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…

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.

Continue reading Spacemtwo Design Limited v Park

Details

AGLC: Spacemtwo Design Limited v Park [2025] NZHC 2308
Case: [2025] NZHC 2308
Decision Date: 14 August 2025

CaseChat Overview and Summary

The case of Spacemtwo Design Limited v Park involved a claim by the plaintiff against the first defendant, alleging breaches of fiduciary duties under the Companies Act 1993. The plaintiff also sought claims against the second and third defendants for knowing receipt of proceeds from the business opportunities. The defendants sought summary judgment, arguing that the claims were settled through an agreement when the first defendant resigned as a director. The plaintiff opposed this, suggesting that the settlement agreement could be reopened due to a side agreement breach and that the second and third defendants were not parties to the settlement. The court dismissed the summary judgment application, reserving costs for further consideration.

The primary legal issue before the court was whether the plaintiff should be awarded costs for successfully opposing the defendants' summary judgment application. The court considered whether it was appropriate to award costs to the plaintiff under the High Court Rules 2016. The plaintiff argued that it should receive costs as it had identified valid grounds for opposing the summary judgment, including the potential reopening of the settlement agreement and the non-participation of the second and third defendants in that agreement. The defendants, on the other hand, contended that the plaintiff's arguments relied on unpleaded claims and that the correspondence between counsel did not influence the court's decision to dismiss the summary judgment application.

In its judgment, the court held that while the plaintiff had successfully opposed the summary judgment application, this did not automatically entitle it to costs. The court noted several reasons for reserving costs. Firstly, the plaintiff's pleadings were inadequate and needed amendments to properly detail existing and new causes of action. Secondly, the court did not need to rule on the issues raised by the plaintiff as it dismissed the application on other grounds. Thirdly, the email correspondence between counsel did not clearly support the plaintiff's position. Fourthly, if the plaintiff had properly pleaded the new causes of action, the summary judgment application might not have been made. Lastly, it was unclear whether the plaintiff would be entitled to costs if it succeeded on the new causes of action. The court concluded that in the exercise of its discretion, it was just to reserve costs.

The court ordered that costs between the parties on the summary judgment application and in relation to the memoranda filed regarding costs be reserved. This decision reflects the court's careful consideration of the procedural and substantive aspects of the case, balancing the need to allow the plaintiff an opportunity to amend its pleadings against the broader discretion in awarding costs.

Orders