Van Der Fluit v O'Neill

[2021] NZHC 3235

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-670

[2021] NZHC 3235

IN THE MATTER OF

Liquid Studios Limited

AND

IN THE MATTER OF

Section 174 of the Companies Act 1993

BETWEEN

PETER WILLIAM VAN DER FLUIT and TAMARA JOAN O’NEILL

Plaintiffs

AND

MICHAEL ARTHUR JAMES O’NEILL

Defendant

Hearing:

On the papers

Counsel:

D W Grove for the Plaintiffs

R M Keane and E F Armstrong for the Defendant

Judgment:

30 November 2021

JUDGMENT OF GAULT J

(Costs)

This judgment was delivered by me on 30 November 2021 at 2:30 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

Solicitors / Counsel:

Mr D W Grove, barrister, Auckland

Mr I Vodanovich (plaintiffs’ instructing solicitor), Vodanovich Law Ltd, Auckland Ms R M Keane and Ms E F Armstrong, LeeSalmonLong, Auckland

VAN DER FLUIT v O’NEILL [2021] NZHC 3235 [30 November 2021]

[1]    Following my judgment of 5 July 2021 dismissing the plaintiffs’ application for an interim order removing the defendant (Mr O’Neill) as a director of Liquid Studios Ltd,1 Mr O’Neill seeks costs of $16,233.

[2]    The plaintiffs submit that costs should be reserved pending final determination of the proceeding.

[3]Two issues arise:

(a)whether costs should be fixed now or reserved; and

(b)whether costs should include preparation for cross-examination.

Costs on interlocutory applications

[4]    Mr Grove, for the plaintiffs, submits that this is an appropriate case for costs to be reserved pending final determination of the proceeding given the finding that there are serious issues to be tried in relation to the principal application. Further, he submits that movement of Mr O’Neill’s position which reduced the need for cross- examination and the operational difficulties in relation to payments from the company bank accounts could be attributed to the bringing of the applications.

[5]Rule 14.8(1) of the High Court Rules 2016 provides:

Costs on an opposed interlocutory application, unless there are special reasons to the contrary,––

(a)must be fixed in accordance with these rules when the application is determined; and

(b)become payable when they are fixed.

1      van der Fluit v O’Neill [2021] NZHC 1651.

[6]    The rule reflects the fact that the merits of particular applications and those of the substantive proceeding are different matters.2 That applies in relation to interim orders where the merits of the application include the balance of convenience as well as the serious question threshold. The costs of an interlocutory application are best fixed by the Judge who decides the application.

[7]    I acknowledge that I found there was a serious question to be tried despite submissions to the contrary for Mr O’Neill. I also acknowledge that the issues narrowed at the hearing. But I do not consider these factors give rise to special reasons justifying a departure from the general rule that costs on an interlocutory application should be fixed.

2B costs

[8]    Mr O’Neill claims costs on a 2B basis for both the plaintiffs’ application for interim relief and the application to cross-examine. In relation to cross-examination, Mr O’Neill claims not only for preparation of his opposition and written submissions, but also preparation for cross-examination of two of the plaintiffs’ witnesses on the basis that, if the plaintiffs’ application to cross-examine Mr O’Neill were granted, they would also need to be cross-examined.

[9]    Given that Mr O’Neill’s primary position was that cross-examination was not required, I decline to include costs for preparation of cross-examination of the plaintiffs’ witnesses. Further, the one day allowance claimed by analogy with preparation for trial is inapt – the item 33B allowance is one day per day for the first to fifth hearing days of a witness hearing whereas any witness component of this one day interlocutory hearing should have been less than half a day. I also consider that the allowance for Mr O’Neill’s submissions should be reduced. He claims 1.5 days for submissions in relation to removal as a director and 1.5 days in relation to cross- examination. Given the overlap between the submissions (and time spent on the unsuccessful serious question issue), I reduce the total amount for submissions by  25 per cent.

2      Chapman v Badon Ltd [2010] NZCA 613, (2010) 20 PRNZ 83 at [12].

[10]   Accordingly, Mr O’Neill is entitled to costs of $11,830.50 plus disbursements of $220.

Gault J