Wenzhou HongLiang Trading Co Limited v Merlo

[2013] NZHC 195

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-400 [2013] NZHC 195

UNDER  the Companies Act 1993

IN THE MATTER OF     Part 19 of the High Court Rules

BETWEEN  WENZHOU HONGLIANG TRADING CO LIMITED

Applicant

ANDROBERT LAURIE MERLO Respondent

Hearing:         13 February 2013

Appearances: Mr Spring and Ms Hojabri for Applicant

Mr Dalkie for Respondent

Judgment:      13 February 2013

ORAL JUDGMENT OF ASSOCIATE JUDGE DOOGUE

Counsel:

Keegan Alexander, Auckland – [email protected] / [email protected]

Mr P Dalkie, Auckland – [email protected]

WENZHOU HONGLIANG TRADING CO LIMITED V  MERLO HC AK CIV-2013-404-400 [13 February

2013]

[1]      This is an originating application seeking orders alternatively under s 284 and s 286 of the Companies Act 1993.  The beginning of this dispute stemmed from the fact  that  Wenztro  Co-operation  Limited  resolved  to  appoint  liquidators  and Mr Merlo,  the  respondent  was  appointed  liquidator.    The  applicant,  Mr  Springs client, was a substantial creditor of Wenztro.   The applicant did not agree with Mr Merlo being the liquidator.   The initial causes of friction were that Mr Merlo declined to convene a creditors meeting which was objected to by the applicant.  For those reasons the originating application was filed with the objective in view being that Mr Merlo would be displaced as liquidator and two other liquidators, Messrs Sargison and Dalton being appointed in his place.

[2]      Correspondence ensued between Mr Spring and Mr Merlo with Mr Merlo holding his ground – he declined to resign.  On 25 January 2013 the applicant filed the present proceedings.  Proceedings have been served but were not defended.

[3]      Mr Dalkie who appeared today for Mr Merlo said that he was instructed in the matter this month.  No doubt following advice from Mr Dalkie, Mr Merlo agreed that he would resign and he signalled his intention to that effect on 7 February 2013.

[4]      The application has been called today.  The parties have apparently reached agreement  that  Mr  Merlo  will  resign  but  they  cannot  agree  the  issue  of  costs. Mr Spring says that the respondent ought to pay costs of the application because it was  unnecessary.    Mr Dalkie does  not  dispute that  some  costs should  be paid. Mr Dalkie’s position is that scale costs are suitable, but Mr Spring says that this is a case which calls for an award of indemnity costs under r 14.6 (4).  He referred me to the jurisdiction to order indemnity costs where a party has, inter alia:

Acted vexatiously, frivolously, improperly or unnecessarily in commencing continuing or defending a proceeding or a step in a proceeding.

[5]      Mr Dalkie’s position is that Mr Merlo did none of these things separately from the Court proceedings he declined to go along with the wishes of the applicant but he never acted in the way described in subrule (4)(a).

[6]      I agree with Mr Dalkie.  No opposition has ever been filed in this proceeding and issue in the proceeding itself has never been joined so it is possible in my view for the provisions of Subrule 4 to be engaged.

[7]      I  consider  that  this  is  a  suitable  case  for  categorisation  as  a  2(B)  costs proceeding.  The parties are agreed that on that approach the correct figure which ought to be awarded to the applicant for costs and disbursements is the sum of

$4,930.40 and I order accordingly.

[8]      The originating application is dismissed.

J.P. Doogue

Associate Judge