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Whitley v SDCIC Architecture Limited

Whitley v SDCIC Architecture Limited

Case [2023] NZHC 785 6 April 2023

Liquidation

Voidable Transactions

Costs

Settlement Offers

Insolvency Law

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-002301

[2023] NZHC 785

UNDER the Companies Act 1993

IN THE MATTER OF

the liquidation of Ezybuilding Group Co. Limited (in liquidation)

BETWEEN

KEVIN JOHN WHITLEY as liquidator of Ezybuilding Group Co Ltd (in liquidation) Applicant

AND

SDCIC NZ ARCHITECTURE LIMITED

First Respondent

HUA WU

Second Respondent

Hearing: On the papers

Appearances:

R B Hucker for the Applicant

A Ho for the Second Respondent

Judgment:

6 April 2023

COSTS JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 6 April 2023 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Crimson Legal, Auckland Zhang Law Ltd, Auckland Hucker Law, Auckland

Alden Ho, Auckland

WHITLEY v SDCIC NZ ARCHITECTURE LTD [2023] NZHC 785 [6 April 2023]

Introduction

[1] Kevin Whitley, as liquidator of Ezybuilding Group Co Limited, applied for orders under ss 295 and 297 of the Companies Act 1993 against SDCIC NZ Architecture Limited and Hua Wu. The orders sought concerned $20,000 Ezybuilding Group transferred to SDCIC, a trade creditor, and a vehicle allegedly transferred to Mr Wu, its former director, shortly before liquidation.

[2]SDCIC did not take any steps in the proceeding and was ordered to repay the

$20,000 transferred.1 Mr Wu disputed that the vehicle was transferred to him. The Court accepted that the vehicle was transferred to SDCIC rather than Mr Wu personally.

[3] The liquidator was ordered to pay Mr Wu’s costs and invited to file a memorandum if costs were sought against SDCIC. The liquidator and Mr Wu have been unable to agree a costs order.

[4] I apologise to the parties for the delay in costs being addressed by the Court, which was due to an unfortunate administrative oversight.

Costs for the liquidator against SDCIC

[5] The liquidator seeks costs on a scale 2B basis against SDCIC of $8,365 and disbursements of $785.50. I am satisfied that these costs and disbursements are reasonable and appropriate.

Costs for Mr Wu against the liquidator

[6] Mr Wu seeks scale costs on a 2B basis and disbursements totalling $17,257.45 (costs of $16,730 and $527.45 of disbursements). He claims for two separate notices of opposition and supporting affidavits, one in relation to the liquidator’s application for the order under s 295 for repayment of the voidable transaction and one for the alternative order under s 297 for compensation for an asset transferred at undervalue. Mr Wu submits that while there was some overlap, the two separate claims added to

1 Whitley v SDCIC NZ Architecture Ltd [2022] NZHC 1528.

the time required to prepare his affidavit and submissions. Evidence on the value of the vehicle and further factual evidence was required for the s 297 claim.

[7] Mr Wu also claims for the costs associated with preparation of the memorandum on costs and for sealing the costs order.

[8] If the Court does not accept his claim for two…

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 Whitley v SDCIC Architecture Limited

Details

AGLC: Whitley v SDCIC Architecture Limited [2023] NZHC 785
Case: [2023] NZHC 785
Decision Date: 6 April 2023

CaseChat Overview and Summary

The High Court of New Zealand was tasked with determining costs in a proceeding related to the liquidation of Ezybuilding Group Co Limited. Kevin Whitley, as liquidator, applied for orders under the Companies Act 1993 against SDCIC NZ Architecture Limited and Hua Wu, a former director of SDCIC. The application sought repayment of $20,000 transferred by Ezybuilding Group to SDCIC, a trade creditor, and compensation for a vehicle allegedly transferred to Mr Wu before liquidation. SDCIC did not participate in the proceeding and was ordered to repay the $20,000, while Mr Wu disputed the transfer of the vehicle to him personally. The Court ruled that the vehicle was transferred to SDCIC.

The key legal issues the Court addressed were whether Mr Wu was entitled to costs on a scale 2B basis or increased costs under specific High Court Rules provisions. The liquidator sought scale 2B costs against SDCIC and argued against Mr Wu's increased costs claim. Mr Wu sought scale 2B costs and increased costs, arguing that the proceeding involved two separate matters and that the liquidator unreasonably rejected his settlement offers. The Court had to assess the reasonableness of Mr Wu's claims for two notices of opposition and affidavits, and whether the liquidator's rejection of settlement offers justified an award of increased costs.

The Court found that Mr Wu was not entitled to costs based on two separate notices of opposition and affidavits, as the proceeding was a single originating application. The Court also rejected Mr Wu's claim for increased costs, holding that the proceeding was not so complex that the time required exceeded the allocation under band C. Furthermore, the Court determined that the liquidator did not act unreasonably in rejecting Mr Wu's settlement offers, as the offers came late in the proceeding and the liquidator had a statutory duty to pursue voidable transactions and recover company assets. As such, the Court ordered SDCIC to pay the liquidator scale 2B costs of $8,365 and disbursements of $785.50. The liquidator was ordered to pay Mr Wu scale 2B costs of $10,516 and disbursements of $527.45. The Court also accepted Mr Wu's claim for the fees of a private translator as a reasonable disbursement.

Orders