Spacemtwo Design Limited v Park

[2025] NZHC 2308

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-2254

[2025] NZHC 2308

BETWEEN

SPACEMTWO DESIGN LIMITED

Plaintiff

AND

DONGWOO PARK

First Defendant

J ROAD DESIGN LIMITED
Second Defendant

PLAN.T GROUP LIMITED

Third Defendant

Hearing:

On the papers

Appearances:

S Kang for Plaintiff

I M Hutcheson for Defendant

Judgment:

14 August 2025

JUDGMENT OF ASSOCIATE JUDGE PAULSEN (COSTS)

This judgment was delivered by me on 14 August 2025 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

SPACEMTWO DESIGN LIMITED v PARK [2025] NZHC 2308 [14 August 2025]

[1]    The plaintiff brings this claim against the first defendant alleging he breached duties owed to it under s 131 of the Companies Act 1993 by diverting business opportunities to the second and third defendants. As against the second and third defendants, the plaintiff claims they are liable to it for knowing receipt of the proceeds of those business opportunities.

[2]    The defendants applied for summary judgment, alleging that the claims the plaintiff advances against the first defendant had been finally settled in a settlement agreement entered into at the time the first defendant resigned as a director of the plaintiff. It was said that as the claims against the second and third defendants were founded on the same allegations of breach of fiduciary duty by the first defendant, those claims could also not succeed.

[3]    In a decision of 15 July 2025, I dismissed the defendants’ application for summary judgment.1 I expressed the view that costs should be reserved but in the event of disagreement I reserved leave for memoranda to be filed.2 The plaintiff has applied for costs. The defendants argue that costs should be reserved pending the outcome of the substantive proceeding.

[4]    The plaintiff’s position is that while there is no settled practice as to whether costs will be awarded when a defendant fails to obtain summary judgment, in the exercise of the Court’s discretion costs should be awarded to it. It says this is because it was the successful party and its counsel pointed out in correspondence prior to the hearing that it had good defences to the summary judgment application, namely that:

(a)there were grounds for the Court to reopen the settlement agreement due to breach of a side agreement between the plaintiff’s directors, Mr Ko and the first defendant; and

(b)the second and third defendants were not parties to the settlement agreement.

1      Spacemtwo Design Ltd v Park [2025] NZHC 1926.

2 At [49].

[5]    The plaintiff argues the matters identified in that correspondence were the very grounds upon which the defendants’ application for summary judgment was dismissed.

[6]    The plaintiff also seeks increased costs, but as costs will be reserved I do not need to consider those submissions.

[7]For the defendants, it is submitted that:

(a)the arguments upon which the plaintiff succeeded concerned unpleaded claims, including for misrepresentation and breach of the Fair Trading Act 1986;

(b)the arguments advanced by the defendants, although not ultimately accepted by the Court, were based on the way the notice of opposition had been unclearly expressed;

(c)the correspondence between counsel relied upon by the plaintiff in its application for costs concerned the existence of a side agreement which was not the subject of the plaintiff’s pleading; and

(d)the issue that the plaintiff focused on in its submissions, concerning whether the second and third defendants were parties to the settlement agreement, was inconsequential in the final determination of the application.

The law

[8]    All issues of costs are discretionary but must be exercised having regard to the principles in the High Court Rules 2016. A relevant principle is that the party who fails in respect to a proceeding or interlocutory application should pay costs to the party who succeeds.3

3      High Court Rules 2016, r 14.2(1).

[9]    In addition, r 14.8 provides that costs on opposed interlocutory applications shall, unless there are special reasons to the contrary, be fixed and become payable when the application is determined. However, r 14.8 does not apply to applications for summary judgment.

[10]   On a plaintiff’s unsuccessful application for summary judgment costs are usually reserved,4 but it has been recognised that on a defendant’s unsuccessful application for summary judgment different considerations may arise.5 There is no settled position as to whether costs will be awarded to a plaintiff who successfully opposes a summary judgment application.

[11]   Here, despite all that has been advanced by the plaintiff I have not been moved from my initial view that costs should be reserved. There are several reasons for this.

[12]   The plaintiff’s pleadings were inadequate and will clearly need to be amended not only to provide proper particulars of its existing causes of action (if they are to continue to be relied upon) but also to plead the new causes of action foreshadowed in its opposition to summary judgment. These new causes of action were raised to respond to the defendants’ defence that the pleaded causes of action had been settled. I dismissed the defendants’ application in recognition of the principle that the plaintiff should be given the opportunity to remedy defects or deficiencies in its pleadings6 and having regard to the concessions responsibly made by Mr Hutcheson as recorded at

[4] of the judgment. I do not consider it follows that a plaintiff who is being given an opportunity to replead its case should also be awarded costs.

[13]              Second, the plaintiff’s submissions in opposition to summary judgment primarily focused on issues such as the existence of the side agreement, whether the plaintiff was a party to the settlement agreement, and the proper interpretation of the settlement agreement, upon which I did not need to rule. I venture no opinion on those matters, but it is certainly not clear that the defendants could not have succeeded had

4      NZI Bank Ltd v Philpott [1990] 2 NZLR 403.

5      Fletcher v Lawlink Group Ltd [2022] NZHC 381; and Miah v National Mutual Life Associate of Australasia Ltd [2016] NZCA 590.

6      Westpac Banking Corp v M M Kembla NZ Ltd [2001] 2 NZLR 298, (2000) 14 PRNZ 631.

it not been for the reframing of the plaintiff’s case and the raising of unpleaded causes of action.

[14]              Third, I also do not consider that the email correspondence between counsel upon which the plaintiff relies turns matters in its favour. Contrary to the plaintiff’s submission, the correspondence did not identify the two main grounds upon which the defendants’ application for summary judgment was dismissed.

[15]              The first ground raised concerned the existence of the side agreement and that Mr Park had acknowledged the settlement deed should be reopened. I made no findings on those matters.

[16]              The second ground raised was that the second and third defendants were parties to the settlement agreement. While I accept that on the face of the settlement agreement that is correct, that was not the basis of my decision. I found that as a matter of law it was arguable the plaintiff might succeed against the second and third defendants whether or not its claim against the first defendant was precluded by the settlement agreement. That was a matter I raised at the hearing, and was not the argument I understood was being advanced by the plaintiff.

[17]              Fourth, had the plaintiff pleaded the new causes of action, or articulated them clearly, it is unlikely the application for summary judgment would have been made. I say that because, as I have noted, Mr Hutcheson readily acknowledged the high threshold the defendants had to cross to obtain summary judgment, and made concessions as to the circumstances when summary judgment would not be appropriate.

[18]              Finally, it is not clear on what basis the plaintiff will now proceed against the defendants or that if it were to succeed on new causes of action it would necessarily be entitled to costs on this application.

[19]              In all the circumstances, and in the exercise of my discretion, I consider the just result is for costs to be reserved.

Result

[20]              Costs between the parties on the summary judgment application and in relation to the memoranda filed as to costs are reserved.

O G Paulsen Associate Judge

Solicitors:

Fairbrother Family Law, Napier Bae Legal Ltd, Auckland