Walker v Gibbston Water Services Ltd

[2014] NZHC 2250

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2012-409-2834 [2014] NZHC 2250

BETWEEN

ROBERT BRUCE WALKER as liquidator

of Gibbston Holdings Limited
Applicant

AND

GIBBSTON WATER SERVICES LTD First Respondent

CASTLEREAGH PROPERTIES LTD Second Respondent

KRISTINA LOUISE BUXTON Third Respondent

CANTERBURY LEGAL SERVICES LIMITED

Fourth Respondent

Hearing:

15 September 2014

(On the papers)

Counsel:

K Sullivan for Applicant
J Moss for Respondents

Judgment:

17 September 2014

JUDGMENT OF MANDER J AS TO COSTS

[1]      The applicant, Robert Walker, sought orders confirming decisions he made as the liquidator of Gibbston Water Holdings Ltd (Holdings).   Central to the dispute between the parties was the liquidator’s decision to void a sale and purchase agreement of shares in Gibbston Water Services Ltd (Services) to Castlereagh Properties  Ltd  (Castlereagh).   After  a three day hearing,  I delivered  a reserved

decision making orders in favour of the applicant.1

1      Walker v Gibbston Water Services Ltd [2014] NZHC 1638.

WALKER v GIBBSTON WATER SERVICES LTD [2014] NZHC 2250 [17 September 2014]

[2]      At the conclusion of my judgment of 11 July 2014, I noted that the applicant was entitled to costs on a 2B basis and that, in the absence of agreement, counsel were to file memorandum.2   There are a number of areas of dispute arising between the parties.

Costs issues

[3]      There is no dispute that the applicant is entitled to costs on a 2B basis. However, the following issues remain in dispute:

(a)       Legal  costs  sought  by  the  applicant  of  1.5  days  relating  to  the preparation of affidavits.

(b)      The following disbursements:

·    Witness fees for the applicant in the sum of $11,200.

·    Witness fees for Mr Simon Thorn in the sum of $2,466.03.

·    Witness fees for Mr Marshall in the sum of $50. (c)         Which of the respondents should bear the costs.

Legal costs

[4]      The applicant seeks an additional 1.5 days which is said to be for the volume of affidavit evidence required to be prepared.3    It is observed that originating applications usually proceed by way of affidavit evidence, and it is submitted that in this proceeding it was necessary to prepare witnesses for cross-examination as if for a full trial.

[5]      The additional 1.5 days is opposed.   The respondents submit that it is not uncommon for originating application proceedings to have a number of affidavits prepared, and that normally they would have been filed with the original application.

There is criticism by the respondents that the liquidator did not attempt to value the

2 At [139].

3      Associate Judge Osborne had already allowed the award of one day for this item in his costs judgment of 24 March 2014: Walker v Gibbston Water Services Ltd [2014] NZHC 549.

shares himself, choosing instead to rely upon the statutory onus on the respondents to prove value.  The subsequent preparation of affidavits in respect of that issue, it is said, is a reflection on the original standard of preparation of the application.  There is no opposition to the other extra steps sought over and above the default rules under sch 3.

[6]      Having regard to the nature of the issues that were in dispute, I am prepared to accept that it is not unreasonable for the applicant to claim an additional 1.5 days for the preparation of supporting affidavits.  I therefore allow 1.5 days for additional affidavits.  In that regard, I note the observation of Associate Judge Osborne in his costs judgment of 24 March 2014, that the previous application could have been structured in reference to opposition to a cross-application which may have allowed resort to item 38.

Disbursements

[7]      Witness fees for the applicant is sought in the sum of $11,200.   This is claimed on the basis that Mr Walker gave expert evidence and was required to meet the financial records, prepared and presented by the respondents on the eve of trial. Mr Walker undertook that task.

[8]      While I am mindful of the exigencies of time created by the late emergence of these statements, it was Mr Walker’s choice to meet this evidence himself, rather than seek expert accounting advice.  In any event, Mr Walker, as applicant, primarily gave evidence as a witness of fact.  Although, from time to time, he drew on his experience as a liquidator to voice opinion about various issues and to critique the accounting material, his involvement in this proceeding and attendance at trial was not in the capacity of an expert witness.  I am not therefore convinced that there is a proper basis upon which to award disbursements for witness fees in respect of his preparation and attendance for trial.

[9]      Witness fees for Mr Simon Thorn in the sum of $2,466.03  are claimed. Mr Thorn also was a witness primarily of fact.  Mr Thorn, of course, was called to give evidence to events arising out of his professional involvement in this matter. That is not the test.  I am mindful however that he was put to some inconvenience in

making himself available, and that his cross-examination did not, in my view, greatly advance matters.   In oral evidence he was asked some questions that drew on his experience  and  expertise  as  a  receiver.    The  respondents,  having  decided  that Mr Thorn was required for cross-examination about matters in respect of both his prior professional involvement in the companies and his knowledge of insolvency procedure the subject of the proceeding, should not quibble about making some contribution to his professional costs.  I order a nominal sum in the amount of $1,000 in recognition of those costs.

[10]     The witness fee for Mr Marshall of $50 appears premised on the application of the Witnesses and Interpreters’ Fees Regulations 1974.   Those regulations no longer have application to proceedings in which the High Court Rules are operative.4

In any event, Mr Marshall did not give evidence in any capacity as an expert and the disbursement is declined.

Respondents' liability for costs

[11]     Rule 14.14 provides that the liability of two or more parties ordered to pay costs is joint and several unless the Court directs otherwise.  The parties are at issue as to which respondents should bear the liability for costs.  All the respondents have been jointly represented by the same solicitor and counsel throughout these proceedings.

[12]     The applicant has sought to emphasise the role played by Canterbury Legal Services Limited in the events the subject of the litigation.  It is however assumed that throughout, this law firm was acting pursuant to instructions.  Its involvement in these proceedings as a party was in respect of the discrete issue of its proof of debt for fees which was the subject of the separate judgment of Associate Judge Osborne

in November 2013,5  in respect of which costs have already been awarded.  At the

commencement of the hearing of this matter it was apparent that, apart from its involvement in the narrative of the proceeding and, notwithstanding any criticism that might be directed towards it, the legal firm no longer had any direct interest in

the proceeding.

4      Air New Zealand Ltd v Commerce Commission [2007] NZCA 27, [2007] 2 NZLR 494 at [49].

5      Walker v Gibbston Water Services Ltd [2013] NZHC 2933.

[13]     Ms  Buxton  and  Castlereagh  Properties  Limited  however  were  directly involved in opposing the liquidator’s applications; Ms Buxton as the sole director of Holdings and other related companies, and Castlereagh as the purchaser of the shares in Services which were the subject of the dispute.   No realistic argument can be made that either the company or Ms Buxton played other than a full role as respondents in opposition to the liquidator’s applications.

[14]     The applicant seeks to exclude Services from joint liability for the costs.  It is to be noted that to date Services has been included in costs awarded against the respondents on a joint and several basis as a result of earlier judgments made by Associate Judge Osborne and Dunningham J.6   It is submitted by the applicant that in retrospect costs previously awarded against Services ought not to have been made in the terms they were.  The fact remains however that the liquidator chose to nominate

Services as a party to the proceeding and the company was represented without demur by the same solicitors and counsel as the other parties.

[15]     I am however mindful that it was the transfer of this company’s shares that was essentially at stake in this proceeding.   The decision of the liquidator giving notice of his decision to void the transaction has been affirmed.  It would be an odd outcome if the shares  the subject of the transaction, which has  ultimately been upheld as voidable, carried with it the costs of the proceeding taken to affirm the liquidator’s action in respect of that share transaction. Services only became a party to the proceeding as a result of a tactical decision to facilitate discovery of financial documents.  The applicant however has to take responsibility for making that choice and drawing the company formally into the proceeding as a party.

[16]     I have concluded that notwithstanding r 14.14, the appropriate apportionment of costs between the respondents is that they should be split in the following manner:

90 per cent of the applicant’s costs and disbursements are to be paid by Castlereagh and by Ms Kristina Buxton jointly and severally and the remaining 10 per cent by Services.   I exclude Canterbury Legal Services Limited from the costs order.   A

breakdown of costs and disbursements is set out in the attached table.

6      Walker  v  Gibbston  Water  Services  Ltd  [2014]  NZHC  549  at  [23](a)  per Associate  Judge Osborne; Walker v Gibbston Water Services Ltd [2014] NZHC 494 per Dunningham J; Walker v Gibbston Water Services Ltd [2014] NZHC 388 per Associate Judge Osborne.

Orders

[17]     I order:

(a)       The respondents  are liable to  pay the costs  and  disbursements  of

$32,945.96 referred to, in the following proportions:

(i)The first respondent is to pay 10 per cent of the costs and disbursements  being $3,294.59  (comprising $2,456.60  costs and $838 disbursements).

(ii)The second  and  third respondents  are jointly and severally liable to pay 90 per cent of the costs and disbursements being

$29,651.37   (comprising   $22,109.40   costs   and   $7,541.96 disbursements).

Solicitors:

DLA Phillips Fox, Wellington

Canterbury Legal Services, Christchurch

Costs and disbursements

Costs
Step	Description	Time	Amount
37	Filing application and supporting affidavits	1	$1,880.00
37	Filing supporting affidavits	1.5	$2,985.00
40	Preparation of written submissions	1.5	$2,985.00
33	Preparation for hearing	2	$3,980.00
41 & 31	Preparation of bundle for hearing and authorities	1.6	$3,184.00
42	Appearance at hearing on 19 – 21 March 2014	3	$5,970.00
11	Filing memorandum for first call on 5 February 2013	0.2	$398.00
11	Filing memorandum on 7 May 2013	0.2	$398.00
11	Filing memorandum for mentions hearing on 26 February 2013	0.4	$796.00
11	Filing memorandum seeking directions on 21 March 2014	0.4	$796.00
11	Filing memorandum for disclosure of financial statements on 2 April 2014 and call before Gendall J	0.4	$796.00
29	Sealing judgment	0.2	$398.00
Costs Total			$24,566.00
Disbursements
Description		Amount
Agency fee for 26 February 2013 – Goodman Tavendale Reid		$281.68
Photocopying		$513.60
Flights – K Sullivan – WN – CHCH – WN		$406.00
Car hire – K Sullivan		$177.00
Airport parking		$87.00
Flights – Robert Walker AK – CHCH – AK		$668.00
Shuttle and taxi – R Walker		$35.00
Accommodation – two nights – R Walker		$270.00
Flights – D Marshall – QN – CHCH		$120.00
Rental car and parking – D Marshall		$123.68
S Thorn – expert fee (adjusted)		$1,000.00
Neil Bonisch expert valuation invoice		$3,329.50
Shipleys AV for Video Conference		$1,368.50
Disbursements Total		$8,379.96
Grand Total		$32,945.96