Terra Capital Partners Limited v W&W Group Limited
[2025] NZHC 994
•29 April 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-001638
[2025] NZHC 994
UNDER the Companies Act 1993 BETWEEN
TERRA CAPITAL PARTNERS LIMITED
Plaintiff
AND
W&W GROUP LIMITED
Defendant
Hearing: 3 March 2025 Appearances:
L Yang for the Plaintiff
T Ashley for the Defendant
Judgment:
29 April 2025
COSTS JUDGMENT OF ASSOCIATE JUDGE COGSWELL
This judgment was delivered by me on 29 April 2025 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
Forest Harrison, Auckland Graham & Co, Auckland
S Moore / G Credo, Auckland T Ashley, Auckland
TERRA CAPITAL PARTNERS LTD v W&W GROUP LTD [2025] NZHC 994 [29 April 2025]
Introduction
[1] On 3 March 2025 the Court heard the defendant’s application for stay of the plaintiff’s liquidation proceedings.
[2] At the date of the hearing, the plaintiff had not filed any opposition or evidence in opposition to the application, nor had it filed submissions.
[3] Instead, just prior to the hearing the plaintiff sought leave to file evidence it contended was relevant to the issues before the Court and sought an adjournment of the hearing. That application was declined.
[4] Following that declinature, the parties conferred and the plaintiff consented to the granting of the defendant’s application for stay.
[5] That was an appropriate step, as it was clear that the defendant’s application would have been successful. The conflicting and inconsistent documentary evidence raised a genuine dispute as to the contractual effect of the agreement the parties signed and on which the statutory demand was based. This is a matter that should not have proceeded to hearing.
Approach to costs
[6]The parties have been unable to agree on costs.
[7] The starting point on costs is that generally in relation to the determination of costs:
(a)the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds;
(b)an award of costs should reflect the complexity and significance of the proceeding;
(c)costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required, in relation to the proceeding or interlocutory application;
(d)an award of costs should not exceed the costs incurred by the party claiming the costs, and
(e)so far as possible, the determination of costs should be predictable and expeditious.
[8] Whilst generally costs are awarded on scale, the Court has a discretion to make greater awards than scale cost awards:
(a)increased costs may be awarded under High Court Rule 14.6(3), where the party opposing costs has, inter alia, contributed unnecessarily to the time or expense of the proceeding by failing to comply with a direction of the Court or by pursuing arguments that lacked merit; or
(b)indemnity costs may be awarded under r 14.6(4) where a party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing or continuing a proceeding or, as above, failed to comply with a direction of the Court or pursued arguments that lacked merit.
[9] At the end of the day, the determination of costs is an exercise of the Court’s discretion. That said, the discretion is not unfettered and has to be exercised judicially.
Discussion
[10]Both parties filed memoranda setting out their position as to costs.
[11] The defendant seeks indemnity costs as a result of the defendant’s refusal to continue the liquidation proceeding, or, in the alternative, an uplift of 50 per cent on scale costs.
[12] The defendant refers to earlier correspondence between the parties where the defendant’s solicitors put the plaintiff’s solicitors on notice of the dispute and requested that the liquidation application be discontinued. No reply was received from the plaintiffs to that invitation.
[13] Instead, the plaintiff’s response suggested that the liquidation proceeding should “go to trial”, and that the matter should be “placed on the standard track”. This approach reflects that the plaintiff considered that the liquidation application could be “converted” into a standard civil proceeding. That is incorrect, the appropriate step to take was to discontinue the liquidation proceeding and commence an ordinary proceeding. That has not been done.
[14] The plaintiff compounded the costs incurred by the defendant by not only refusing to discontinue the liquidation proceeding but by also failing to file a notice of opposition and supporting evidence, or to file submissions in opposition to the defendant’s application for stay.
[15] This necessarily put the defendant to costs in preparing for a hearing and needing to do so without any expression of the plaintiff’s position on the stay application. It had to anticipate what the plaintiff may say, as the plaintiff had not filed submissions.
[16] It was abundantly clear from the outset of this matter that there was a genuine dispute sufficient to challenge the debt on which the liquidation proceedings were based. Whilst the defendant failed to respond to the statutory demand, by the time the defendant indicated its opposition to the application and the reasons for it, the plaintiff should have acknowledged the existence of an insurmountable factual dispute and withdrawn the liquidation proceedings. It should have filed a standard proceeding if the plaintiff considered it had that right. The failure to take any of those steps has put the defendant to increased costs.
[17] The plaintiff says that the stay was an inevitability given the dispute, which “only became known after filing of the liquidation application”. I do not accept that submission. The parties’ positions were made known to each other well before
proceedings were issued and there is a suggestion that the statutory demand and the liquidation proceedings were continued in an attempt to pressure the defendant into payment. That is not the purpose of the liquidation jurisdiction.
[18] Further, the defendant sought to resolve the matter once liquidation proceedings had been issued. In its memorandum of 26 September 2024, the defendant recorded that there had been three attempts to contact the plaintiff concerning its intentions for the liquidation proceeding, but that none of them had been responded to. Later attempts to have the plaintiff engage were met with arguments to “convert” the liquidation proceeding to an ordinary proceeding or simply ignored.
[19] Taken overall and having considered the correspondence between the parties leading up to the issue of the statutory demand and liquidation proceedings, the later exchanges between the parties in response to the liquidation proceedings and the stay application, the plaintiff’s defaults in the timetable orders and the plaintiff’s actions in requiring the defendant to prepare for the hearing which it then consented to, I award scale 2B costs with a 50 per cent uplift.
[20] The defendant seeks costs on the filing of a statement of defence to the plaintiff’s claim. However, the liquidation proceeding is currently only stayed but not discontinued, and so it is not appropriate to award costs on the taking of that step.
[21] In all other respects, the costs items claimed by the defendant are recoverable, being items 11, 12, 22, 24, 25, 26 and 29. Those steps, on a cost 2B category, total
$10,874.50. Applying a 50 per cent uplift on that gives total costs of $16,311.75. I award costs to the defendant of that sum. The defendant is entitled to disbursements totalling $1,413.
[22] The parties are directed to file a joint memorandum regarding the future steps required in the liquidation proceedings within 5 working days.
Associate Judge Cogswell
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