Saunders v Winton Stock Feed Ltd - [2009] NZCA 148

IN THE COURT OF APPEAL OF NEW ZEALAND
CA536/2008
[2009] NZCA 148
BETWEENARTHUR OWEN SAUNDERS AND ROBERT JOHN SAUNDERS

First Appellants
ANDCENTRAL GRAIN & PRODUCE (SOUTHLAND) LIMITED

Second Appellant

ANDWINTON STOCK FEED LIMITED

First Respondent
ANDIAIN ANDREW NELLIES AND PAUL WILLIAM GERRARD JENKINS

Second Respondents

Hearing:24 March 2009

Court:Chambers, Randerson and Potter JJ
Counsel:M J Tingey and N F D Moffatt for Appellants

P F Whiteside for Respondents

Judgment:24 April 2009 at 2 pm

JUDGMENT OF THE COURT

AThe appeal is allowed.
BThe order for costs made on 29 August 2008 of $25,425.17 is quashed.
C In substitution therefor, an order is made that the appellants must pay the respondents by way of costs the sum of $8,240, plus disbursements of $425.17, a total of $8,665.17. The appellants’ liability is joint and several.
D With respect to costs in this Court, the respondents must pay the appellants costs for a standard appeal on a band A basis, reduced by a third, plus usual disbursements. The respondents’ liability is joint and several.

_________________________________________________________________________________
REASONS OF THE COURT
(Given by Potter J)
Introduction
[1] The appellants appeal against costs judgments of Chisholm J delivered in the High Court in Christchurch on 11 and 29 August 2008 in CIV 2006-425-390 on the grounds that:
a)Costs should not have been awarded to the first and second respondents on a solicitor/client basis in respect of the appellants’ application to strike out the first and second respondents’ claim against them or, in the alternative, for summary judgment; and
b)The quantum of costs awarded, being $25,000 plus disbursements of $425.17, a total of $25,425.17, is excessive.

[2]       The appellants seek that the award of costs be set aside and that costs be fixed on a category 2B basis under the High Court Rules. Alternatively, if this Court upholds costs being awarded on an indemnity basis, they should not exceed $10,000.
Background
[3]       The proceeding in CIV 2006-425-390 was commenced on 19 July 2006 in the Commercial List at Auckland. It arises from the supply of grain by Winton Stock Feed Limited, the first respondent, to Southern Arable Specialists Limited (“Southern Arable”) of which the first appellants were directors and shareholders. Southern Arable subsequently went into liquidation. The second respondents are the liquidators of Southern Arable and Winton is a creditor.
[4]       The respondents allege there are no assets of Southern Arable to meet the debt of Winton and other liabilities of the company and that the assets of Southern Arable were transferred to the second appellant Central Grain & Produce (Southland) Limited at the expense of the creditors. They also allege that the first appellants breached various duties to the creditors of the company.
[5]       In July 2007 Harrison J ruled that the proceeding be transferred from the Commercial List in Auckland to Christchurch, noting that all relevant witnesses lived in the South Island, the amount of the claim was relatively small, $293,996, and there had been excessive interlocutory activity and adjournments.
[6]       In a Calderbank letter…

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.

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Details

Case: [2009] NZCA 148
Decision Date: 24 April 2009

CaseChat Overview and Summary

In the case of Saunders v Winton Stock Feed Ltd, the appellants, Arthur Owen Saunders and Robert John Saunders, along with Central Grain & Produce (Southland) Limited, challenged the costs judgments awarded by Chisholm J in the High Court. The respondents, Winton Stock Feed Limited, and its liquidators, Iain Andrew Nellis and Paul William Gerrard Jenkins, alleged that the assets of Southern Arable Specialists Limited, of which the appellants were directors and shareholders, had been transferred to Central Grain & Produce (Southland) Limited at the expense of creditors. The appellants argued that the award of costs should not be on a solicitor/client basis, and that the quantum of the costs awarded, $25,425.17, was excessive.

The Court of Appeal allowed the appeal and quashed the order for costs made by Chisholm J. The Court found that the Judge was wrong to award indemnity costs on the application, as the appellants' application was not vexatious, frivolous, improper, or unnecessary. While the Judge had concerns about the conduct of the appellants, these concerns did not provide a proper basis for the award of indemnity costs. The Court of Appeal considered that there was justification for awarding increased costs to the respondents on the appellants' application, as it was filed only about three weeks before the trial fixture. The Court substituted an order for costs in the sum of $8,240 plus disbursements of $425.17, a total of $8,665.17.

The appellants are entitled to costs on the appeal, and the Court awarded costs for a standard appeal on a band A basis, reduced by a third, plus usual disbursements. The respondents must pay the appellants' costs for the standard appeal on a band A basis, reduced by a third, plus usual disbursements.

Orders