West v Cowley - [2013] NZHC 2356

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-2352 [2013] NZHC 2356

UNDER the Companies Act 1993 section 174

IN THE MATTER OF

SHAFTSPRY LIMITED (In Liquidation)

BETWEEN

CALVIN BLAKLEY WEST Plaintiff

AND

BRIAN PATRICK COWLEY First Defendant

SHIRLEY DENISE van der KLEY Second Defendant

On thepapers:

Appearances:

R S Pidgeon for Plaintiff
D E Smyth for Defendants

Judgment:

10 September 2013

COSTS JUDGMENT OF ASSOCIATE JUDGE BELL

This judgment was delivered by me on 10 September 2013 at 4:00pm
pursuant to Rule 11.5 of the High Court Rules.
...................................
Registrar/Deputy Registrar

Solicitors:
Pidgeon Law, Auckland, for Plaintiff
Simpson Dowsett Mackie, Auckland, for Defendants

Counsel:
D E Smyth, Auckland

WEST v COWLEY [2013] NZHC 2356 [10 September 2013]

category 2 band B basis and oppose the plaintiff’s application for an order otherwise

to allow costs to lie where they fall.

[2] Rule 15.23 applies:

15.23Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to an including the discontinuance.

[3] In FM Custodians Ltd v Pati1 Associate Judge Abbott summarised the principles under r 15.23:

[10] The presumption may be displaced if the Court finds there are circumstances which make it just and equitable that it should not apply.2

[11] The Court is not limited in the factors that can be taken into account when considering whether the presumption is displaced, but the following are matters which are taken into consideration:

[a] As a general rule the Court will not consider the merits of the respective cases (unless they are so obvious that they should influence the costs issue).3

[b] The Court will consider the reasonableness of the stance of both parties in the proceeding (whether it was reasonable for the plaintiff to bring and continue the proceeding, and for the defendant to oppose and continue to oppose it, up to the point of discontinuance).4

[c] Conduct prior to the commencement of the proceeding may be relevant (for example, if any conduct by a defendant has precipitated the litigation), as may be the reason for discontinuing (for example, where a change of circumstances has made the proceedings unnecessary).5

1      FM Custodians ltd v Pati [2012] NZHC 1902.
2      North Shore City Council v Local Government Commission (1995) 9 PRNZ 182 (HC) at 188;
Kroma Colour Prints Ltd v Tridonicato NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973 at [12].
3      North Shore City Council, above n 1, at 186; Kroma Colour Prints Ltd op cit.
4      North Shore City Council, above n 1, at 187; Kroma Colour Prints Ltd op cit.
5      Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194, quoted in North Shore City Council, above n 1, at 187. See also McGechan on Procedure (looseleaf ed, Brookers) at [HR15.23.01], cited in Vector Gas Ltd v Todd Petroleum Mining Co Ltd HC Wellington…

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 West v Cowley

Details

AGLC: West v Cowley [2013] NZHC 2356
Case: [2013] NZHC 2356
Decision Date: 10 September 2013

CaseChat Overview and Summary

In the case of West v Cowley, Calvin Blakley West, a former shareholder and director of Shaftspry Limited, initiated proceedings against Brian Patrick Cowley and Shirley Denise van der Kley, also former shareholders and directors, under section 174 of the Companies Act 1993. West sought compensation for his removal as a director, dismissal from the company, and various allegations of mismanagement against Cowley. The High Court of New Zealand was tasked with determining whether West could recover any relief from Cowley given the company's insolvency and the nature of the claims.

The legal issues before the court involved the applicability of Rule 15.23 of the High Court Rules, which generally requires a plaintiff who discontinues a proceeding to pay the defendant's costs, and the principles of fairness in litigation, particularly in the context of settlement negotiations. West argued that the defendants were unreasonable in not accepting his settlement proposal, while the defendants maintained that the proceeding was without merit and should not proceed to a substantive hearing.

The court found that West's expectation of recovering any relief was unrealistic due to the company's insolvency and the significant financial contributions made by Cowley and van der Kley. The court noted that even if West's allegations were substantiated, there would be no substantial benefit to him as an unsecured creditor due to the company's liquidation. The court also concluded that neither party was at fault for the failure to reach a settlement, as both sides negotiated in good faith but overplayed their hand. The court held that the defendants were entitled to costs under Rule 15.23, and fixed the costs at $12,425.80 for the steps taken in 2012.

In summary, the court ruled that West must pay the defendants' costs of the proceeding, as the litigation was deemed to have no merit and would not have served any useful purpose given the company's insolvency and the nature of the claims.

Orders