questions as well as an injunction restraining the receiver from disposing of GNZ’s assets, by the time of the hearing the questions had been largely answered.  He also points out that because of my finding that there was a serious question to be tried on the  oppressive  conduct  issue  he  should  be  regarded  as  having  been  more  than partially successful.

[8]      The fact that by the time of the hearing the original basis for the application had disappeared is not necessarily in Mr Sage’s favourIndeed, it is doubtful if it ever formed the legitimate basis for an application for injunction.  The changing nature of the  basis  for  the  injunction  has  undoubtedly  put  the  defendants  to  unnecessary expense and I consider than an additional allowance of half a day would be appropriate.  I consider the extent of Mr Sage’s success below.

Disbursements

[9]      The defendants seek the disbursements itemised in section 3 of the schedule to Mr Fraser’s first  memorandum being airfares,  taxi fares,  accommodation and meals and library charges totalling $1,124.73.  There was no issue taken with these disbursements by the plaintiff’s counsel and I allow them.

Should costs be reserved?

[10]     The plaintiff seeks to have costs in this case reserved rather than fixed at this stage on the basis that  he has been more than partially successful and it  would

therefore be in the interests of justice not to require him to pay costs at this stage.  He frankly admits that he has few assets and it appears that he will probably have difficulty meeting an award of costs.

[11]     While I did find that there was a serious question to be tried on the allegation of oppressive conduct, that finding, in terms of the respective merits of the parties in relation to the injunction application, is significantly outweighed by the obvious lack of any reasonable basis on which to expect that an injunction would be granted.  The cause of action on which I found there was a serious question to be tried is one on which an award of damages would plainly be adequate.  There was no prospect of a successful to the challenge of the validity of the debenture or of the reasonableness of the time given to satisfy the default under it.  Given GNZ’s precarious financial position Mr Sage must have realised that the prospects of obtaining an injunction restraining the receiver from disposing of assets while they still had some value was remote.  As a result, I do not accept that there is any ground on which to depart from the usual course of fixing costs on an interlocutory application.

Time to pay costs?

[12]     The defendants seek an order requiring costs to be paid within a specified period failing which the plaintiff’s proceedings should be stayed.  The plaintiff seeks an order that he be given further time to pay over and above the time sought by the defendants.

[13]     I do not intend to make any order in relation to the payment of costs.   The defendants are free to seal an order and enforce it as they wish.   I do not see any

basis on which to make further orders affecting the substantive proceeding.

P Courtney J