Wilding v Te Mania Livestock Ltd
[2018] NZHC 1506
•22 June 2018
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2014-409-899 [2018] NZHC 1506
BETWEEN TIMOTHY WILDING
First Plaintiff
TE MANIA PROPERTIES LIMITED Second Plaintiff
AND
TE MANIA LIVESTOCK LIMITED First Defendant
WH HOLDINGS LIMITED Second Defendant
JOHN HARRINGTON Third Defendant
JOONG BEE TECK Fourth Defendant
WONG CHUN WIN Fifth Defendant
HONG WEIGOU Sixth Defendant
Hearing: 3 August 2017 Appearances:
P J Dale and V E Fletcher for First and Second Plaintiffs B M Russell and R Hopkins for Second, Fourth and Fifth Defendants
I G Hunt and C Light for Third Defendant
No appearance for First Defendant
No appearance for Sixth DefendantJudgment:
22 June 2018
Reissued:
20 July 2018
TIMOTHY WILDING v TE MANIA LIVESTOCK LIMITED [2018] NZHC 1506 [22 June 2018]
JUDGMENT OF NICHOLAS DAVIDSON J
CONTENTS
Section Heading Paragraph
No.
A. B.
C.
D. D1.
D2.
INTRODUCTION ……………………………………………………
INTERIM JUDGMENT AND REASONS FOR INTERIM JUDGMENT …………………………………………………………. Election ………………………………………………………………..
REASONS FOR INTERIM JUDGMENT …………………………. The fate of TML ……………………………………………………… Leases ………………………………………………………………… Mixing of Wilding and TML interests ……………………………… The breakdown in relationships …………………………………….
2014 …………………………………………………………………… Stock management/neglect ………………………………………….. DOC Grazing Licence ………………………………………………. Liquidation of TML …………………………………………………. Malicious prosecution/abuse of process ……………………………. Hacking ………………………………………………………………. TML share valuation ………………………………………………… An exhaustive approach …………………………………………….. The pleading …………………………………………………………. Antecedent litigation ………………………………………………... Conduct of the parties ………………………………………………. Lagoon Flat ………………………………………………………….. TMPL and TML …………………………………………………….. The opportunity for Mr Wilding to purchase the shares …………. Costs …………………………………………………………………..
SUBMISSIONS AS TO COSTS …………………………………….
SUBMISSIONS FOR MR WILDING ……………………………… Offers to settle ……………………………………………………….. Considerations submitted for Mr Wilding …………………………. Mr Wing ………………………………………………………………
SUBMISSIONS FOR SECOND, FOURTH AND FIFTH DEFENDANTS/COUNTERCLAIMANTS, WHHL, BEETECK AND MR WONG ……………………………………………………. Offers to settle ………………………………………………………... Categorisation and Banding ………………………………………… Increased costs generally ……………………………………………. Indemnity costs sought by fourth defendant, Beeteck ……………..
50 per cent uplift ……………………………………………………... Computer hacking …………………………………………………… Semen ………………………………………………………………….
[1]
[4] [9]
[10] [11]
[12]
[14] [15]
[16]
[17] [18]
[19] [20] [21]
[22]
[23] [24]
[28] [32]
[36] [40] [41]
[47]
[48] [49]
[62]
[66] [75]
[76] [77]
[84] [89]
[91] [92] [93]
[94]
Length of trial ………………………………………………………... Actual costs …………………………………………………………… Timetable breaches ………………………………………………….. Mr Wing ………………………………………………………………
Disbursements ……………………………………………………….. The attempted liquidation of TML by Mr Harrington …………… Wadi ………………………………………………………………….. Success and failure …………………………………………………..
[95] [96]
[97] [98]
[99] [100] [101]
[102]
D3.
D4. E.
F.
SUBMISSIONS FOR MR HARRINGTON ……………………….. Offers…………………………………………………………………. Category and Banding ………………………………………………. “Success” ……………………………………………………………... The uplift sought by Mr Harrington ………………………………..
MR WILDING’S REPLY TO THE DEFENDANTS’ SUBMISSIONS ……………………………………………………….
DISCUSSION ………………………………………………………... Discretion …………………………………………………………….. Success ………………………………………………………………... Valuation ……………………………………………………………... Categorisation ……………………………………………………….. Banding ………………………………………………………………. Increased (uplift) costs ………………………………………………. Indemnity costs ………………………………………………………. Refusal of or reduction in costs ……………………………………... Calderbank and other offers ………………………………………... The two offers ………………………………………………………… Disbursements, – including Mr Wing, and experts ………………… Conclusion …………………………………………………………….. Revised Scale costs schedules ………………………………………… The final assessment ………………………………………………….. Costs on the issue of costs and interest on costs ……………………..
DISPOSITION ……………………………………………………….
SCHEDULE 1
SCHEDULE 2
SCHEDULE 3
[107] [113] [119]
[121]
[124]
[126] [138]
[139] [140] [160] [169]
[171]
[175] [181] [185]
[188]
[194] [201] [202]
[212] [214]
[221] [223]
A. INTRODUCTION
[1] This judgment determines costs applications following the delivery of Interim Judgment on 5 April 2017,1 and Reasons for Interim Judgment on 12 April 2017.2 The parties made extensive submissions on costs as this judgment reflects. Judgment has required consideration of a plethora of principles and evaluation of the success or otherwise of the parties across multiple issues.
[2] The proceedings have a long and complex history and the main hearing occupied 32 days in two bands in 2016. It was preceded by related proceedings and judgments, then a residual but still substantive phase through to March 2017.
[3] The second plaintiff, Te Mania Properties Limited (“TMPL”), was unsuccessful in its various claims but has settled costs which might have been claimed against it by Te Mania Livestock Limited (“TML”). This outcome reflects the Wilding family’s interest in both companies as the result of judgment.
B. INTERIM JUDGMENT AND REASONS FOR INTERIM JUDGMENT
[4] At the end of the 2016 hearings, the question was whether the first plaintiff, Timothy Wilding (“Mr Wilding”), should have the opportunity to acquire the shares of the defendant shareholders in TML or whether, as the third defendant John Harrington (“Mr Harrington”) sought, TML should be liquidated. The shareholder defendants (also counterclaimants), bar the sixth defendant, Mr Hong Weigou (“Mr Hong”), preferred their shares to be purchased by Mr Wilding at a fair value determined by the Court. Mr Hong took no part in the litigation. If liquidation was not ordered as Mr Harrington sought, then he adopted the same position, although earlier in the proceedings he had been a competitor with Mr Wilding for the TML shares.
[5] Well before the commencement of proceedings and more so by the time of the interim judgment and Reasons, TML was in a very unsatisfactory, indeed vulnerable, position. The parties had fallen out on a deeply personal level as well as a commercial
1 Wilding v Te Mania Livestock Ltd [2017] NZHC 649. [Interim judgment].
2 Wilding v Te Mania Livestock Ltd [2017] NZHC 717. [Reasons].
level, which confounded the operations and governance of TML over several years. The company continued to operate as the owner of the renowned Te Mania Angus Stud, in spite of the near ungovernable state of the company and severe operational discord, and it was still supported by Heartland Bank (“Heartland”) to which favourable mention is made in the Reasons for Judgment, as a patient and supportive banker to the business.
[6] Despite the sustained and vigorous opposition of Mr Harrington, which was maintained until the end of the hearing, Mr Wilding was by the interim judgment given the opportunity to purchase the shareholding of the defendants at the value fixed by the Court by a “first phase” calculation. Further information was required for the “second phase” of valuation after the strongly contested residual issue of semen valuation had been resolved. Costs orders which involved TML were potentially a factor in the valuation of TML shares.
[7] The interim judgment recorded the outcomes later explained in the Reasons. The primary outcome turned on the engagement of s 174 of the Companies Act 1993
(“the Act”), and the conclusion that it was certain that the affairs of TML would be conducted in an oppressive and unfairly prejudicial or discriminatory way as the parties were so much at odds as to the very existence of TML, its governance, and management. From that conclusion lay jurisdiction to make an order that Mr Wilding should have the right to purchase the shareholding of the defendants, and I concluded that it was in the interests of the company and all parties that he do so, and that his conduct, so heavily criticised in the litigation, did not disqualify him from having that opportunity.
[8] Further to the s 174 conclusion:
(i)claims to damages or compensation in Mr Wilding’s name for the benefit of TML arising from the lease by W H Holdings Limited
(“WHHL”) of Lagoon Flat to a third party, for deliberate stock neglect, and for not intervening when Mr Harrington tried to liquidate TML, failed;
(ii) claims by TMPL against TML for alleged breach of leasehold obligations failed;
(iii) the Department of Conservation (“DOC”) grazing licence held by
Mr and Mrs Wilding was found to be held in trust for TML as
Mr Wilding asserted, and the claim that it was held for WHHL failed;
(iv) Mr Wilding was not liable to Mr Harrington in the torts of malicious prosecution and/or abuse of process;
(v)there was no overall strategy adopted by the defendants in breach of their obligations to TML but there were elements of conduct relevant to disposition by all parties that were untoward, particularly the unwarranted attempt to wind up TML by Mr Harrington, supported by the inaction of some other defendants;
(vi) lesser claims against Mr Wilding which were said to reflect on the share valuation failed, for example, his entering a GoBeef contract, allegedly to the disadvantage of TML;
(vii) the valuation of TML shares involved a number of adjustments to which reference will be made, however, the principal issue of stock value was in the end largely resolved by an orthodox valuation process. The semen valuation was settled.
Election
[9] Mr Wilding elected to acquire the shares of the defendants in terms of the interim judgment. He had to accept the entire interim judgment, like it or not, to do so. The share sale and purchase has been completed. Most outstanding issues referred to in the interim judgment were resolved, but not the question of costs.
C. REASONS FOR INTERIM JUDGMENT
[10] I take from the Reasons elements relevant to costs. This is an unusual case in the number of issues, some reflected in causes of action, some going to conduct relevant to disposition, which came down to liquidation of TML or the opportunity given to Mr Wilding to purchase the defendants’ shares. This requires the “success” of the parties to be considered on a broader basis than the outcome of individual
claims, hence this short analysis of the Reasons, and the Interim Judgment.
The fate of TML
[11] The fate of TML was at large throughout the trial. Mr Harrington wanted to buy Mr Wilding’s shares and those of the other defendants, so he was in direct contest with Mr Wilding. Late in the trial he abandoned that position and sought the liquidation of TML as his primary relief and otherwise sought, with the other defendants, that the Court fix the price which Mr Wilding should pay for the shares. This intense contest between Mr Harrington and Mr Wilding in first competing for the shares, then as to whether TML should be liquidated, has an influence on costs.
Leases
[12] A feature of TML’s governance was the very loose way it leased property from TMPL, a Wilding family company, and later the way it addressed the lease of Lagoon Flat by TML. The informality of these arrangements led to contest and some very surprising evidence by the fourth defendant about the lease of Lagoon Flat to TML.
[13] I attribute a good part of the litigation, its complexity and evidential reach, to this informality. Not recognising the critical importance of land tenure to TML was a significant failure of management and governance.
Mixing of Wilding and TML interests
[14] The Wilding family’s financial position did become mixed with that of TML which resulted in Mr Wilding having to make a large payment to adjust an indebtedness to TML. This accrued debt caused resentment and a loss of trust between
some of the defendants and Mr Wilding, but the heightened response by Hoong Bee
Teck (“Beeteck”), who referred to a “criminal breach of trust”, was not warranted.
The breakdown in relationships
[15] In hindsight, by 2014 the need for the parties to go their separate ways is crystal clear. TML was at very real risk. The defendants (bar Mr Hong) wanted to bring the commercial relationship to an end. They saw a poorly performing stud and no return to shareholders, contrary to Mr Wilding’s view. Stock reduction was undertaken, the Kirriemuir lease at Ashburton would be relinquished by negotiation, and debts to TML would be called up, but there remained a deep seated personal antagonism between the parties, who had quite different aspirations for Te Mania.
2014
[16] In 2014, Mr Wilding accused Mr Harrington of deliberate neglect of animals, and WHHL gave one month’s notice that TML must leave Lagoon Flat, which by then was on a month-to-month holding.
Stock management/neglect
[17] I found that something went seriously wrong with the stock management, which justifiably alarmed Mr Wilding. This may have been associated with the extreme stress on Mr Harrington arising from the breakdown in relationships. I concluded that Mr Harrington did not deliberately neglect or starve the animals, but his high standards fell away and rational decision making was compromised. TML’s fine reputation was put at risk by this. It was not deliberate but the mismanagement was a “serious and unusual circumstance”, which occupied a great deal of the hearing, as did the circumstances in which the Lagoon Flat property was withdrawn from TML occupation. These were each in different ways manifestations of the breakdown in relationships and the parties’ different aspirations for the future of TML, and they deepened distrust, which was already embedded.
DOC Grazing Licence
[18] DOC land was held under the grazing licence issued to Mr and Mrs Wilding, in trust for TML, which the defendants said should belong to WHHL. Mr Wilding accepted it was held for TML as the interim judgment held.
Liquidation of TML
[19] In proceedings antecedent to trial, Mr Harrington had wrongfully continued his attempt to liquidate TML, even though its employment liability to him had been met. This incensed Mr Wilding, whose actions alone saved the company from liquidation. Mr Harrington’s conduct and the at least tacit support of other defendants was in my view not just ill founded, but antithetical and harmful to the interests of TML.
Malicious prosecution/abuse of process
[20] Mr Harrington was prosecuted for theft of TML hay before the Police dropped charges. This gave rise to his claims for malicious prosecution and abuse of process against Mr Wilding. It was a very hard-fought cause of action, which failed once the facts were established at trial.
Hacking
[21] During the intensifying dispute, Mr Harrington’s email account was hacked so his private litigation position and confidential communications were known to Mr and Mrs Wilding, although they did not initiate this exercise. This was a serious breach of confidence and reflective of just how bitter and personal the dispute had become. This issue was straightforward evidentially and there was no contest about the illicit nature of the hacking. It bore most on whether Mr Wilding should have the opportunity to purchase the shares.
TML share valuation
[22] The valuation of livestock and the monetary claims by TMPL and Mr Wilding were the principal components of valuation, with which the interim judgment was ultimately concerned. At every turn, the parties contested some aspect of the stock
valuation process, including the identity of the valuers, their expertise and their associations which it was alleged qualified or disqualified their status as expert witnesses. The spectre of a prolonged valuation contest lay before the Court, as opposed to an orthodox approach with two expert valuers and an umpire. Eventually the parties agreed to such orthodox process, directed by the Court. The same approach was to apply to the valuation of semen, but that too became complex before it settled. The initial and flawed approach to valuation issues reflected the “all or nothing”, “die in a ditch” approach to this litigation on many fronts.
An exhaustive approach
[23] The determination to pursue every issue to the last evidential vestige greatly stretched the trial, because at heart each of the multiple issues was relatively straightforward at law. Reaching a share value to reflect the length of the trial and how adjustments should be made for TML’s evolving business and the farming cycle was not straightforward. Some issues were “behavioural” only, for example, the hacking of emails. Many invoked compensation or damages. This observation is reflected in the resolution of costs, as the exhaustive approach to the litigation added greatly to the Court hearing time and thus costs, and far exceeded the estimate.
Mr Wilding had to resist a determined challenge to his right to purchase the shares. It is no exaggeration to say the way the litigation was conducted stretched the parties’, counsel’s, and the Court’s resources. It was excessive in its reach, but as discussed further, there was a good opportunity to avoid all but the valuation issues, which opportunity was not seized.
The pleading
[24] Mr Wilding’s first cause of action was maintained until the end of the 2016 phase of trial and alleged that the second to fifth defendants were in breach of their obligations as directors of TML and under the shareholders’ agreement. Most of the elements of that were repeated in the second cause of action which centred on s 174 of the Act. The first cause of action was not tenable and was an attempt to “detour around the law” but, in the end, it did not matter as the same issues fell under the s 174 cause of action. All parties pleaded that as a jurisdictional basis to bring the relationship between the parties to an end, and Mr Wilding sought damages or
compensation. The defendants prepared for the case as pleaded and the Court had to address the first cause of action until it was abandoned. Any action lay in the name of TML, by a derivative action, but s 174 allowed all claims to be addressed, so I conclude that apart from the pleading and Mr Dale’s opening to explain the first cause of action, it does not reflect in costs in any significant way as it was so obviously misconceived from the outset.
[25] The separate causes of action brought by TMPL against TML for breach of leasehold obligation were on the face of it straightforward evidential issues. They were large in quantum and could have had a major influence on the TML valuation. They all failed. They do not influence this costs judgment as costs between TMPL and TML have been settled, and must not be reflected again by a side wind in evaluation of the costs claimed.
[26] Mr Harrington counterclaimed for malicious prosecution or abuse of process by Mr Wilding. He otherwise counterclaimed under s 174, that the conduct of TML’s affairs was oppressive, unfairly discriminatory, or unfairly prejudicial to him as a shareholder, the fault for which he laid at Mr Wilding’s door.
[27] The second, fourth and fifth defendants, WHHL, Beeteck and Mr Wong, denied liability to TML which Mr Wilding pleaded against them, and sought counterclaim relief under s 174 and/or s 241 of the Act, alleging oppressive, unfairly discriminatory or unfairly prejudicial conduct by Mr Wilding.
Antecedent litigation
[28] Gendall J declined an application for an interim injunction sought by WHHL in relation to the grazing licence issued to Mr and Mrs Wilding for the 17 hectares of DOC land which WHHL once held under licence.3 In the end, Mr and Mrs Wilding succeeded in their contention that the DOC grazing licence was held by them in trust for TML.
3 WH Holdings Ltd v Wilding [2015] NZHC 1173.
[29] Mr Wilding abandoned his earlier attempt to bring a derivative action in TML’s name against WHHL for failing to renew the lease of Lagoon Flat to TML and against
Mr Harrington for allegedly neglecting stock while employed by TML. This did not involve much time or cost and was replicated in the second cause of action.
[30] Mr Wilding applied to remove Mr Harrington as a director based on an alleged conflict of interest, and to remove Ms Adams, his partner, as alternate director. He was unsuccessful because no duty was owed to Mr Wilding as a shareholder, but more to the point, the type of order sought was directed to a restraint, not removal of a director, and before Dunningham J the application failed.4
[31] Associate Judge Matthews issued judgment on Mr Harrington’s application for an order placing TML into liquidation on 22 April 2016.5 The presumption of insolvency was rebutted, but Mr Harrington pressed on with his proceeding.
Mr Wilding was critical of the directors who decided not to oppose the winding up and who were content for the proceedings to be advertised. He was given leave to defend the proceedings and advertising and a stay was entered until further order of the Court. TML survived only because of Mr Wilding.
Conduct of the parties
[32] A host of issues generated discord, cascading one on the other. From about mid-2012 there was resentment arising out of the perceived inability of the Wilding family to separate their interests from those of TML, and that Mr Wilding would not leave Te Mania’s management to Mr Harrington.
[33] Mr Wilding based his case on a “strategy” he says was developed by the defendants in July 2013, when he realised that they wanted to split the company and go their separate ways. He regarded this as a “hidden agenda”, orchestrated by
Mr Harrington. I commented in the interim judgment that “this refrain rang
throughout the whole trial”. I found there was no hidden agenda, but how the
4 Wilding v Te Mania Livestock Ltd [2015] NZHC 2105.
5 Harrington v Te Mania Livestock Ltd [2016] NZHC 785.
defendants went about trying to extricate themselves from their investment in
Te Mania is another matter.
[34] There were trenchant allegations of disloyalty both ways. Mr Wilding alleged deliberate neglect of stock by Mr Harrington, which he said was based on a warped self-interest to bring TML’s internal relationships to an end, and he made much of his attempt to liquidate TML when it was solvent. Other defendant directors took the position that the company would not be able to pay its creditors in December 2015 or January 2016. I concluded that the stance of these directors was not reasonable but in their self-interest and “they simply wanted out”. Given the threat to the company’s reputation and its very existence, and the failed attempt to prove insolvency, these were matters for which they can be rightly criticised. I left open the question of costs which the defendants say WERE fixed by agreement.
[35] I expressed an overview of the falling out, which grew into a deep distrust. Mr Wilding did not get to grips with the fact that TML could not run on as it had been, and I concluded he was never able to fully accept entry into the company of non- Wilding interests, as he held TML close to his heart, as the Wilding family business.
Lagoon Flat
[36] The claim brought by Mr Wilding in respect of the withdrawal of Lagoon Flat from TML’s use did not succeed. I concluded that the shareholders and directors were looking to their own self-interest by decoupling Lagoon Flat and selling it, rather than deliberately trying to bring TML to an economic watershed, although that was contemplated as an outcome, and was an outcome encouraged by Mr Harrington.
[37] The lease had run its full 10 year term, on the (assumed) basis that it was renewed, but rather than TML being given the right of first refusal should the property be leased again, it was leased to Terra Firma. This was irrigated land which insured TML in drought conditions.
[38] I found there was no obligation on WHHL to offer a right of first refusal, but if there had been I did not find TML would have suffered any loss, as the herd size had
reduced independently of Lagoon Flat considerations and Mr Wilding said he did not consider that Lagoon Flat was needed.
[39] However, the pathway to these conclusions was marked by the curious conduct of WHHL defendants and the directors overall who made no meaningful attempt to engage in a governance discussion that a second five year lease term on the face of it was coming to an end. When the issue crystallised, it denied that there was ever a renewal for a second term, and thus that there was any right to take up a further lease should WHHL want to lease the property again. The defendants’ legal position was upheld in the end but not before Beeteck denied the very existence of a Deed of Lease for Lagoon Flat, which was hard to comprehend because a lease of Te Mania by TMPL was entered on the same day as the Deed of Lease of Lagoon Flat in 2009, in identical formal terms. This is referred to at para [240] of the Reasons, and it was understandably a severe provocation to Mr Wilding. Whatever the legal position, I concluded there was no loss suffered by TML by its not having the use of the Lagoon Flat land, so the claim by Mr Wilding failed at a factual level.
TMPL v TML
[40] As recorded above, these claims all failed. The evidence was inadequate to prove breach of the leasehold obligation and the losses claimed were not properly formulated in law or fact. If they had even in part succeeded that would have had an impact on the TML share price.
The opportunity for Mr Wilding to purchase the shares
[41] All the matters referred to above, and other issues including the entry of TML into a Go-Beef contract by Mr Wilding, were relevant to whether he should have the opportunity to buy the defendants’ shares. This is set out at length under “An overview” from para [447] in the Reasons.6
[42] While there was cause for the defendants’ criticism of Mr Wilding, and the list of allegations against him was long, the bitter infighting and constant carping in
6 Above n 2.
correspondence and meetings had its own effect. The resolve of Mr Wing, who chaired the Oversight Committee, the strong remedial steps by William Wilding who took over from Mr Harrington, the inherent strength of Te Mania genetics and its standing as a stud, saw the situation was stabilised when things were going so wrong in 2014. Heartland Bank’s support was crucial and steady in a very troubled period, over many months.
[43] The dominant conclusion reached without qualification was that for the future the prejudicial, discriminatory and oppressive conduct of the affairs of TML was inevitable, and that was the product of all parties acting determinedly against the other “side”, as they perceived it. It was not just a future perspective. This was the setting throughout the trial and long before. It was so obvious that it should have been agreed without trial, but the many other elements of pleading still required an answer. I refer
to para [468] of the Reasons:
Conclusion
[468] The remedy under s 174 of the Act is not punitive. Conduct may preclude either party having the right to purchase shares, but that would be rare in my view. The outcome should best advantage the shareholders as a whole. I have no doubt s 174 is engaged at the suit of Mr Wilding and the defendants. The conduct and attitude of all parties is such that TML is ungovernable, and unmanageable, because the parties are now largely unable to agree on anything, and a winding up order would inevitably result. Both sides in this litigation have contributed to the likelihood, indeed certainty, that the affairs of TML will be conducted in an oppressive, discriminatory or prejudicial way, fatal to TML’s future.
[44] I did not find any disqualifying conduct by Mr Wilding, and viewed in another way, if he had not fought so hard to resist the liquidation of the company (twice), TML would have been wound up. The one matter which gave me pause for thought was his association with the hacking of emails. Ultimately, that did not alter my conclusion that the best thing for all involved was that the company not be liquidated. I saw a good deal of further litigation arising in a liquidation setting and it was obviously time to sever TML relationships once and for all with no tailwind to raise further dispute. That was the condition which Mr Wilding had to accept if he purchased the shares. The interim judgment was predicated on this essential foundation. The sorry story of TML under its then governance and operation had to come to an end, to give TML the opportunity to take the famous Te Mania stud forward once more.
[45] The approach to share valuation somehow had to reflect the way the equity reduced so much between 31 March 2016 and 18 November 2016, by some $1.17 per share. That was in part the result of the litigation being so extended and the remedial efforts required under financial stress, including herd reduction. That influences the analysis of offers to settle the litigation, as I discuss further.
[46] Litigation elements which reflected in the share valuation included the argument about GoBeef which was said to have caused loss to TML for which it was said Mr Wilding should compensate TML. That contention failed. There were other issues addressed, more in the round and not amenable to precise calculation, including the timing of the valuation of TML assets. Rent was an issue, and depreciated value of improvements on TMPL land. The valuation of cows with calves at foot, or after weaning, raised a discrete valuation issue. There was a broad element for consideration in the way the company was being run in the last 18 months or so pending judgment. Property, plant and equipment on TMPL land was treated as a TML asset. Not only did the shareholders and directors disagree about nearly everything, but decision making was stymied. TML was treading water, just, and the enmity between Mr Harrington and Mr Wilding was antithetical to sustaining TML in good economic shape.
Costs
[47] I made some preliminary observations as to costs. The judgment as to the application of s 174 responded to multiple allegations and counter allegations, and all parties had some success, and some failure, but in particular Mr Wilding succeeded in resisting liquidation, and securing the right to acquire the shares.
D. SUBMISSIONS AS TO COSTS
[48] I begin with an overview of the submissions, which were in their thoroughness and detail proportionate to the length of judgment. Mr Dale with Ms Fletcher for Mr Wilding says costs should lie where they fall, but raises separate claims for costs should that submission not be upheld, reflected in Schedule One to this judgment. The costs claimed by the second, fourth and fifth defendants and counterclaimants are shown in Schedule Two and by the third defendant and counterclaimant, Mr
Harrington, in Schedule Three in black type. Inclusions in red reflect this costs judgment.
D1. SUBMISSIONS FOR MR WILDING
[49] Mr Dale submits that while a costs judgment engages the “costs follow the event” rule, there are broader considerations. For example, there was a significant sharing of resources by the defendants and he submits a lot of time was taken up in excessive evidential challenges by them. He refers to court time spent on issues not pleaded, for example allegations against Mr Wilding about the unsuccessful Wadi property development which came up a number of times but was not a separate cause of action, nor in the end a relevant consideration. It was a running sore for some defendants, particularly Beeteck, who felt let down by Mr Wilding, and lay as a shadow across the trial with nothing substantive turning on it. Correctly Mr Dale says it warranted only passing mention.
[50] The defendants say that Calderbank and other offers were made to Mr Wilding, and that he should have accepted one offer in particular that was made just before trial. They say that given the judgment outcome, the conduct of the trial from the time of the Calderbank offer was unnecessary, and this should reflect in costs in their favour. Mr Dale submits there are reasons not to adopt this approach, and he is right that in the end even with a Calderbank offer in play costs are discretionary.
[51] He submits that “success” is to be measured with care because a party may succeed on one issue, but fail on others, and an overall evaluation must be made.7 Mr Dale submits that all parties have had some measure of success and failure so costs should lie where they fall. He submits that addressing the claims and counterclaims one by one is difficult and unsatisfactory because, for example, some claims were unsuccessful as to damages or compensation but evidence in relation to them and findings were relevant in the contest whether Mr Wilding or Mr Harrington might buy TML shares, or whether TML should be liquidated.
7 Water Guard NZ Ltd v Midgen Enterprises Ltd [2017] NZCA 36.
[52] Because judgment was reached under s 174 of the Act based on the company’s future governability, not every issue raised as relevant to s 174 is the subject of separate judgment. I consider there are few if any such omissions, if that is what Mr Dale means when he says some issues were not resolved in the interim judgment or Reasons. However, the trial involved multiple allegations of conduct said to be relevant for s 174 disposition, as to whether TML should have been liquidated, or whether the shares might be purchased by Mr Wilding or Mr Harrington.
[53] Mr Dale also submits that separating out events prior to the proceedings from events which occurred in the course of the proceedings is difficult, and the Wilding interests and the defendants all made attempts to settle.
[54] Mr Harrington by his last amended defence and counterclaim pleaded multiple instances of oppressive conduct by Mr Wilding, not all of which had to be ruled on, but had to be pleaded in defence, and addressed in evidence. Many of the same allegations were pleaded in the statement of defence and counterclaim of the second, fourth and fifth defendants.
[55] The key issues of fact and law which the Court was required to determine are set out by Mr Dale, and because they are relevant to a “line by line” analysis of the success or otherwise of the parties, I record his summary as follows (with minor elaboration):
(i) Conduct of the parties leading up to the breakdown in relationships.
(ii) Stock neglect issue founding a claim for damages brought by
Mr Wilding and as providing grounds for relief under s 174 of the Act.
(iii) Lagoon Flat issue, from the same perspective.
(iv) The WHHL claim to the DOC grazing licence.
(v)Malicious prosecution/abuse of process claim by Mr Harrington against Mr Wilding.
(vi) Allegations of mismanagement of TML accounts.
(vii) Wadi.
(viii) Damages.
(ix) Attempt by Mr Harrington to liquidate TML, as a breach of s 174.
(x) Whether the defendants acted in concert to bring down TML.
(xi) Counterclaims by all defendants against Mr Wilding, including failing to promote and market the 22 June 2016 bull sale.
(xii) Issues about interim management of the company, including increase in the company’s overdraft and difficulties with the payment of creditors.
[56] Mr Dale refers to “irrelevant considerations”, including “hacking of emails”, yet had to be addressed in deciding whether Mr Wilding by his conduct should be precluded from having the opportunity to purchase the shares.
[57] Mr Dale says that Mr Wilding intended to sell TMPL land, including land leased to TML, but he submits that was always on the condition that TML had the continued use so that was never a risk to TML. However, that was not the way
Mr Wilding put it when he described such potential sale as “none of your business”, when challenged.
[58] The derivative leave application was abandoned as it could not be determined before the s 174 proceedings, and is submitted not to have involved additional costs because the same evidence was part of the s 174 case anyway.
[59] As to stock neglect, Mr Dale says that this issue took a great deal of time as
Mr Harrington denied responsibility for the condition of the animals which had been quite severely neglected and his “defences” to that were rejected. Mr Harrington’s standards were found to have fallen away, and Mr Dale says that was the point
Mr Wilding made at the time. It led to his alarm and justified suspicion as to how this could have happened. TML was put at severe reputational risk but the situation was rectified through effective veterinary intervention, the stewardship of William Wilding, and the inherent strength of TML’s genetics. The abject condition of these animals went to the TML reputation, so Mr Dale submits. There was a risk of SPCA prosecution. For these reasons, while the issue had no financial outcome in the judgment, it was relevant in particular to s 174 issues and who should have the chance to buy the shares. Mr Dale submits that Mr Wilding should not be liable for the defendants’ costs incurred for this issue, but they should be met by Mr Harrington who had managerial responsibility for the stock.
[60] Mr Wilding said the lease of Lagoon Flat with its irrigation was in TML’s interest, and there should have been a new lease offered to it. Instead, it was leased
to a competitor, in a time of drought. The defendants were entitled to exit the lease arrangement with TML, as a matter of law, but Mr Dale resuscitates the argument that they did so to advantage their own position. Mr Harrington pressed that Lagoon Flat be leased to Terra Firma because it would put more pressure on TML, and help terminate the relationship between the parties in TML.
[61] Mr Wilding seeks costs and disbursements in respect of three elements of the proceeding as in Schedule One to this judgment, under Scale 2B:
(a)Under CIV-2015-409-777 in which Mr Harrington sought to wind up TML, Mr Wilding seeks Scale costs of $25,771.56 including disbursements but says he should have indemnity costs.
(b) Under CIV-2015-409-232, being the claim by WHHL against
Mr Wilding in respect of the DOC grazing licence, Mr Wilding claims costs and disbursements of $33,893.00.
(c)Under CIV-2014-409-899, being Mr Harrington’s malicious prosecution and abuse of process counterclaim, Mr Wilding seeks costs and disbursements of $37,128.00
Offers to settle
[62] Settlement offers provided opportunities for all parties to exit the company or reduce the scope of the trial. Some referred to by Mr Dale are said by the defendants to breach ‘without prejudice’ communications and which resulted in an amended bundle filed for Mr Wilding. Mr Wilding’s version of the offers is as follows:
(i)offer by Mr Wilding on 2 June 2016 to purchase the defendants’ shares for $1.4 million, in full and final settlement;
(ii)response from Lane Neave on 3 June 2016 for second, fourth and fifth defendants offering to buy Mr Wilding’s interest for $3.50 per share and Mr Wilding signing over the DOC grazing licence to WHHL, with costs otherwise lying where they fell;
(iii)Mr Dale’s reiteration of Mr Wilding’s offer of 2 June 2016 on 8 June, then a spreadsheet in support of the offer, on 15 June 2016;
(iv) Young Hunter wrote on 15 June 2016 offering to sell the defendants’ interests at $3.80 per share, leaving for separate resolution the DOC issue;
(v) Mr Dale responded on 15 June 2016, offering $2.90 per share on a
‘full and final’ basis;
(vi) On 16 June 2016, a further offer was made by all defendants to accept
$3.10 per share with discrete terms in relation to the DOC land, including a boundary adjustment;
(vii)By Mr Dale’s response of 17 June 2016 Mr Wilding offered to purchase the defendants’ shares at the midpoint between previous offers, at $3.00 per share, with separate terms in relation to other land, which included Mr Wilding surrendering the River Flat land but retaining the DOC land;
(viii)Response from Mr Russell for defendants of 17 June 2016 rejecting that offer;
(ix) Email from Ms Hopkins for defendants on 18 June 2016 addressing the value of the River Flat land;
(x)Mr Dale then suggested that share valuation issues be addressed without a valuer being called;
(xi)On 23 June 2016, Young Hunter wrote, not with an offer of settlement but proposing a narrowing of issues, which required Mr Wilding to abandon the stock neglect and Lagoon Flat claims. Mr Wilding would buy the defendants’ shares, and Mr Harrington was prepared to give up his malicious prosecution claim.
[63] The defendants object to the emails of 8 and 9 June 2016 and documents
TW 69 to TW 72 inclusive, saying they are not Calderbank correspondence, and privilege in respect of them has not been waived. Mr Dale agrees they should not be read for this reason.
[64] Mr Dale submits that Mr Wilding was prepared to settle on terms which would not require the Court to address his damages claims and TMPL’s claims, but once negotiations broke down, preparation for trial was fully engaged. He says settlement offers should be considered when they were made, not against the result of the litigation, and that the Court should bring to account that a letter sent to stop litigation and save further costs does not constitute a failure to accept an offer of settlement. He submits it was not unreasonable for Mr Wilding to reject an offer which was made late, so close to the hearing. He says that where an application is made for increased costs because of the rejection of a settlement proposal, the refusal must be
unreasonable. Mr Dale submits I can bring to account the failed mediation, but I do not do so given the confidentiality of that process.
[65] Mr Dale (with Ms Fletcher) says the offers by the defendants to sell their shares to him should not reflect in this costs judgment. For reasons which follow I reject that submission, and one in particular is brought to account.
Considerations submitted for Mr Wilding
[66] Mr Dale asks me to take into account “time wasted” at trial on the stock neglect issue, which he said was sincerely advanced by Mr Wilding based on evidential detail, and the complaints about Mr Wilding’s behaviour said to justify winding up TML, or that he be ordered to sell his shares. The stock neglect issue was hard fought and
Mr Dale says the abject condition of the animals should have been acknowledged by
Mr Harrington and other defendants at the time, and at trial, and the causes of that been the evidential focus rather than the persistent denial of the problem which judgment held did exist.
[67] Mr Dale submits that Mr Wilding has been successful in his primary claim of oppression or other unfair conduct under s 174, and that he was in the end given the opportunity to purchase the defendants’ shares. In the last part of that submission he is correct. Mr Wilding succeeded in securing that right against multiple allegations of his disqualifying misconduct in the affairs of TML, and in the litigation.
[68] Mr Dale submits that this costs determination requires a detailed analysis of the history of the proceeding to isolate and assess the reasonableness of the steps taken by the parties along the way and the costs they incurred at each stage, bearing in mind complications arising out of the overlap of issues. He refers to numerous issues where fault has not been attributed, or where there are “good arguments both ways”, including the need for the Oversight Committee to keep TML running, and the appointment of Mr Wing to chair it. He did a remarkable job as I have mentioned. Mr Dale also refers disputes about the evidence of Mr Dennis Hazlett given his untimely death and that of Mr Lindsay Haugh, and of Mr Orr.
[69] Mr Dale submits it is not possible to accurately ascribe time to each issue, and I agree. It could be no more than a rough estimate and while Mr Dale does attempt that, he faces the difficulty that the trial was run in such an unco-ordinated way with witnesses coming and going, particularly Mr Wilding, addressing and then being cross-examined on multiple issues. All this was the product of an estimate of trial duration wildly off track. Mr Dale submits that:
On that basis my estimate of the 32 days of sitting time my best guess is as follows:
(i) Animal neglect issues – 8 days.
(ii) The Lagoon Flat issue (cross-examination of Mr Wilding, evidence of
Messrs Stone and Smith, cross-examination of defendants) – 4 days.
(iii) Traversing the history of the company and s. 174 issues generally – 3
– 4 days.
(iv) Wadi issues – 1 day.
(v) Malicious prosecution / abuse of process – 2 – 3 days.
(vi) Winding up issues – 1½ days.
(vii)The DoC land WHHL claim – 2 days (counsel agreed at the trial that two days hearing fees would be reasonable).
(viii)Complaints regarding the TML accounts including cross-examination of Mr Girdlestone, Mrs Wilding and Mr Wilding – 2days. There were issues, but not actionable or a breach for the purpose of s. 174.
(ix) Cross-examination of expert evidence and in particular Mr Hagen –
1 day.
(x) The counterclaim allegations including cross-examination of
Mr Wilding and evidence from the defendants – 3 days.
(xi)Evidence on the TMPL claims, which are no longer relevant – 4 days. (Costs calculated on the basis of 6 days but there was an overlap.)
(xii) Damages re Lagoon Flat and the animal welfare issues – 4 days.
(xiii)Discovery of the Bank’s documents (not supported by a formal application, so dealt with at the trial) – 1 day.
(xiv) The need to hear from Mr Wing and Mr Travis – ½ day.
[70] More time is thus calculated by Mr Dale than was actually spent in trial, and his ‘best guess’ does not include some valuation issues, which included goodwill as
the defendants sought (later abandoned), the date of valuation and the valuation of semen.
[71] If a costs order is to be made in favour of the defendants, Mr Dale submits there should be allowance for the “failed defences” raised by Mr Harrington to the stock neglect issue, and the defendants’ counterclaims, upon which Mr Dale submits no rulings have been made, save for the GoBeef contract in favour of Mr Wilding. He says allowances should be made for the late application for security for costs, the request for Heartland Bank documents in the course of trial by all defendants, the strike out application by the third defendant, the late filing of evidence by Mr Harrington,
the very lengthy cross-examination of Mr Wilding, and the need for a statement of defence to the amended counterclaim.
[72] Mr Wilding succeeded in the DOC claim, and with Mrs Wilding was held to have acquired the licence on trust for TML. The defendants sought an order that WHHL was entitled to the grazing licence. He seeks costs in Schedule One.
[73] As to the malicious prosecution claim, Mr Wilding did not lay the complaint nor cause the prosecution to be initiated, and Mr Harrington would not have been charged if he had paid for the hay which he took for the use of Terra Firma.
Mr Wilding acted responsibly throughout, and the claim is submitted to have been misconceived. Mr Dale describes this as an in terrorem claim. He says that the estimated hearing time was three days, preparation three days, statement of defence half a day, and legal submissions and argument one day. His Schedule One sets this out.
[74] Mr Dale seeks the expert witness costs of Mr Hagen for the valuation exercise, which is part of the relief sought under s 174. Mr Dale’s position is that Mr Hagen was in the witness box for a day and Mr Wilding incurred costs, and this was a waste of the Court’s resources. Costs for the winding up proceedings have not been paid, and Mr Dale seeks them on an indemnity basis. He submits the proceedings had no merit but were pursued for a collateral reason to get the defendants out of their TML investment. He says it is difficult to know what the costs are, and his best estimate is
$25,000.00 together with Mr Hagen’s costs of $8,596.25, reflected in Schedule 1.
Mr Wing
[75] Mr Wing was appointed chair of the Oversight Committee. Mr Dale submits, and I agree, that there was no way in which the company could have remained operationally afloat without him. Mr Dale submits that the costs of the Oversight Committee and Mr Wing should be borne equally by the parties, as Mr Wing’s costs of $54,000.00 have so far been borne by TML alone and were not taken into account in the final washup for valuation. That is, they have fallen to TML and thus gave an impost on Wilding interests which now own TML. Mr Dale says the defendants ought to bear an equal share of these costs. There is merit in this as Mr Wilding is not the only reason why the Oversight Committee was necessary. I will address reply submissions for Mr Wilding after the submissions for the defendants, then comprehend their replies under “Discussion”.
D2. SUBMISSIONS FOR SECOND, FOURTH AND FIFTH DEFENDANTS/COUNTERCLAIMANTS, WHHL, BEETECK AND MR WONG
[76] These defendants, through counsel Mr Russell and Ms Hopkins, say that
Mr Wilding took the same litigation position in the end as they did, that he be given the right to acquire their shares at a price fixed by the Court. These defendants pleaded that Mr Wilding’s conduct engaged s 174 to establish jurisdiction. The real contest was between Mr Harrington and Mr Wilding as competitors for the shares, and over whether TML should be liquidated. Mr Wilding was given the chance to purchase the defendants’ shares which they did not oppose as such, and the DOC land was found to be held in trust for TML. These defendants say he was otherwise unsuccessful, viewed from their litigation perspective. His claims against WHHL and the defendant directors all failed. They say they are entitled to increased costs given their offers to settle which they say Mr Wilding unreasonably rejected.
Offers to settle
[77] Inevitably, Mr Wilding puts a different complexion on the settlement offers. These defendants say as follows.
[78] On 3 June 2016, two weeks before trial, WHHL and Mr Wong offered to sell their shares for $2.87 per share, together with Mr Harrington’s block for an average price of $3.00 per share (not $3.50 as Mr Dale submits). On this foundation, WHHL, Beeteck and Mr Wong say they were successful in the contest over share value. They calculate the share price by the sum that Mr Harrington, Mr Wong and WHHL would accept for their entire block of shares $900,000.00 as a global settlement. Mr Wilding paid $3.43 per share as the interim judgment directed. This offer was on the basis that
17 hectares of DOC land would be assigned to WHHL. That was valued by judgment at $14,000.00, and they say the offer should have been accepted, even though it was held that the DOC land is held from TML. Calderbank offers which involve extraneous matters cannot usually be relied upon.8
[79] Mr Wilding had offered $2.07 per share on 2 June 2016. The Calderbank correspondence shows that the only unconditional offer by Mr Wilding for the shares of WHHL and Mr Wong was $2.07 per share.
[80] Apart from the offer of 3 June 2016, a letter of 23 June 2016 from Young Hunter was endorsed by Lane Neave on 26 June 2016 for the WHHL defendants. Mr Wilding and TMPL would abandon their claims, with costs to lie where they fell, and the only trial issue would be share value. The defendants would give up their claims for costs in defending various claims by Mr Wilding, that have since been abandoned or dismissed at trial.
[81] While Mr Wilding says that the 23/26 June proposal required him, without compensation, to abandon his stock neglect and Lagoon Flat claims, these claims failed. As a result, the defendants submit the offer to abandon substantial costs claims for these causes of action to that point was a concession by them, and that Mr Wilding was not justified in refusing to settle because of those claims.9
8 Concrete Structures (NZ) Ltd v Palmer HC Auckland CIV-2004-463-825, 7 April 2005 at [5](d)
and Rapana v McBride Street Cars Ltd [2007] DCR 551 (HC) at [22].
9 Warren Metals Ltd v Grant [2015] NZHC 2462 at [42].
[82] Mr Wilding’s submissions refer to mediation. This is more a matter for
Mr Harrington but discussions about what offers were made and were not made at that mediation are privileged and do not fall for this judgment.
[83] Beeteck was a defendant only in the abandoned first cause of action, which was legally misconceived. He was not a defendant in the second cause of action under s 174, so all claims against him personally were abandoned and his interests were represented in WHHL. It is submitted he should never have been sued personally, yet faced risk until the end of the trial. His position was the same as the other defendants as to share valuation, but otherwise he had a complete defence to both causes of action. His real involvement and exposure thus lay in WHHL. He was otherwise a witness of fact.
Categorisation and Banding
[84] These defendants seek costs on a Category 3 basis with some steps in Band B, and some Band C, reflected in Schedule Two, with inclusions made by the Court to reflect this judgment,
[85] They submit this is a Category 3 proceeding given its complexity and based on the length of the statements of claim, the length of the trial, antecedent litigation, the number of witnesses, factual complexity, the length of time which the events in issue spanned, and the volume of documents. Complexity is submitted to lie in the attempt to bring a derivative action under the s 174 proceedings, in the land law and lease issues, duties of directors, employment law involving Mr Harrington, an argument that lease renewal could be addressed in equity and not in contract, and valuation principles.
[86] Time Bands B and C are sought as Schedule Two demonstrates. Memoranda were filed over multiple issues, including the interim management of TML, the valuation process, livestock condition and share valuation, further interim management, and semen valuation. Multiple and unusual issues developed during the course of the proceedings and required more than the average time to prepare and file.
[87] For discovery and inspection, Band B allows only 2.5 days for preparation of a list and 1.5 days for inspection, which is submitted insufficient. The parties had five storage boxes of documents to discover and inspect. In preparation for hearing, they claim two sets of preparation costs, for the June 2016 and November 2016 phases of the hearing, and as this was a 32 day trial with many other attendances, the Band B allocation of three days is submitted insufficient and six days is submitted more appropriate.
[88] For preparation of briefs, these defendants called two witnesses of fact and six expert witnesses. Band C allows for five days, but substantially more time than that was required. For preparation of a list of issues, authorities and common bundle, Band C is submitted appropriate, to allow four days.
Increased costs generally
[89] Increased costs may be ordered under r 14.6(3) High Court Rules (HCR) for several reasons. It is convenient to set out the Rule.
14.6 Increased costs and indemnity costs
…
(3) The court may order a party to pay increased costs if—
(a)the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or
(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
(i)failing to comply with these rules or with a direction of the court; or
(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or
(iii)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or
(iv) failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or
(v)failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or
(c)the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or
(d)some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
[emphasis added to reflect submissions]
[90] The WHHL defendants seek the substantial costs against Mr Wilding in Schedule Two. Their overall position is that he failed against them, and claims against Beeteck were abandoned. They seek increased costs because Beeteck should not have been a party in the proceedings, say that they were always willing to sell their shares. They say that the Lagoon Flat claim lacked merit, and the stock neglect claim ran on despite legal advice being taken, and based on that, the Board resolved not to bring a counter claim against Mr Harrington. They refer to the ill-conceived allegation that they were part of a conspiracy to neglect stock, the Calderbank offer to sell for an average of $3.00 per share, the open letter of 26 June 2016 offering the relief in the end ordered by the Court, the email hacking, and Mr Wilding’s conduct in relation to the semen valuation issues.
Indemnity costs sought by fourth defendant, Beeteck
[91] Beeteck was sued for breach of the shareholders’ agreement, but he was not a shareholder. This defence was pleaded but there was no amendment to the pleading. He was not sued under the second cause of action and the first cause of action was abandoned. He had the same representation as Mr Wong and WHHL, and his real interest lay in the outcome for WHHL. Thus, the only cause of action which named him was abandoned at the end of the trial and it is submitted that Beeteck should be paid all of his costs on an indemnity basis, although he was at no risk of liability whatsoever and that was obvious from the outset.
50 per cent uplift
[92] An uplift is otherwise sought on Scale costs of 50 per cent from 28 June 2016, when the 26 June 2016 offer expired, to reflect Mr Wilding’s failure to accept what is submitted a reasonable settlement offer or offers. They say Mr Wilding pursued arguments that lacked merit: the entire first cause of action, the Lagoon Flat claim, and his case that stock neglect was part of a strategy by the defendants to wind up TML. The Lagoon Flat claim failed but was not in the “completely without merit” category.
Computer hacking
[93] This is a serious issue which they submit falls within HCR14.6(3)(d) as “some other reason” justifying increased costs.
Semen
[94] The valuation of semen was problematic. Some straws missing from the valuation were identified in the week before trial. In the end, the semen value was settled at $75,000.00 and it is submitted delay in reaching settlement was mainly due to Mr Wilding’s interference with the valuation process. Mr Wilding split the list of semen into a “keep” list and a “discard” list, and advocated for a $0 discard list value. He had to be directed by the Court not to contact the valuers directly. Mr Sergeant advised Mr Donald that he was instructed by Mr Wilding only to value the “keep” list and the Court had to direct the valuation of both lists. An umpire was suggested by Mr Wilding but he had ties to TML. The straws held by TML reduced in number between the June and November hearing. A reconciliation exercise established that the straws taken by TML on farm for insemination had not all been used and the “keep” list did not include semen purchased by TML between June and November 2016. Some semen sales had not been recorded. Overall, it is submitted that the settled value of the straws was achieved through the tenacity of Ms Adams. The defendants proposed a value of $50,000.00 for semen, with them being given the semen in the “discard” list, but this was rejected. The settlement figure of $75,000.00 was closer to the defendants’ original stance than that of Mr Wilding. It was submitted at least three days of hearing time was involved in this, relevant to increased costs.
Length of trial
[95] Counsel submit that a good deal of new evidence was adduced during the trial, including that from Messrs Lindsay Jones, Guy Sergeant, Jansen Travis, Ian MacDonald, Bruce Orr, Ben Scott, and Mrs Katie Wilding, and a “memorandum as to damages” by William Wilding. They say all this was Mr Wilding’s choice and explains why the trial extended so far beyond the estimate, which they lay at his door.
Actual costs
[96] The actual costs incurred by these defendants were $835,876.23 including
GST, plus disbursements.
Timetable breaches
[97] Mr Wilding submits that he has been prejudiced by timetable breaches, but the allegations in this regard are submitted “footling” in comparison with the other issues, and I agree with this submission.
Mr Wing
[98] The WHHL defendants submit that Mr Wing’s costs up to 18 November 2016 were properly reflected in the share valuation, and they are for TML, just as all income is for TML, so no adjustment is warranted in this costs judgment. These costs were essentially the product of the complete breakdown in relationships and should be reflected, but only in the broad brush of residual discretion and only to a very limited degree.
Disbursements
[99] The disbursements sought by these defendants are $60,043.84 set out in Schedule Two to this judgment. The costs of all expert witnesses except Mr Oxnam have been shared with Mr Harrington.
The attempted liquidation of TML by Mr Harrington
[100] WHHL defendants disassociate themselves from Mr Harrington’s actions in seeking liquidation of the company (twice) and allegedly neglecting animals. They say legal and other resources have been shared between themselves and Mr Harrington to the extent possible. The antecedent attempt to wind up TML primarily involved Mr Harrington, and they say costs were agreed on a Scale 2B basis. WHHL supported Mr Harrington and it is submitted that the intent was to preserve the equity of the company so far as Beeteck was concerned. Nevertheless, I remain very critical of this attempt to liquidate TML by Mr Harrington and the WHHL defendants in effect acquiesced in that process. It was a high-risk step which could have brought TML down, and it was wrong in law.
Wadi
[101] The Wadi property was in evidence during the trial and Mr Wilding pleaded reference to it as part of his TMPL claim, so it is submitted he introduced it to the pleading. He did so in the context of rates, but it was otherwise clearly a source of disquiet. For Beeteck this was a key factor in the breakdown of relationships. There was a Wadi rates claim which was disallowed in the valuation exercise.
Success and failure
[102] Mr Russell and Ms Hopkins refer to Packing In Ltd (in liquidation) v Chilcott, where a liquidator successfully defended the setting aside of three out of
14 transactions, about half the value of the transactions challenged.10 The Court of
Appeal said that each party had similar success and failure, and time spent on each transaction or group of transactions should be brought to account with anything else the Court considers relevant to the exercise of discretion. Overall, the Court must do justice to all sides.11 These WHHL defendants submit that overall, they succeeded, in the defence of claims against them arising out of stock neglect and Lagoon Flat, and should have increased costs for their offers to settle, or to confine trial to share valuation.
10 Packing In Ltd (in liquidation) v Chilcott (2003) 16 PRNZ 869 (CA).
11 At [5].
[103] The Lagoon Flat claim by Mr Wilding failed because TML had no first right of refusal, but otherwise there was no loss to TML proved. A good deal of evidence was addressed. Witnesses included Beeteck, Mr Harrington and expert witness
Mr Glennie, and cross-examination was required of Mr Wilding, William Wilding, Dr Geenty, Mr Stone, Mr Scott and other witnesses for the plaintiff. It was a large claim, some $987,057.46 which increased to $1.35 million by the fourth amended statement of claim. The claim was out of all proportion to the turnover of TML, or profits and losses over its lifetime. It was not in that sense a serious claim and should not have been mounted in this way. There were other misconceptions in the claim including the land subject to the lease, and the extent of the right of first refusal, should that have existed. Overall, the submission is made that the approach to the Lagoon Flat claim by Mr Wilding was casual, lacked attention to detail, and failed.
[104] As to the DOC grazing licence these defendants failed, but they submit the issue did not take a great deal of time. I do not accept the submission that these defendants had much merit in the position they took, again the product of a highly informal, indeed casual (to use counsel’s words), approach to tenure issues. Mr and Mrs Wilding took the licence on trust for TML, and this position was upheld.
[105] As to stock neglect, this permeated much of the trial and these defendants say they had to take part because of the allegation that this was part of an overall strategy to exit TML. Something went very wrong with stock management, as the Reasons explain. These defendants by then backed Mr Harrington in circumstances where there was strong cause for the extreme concern held by Mr Wilding, and theirs should have been a vigorous response to this very obvious and severe problem.
[106] Other matters are raised by these defendants, including Mr Wilding being prepared to sell TMPL land to the disadvantage of TML. Although he says that was never going to be at the expense of TML, I have held that his actions spoke otherwise. Overall, it is submitted that Mr Wilding’s claims lacked merit and failed at every level, despite an offer being made to accept a walk-away position that expired on
28 June 2016, so increased costs are justified from that date. Otherwise, their reply to
Mr Wilding’s costs submissions is encapsulated under “Discussion”.
D3. SUBMISSIONS FOR MR HARRINGTON
[107] Mr Harrington, through counsel Mr Hunt and Mr Light, says he succeeded on all issues, except for malicious prosecution/abuse of process, and he seeks an uplift of
75 per cent on his scale costs, reflected in Schedule Three to this judgment, to
$500,000 plus disbursements less costs which he says were agreed on his failed liquidation proceeding and for his failed claims in tort against Mr Wilding.
[108] He seeks an uplift because Mr Wilding’s first cause of action “lacked merit” and under his second cause of action his monetary claims all failed. Mr Wilding was in the end given the opportunity to purchase the defendants’ shares, but that had been offered to him on terms he should reasonably have accepted before trial. Mr Wilding rejected the proposal made near the beginning of trial that the Court should simply determine the fair value of the shares. Overall, it is submitted he failed to accept a number of settlement offers, which would have given him a result better than he achieved at trial. Counsel say Mr Wilding refused these offers because he wanted to pursue his damages and compensation claims against the defendants, and if he had succeeded, then the defendants held liable would have received back something of any judgment against them as shareholders of TML. However, if TMPL succeeded then the TML valuation would have reduced by a telling amount.
[109] Mr Hunt and Mr Light refer to the interim judgment at paragraph [6] which reads:
Along the way a commercial approach to resolution was lost. These Reasons address multiple allegations and counter allegations played out over 32 days of hearing, with prior and subsequent litigation attendances, more than 1,300 pages of evidential transcript, and several thousand documentary exhibits. The value of the shares in dispute is out of all proportion to the costs of this litigation, which has unfolded with excruciating detail and contest on every conceivable issue.
[110] For Mr Harrington it is submitted this perspective is held because Mr Wilding pursued a “vendetta” against the defendants and if a commercial approach to resolution was lost along the way, as I have held, this is not attributable to the defendants. Because of this Mr Harrington says he should be compensated for the expense to which he has been put by Mr Wilding, by the costs he seeks including uplift.
[111] Mr Hunt and Mr Light submit that overall this was an unnecessary and unnecessarily protracted proceeding, and brought against Mr Harrington without merit in fact and law. Mr Wilding’s claims are submitted to have required a trial of “inordinate and unnecessary length”, which involved the “excoriating ventilation” of unmeritorious allegations, and the public disclosure of facts damaging to the parties and TML. Mr Wilding had the chance to avoid this, but failed to respond to the defendant’s reasonable attempts to settle. Parties should avoid the expense of money and “spirit” in litigation like this, and costs should reflect passed-up opportunities to do so. Mr Harrington tried to buy Mr Wilding’s shares, and offered to sell his shares. He proposed that the s 174 claim and counterclaim based on the unsustainable operation of TML be agreed, to provide jurisdiction for the valuation of shares.
Mr Wilding did not accede to this.
[112] While costs are at the discretion of the Court, specific costs rules should be applied and the discretion to depart from the rules and allowances must be undertaken in a principled way.12 It is convenient to refer here to r 14.2 HCR which reads as follows:
(1) The following general principles apply to the determination of costs:
(i)the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds:
(ii)an award of costs should reflect the complexity and significance of the proceeding:
(iii)costs should be assessed applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application:
(iv) an appropriate daily recovery rate should normally be two-thirds of the daily rate considered reasonable in relation to the proceeding or interlocutory application:
(v)what is an appropriate daily recovery rate and what is a reasonable time should not depend on the skill or experience of the solicitor or counsel involved or on the time actually spent by the solicitor or counsel involved or on the costs actually incurred by the party claiming costs:
12 Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [22].
(vi)an award of costs should not exceed the costs incurred by the party claiming costs:
(vii)so far as possible the determination of costs should be predictable and expeditious.
Offers
[113] Mr Harrington’s position is put in parallel with the WHHL defendants. The global settlement offered to Mr Wilding valued the defendants’ shares at (an average)
$3.00 per share. Mr Harrington wanted more for his share than the other defendants, more than the price fixed. Costs would lie where they fell. The DOC concession would be assigned to WHHL. As with the WHHL defendants, that overall offer is submitted much better than the $3.43 per share paid by Mr Wilding. He would have done much better by accepting this proposal, by some $130,000.00, leaving aside costs. As with the WHHL defendants, the settlement offers are advanced in support of an order for increased costs under HCR14.6(3)(b)(v) (set out above), if the Court concludes that a party has failed without reasonable justification to accept an offer of settlement. Faced with claims or issues for determination at trial which do not reasonably reflect the costs which will be involved, there is a strong policy interest in defendants (including counterclaim defendants), being able to seek protection in costs by making offers to settle. Calderbank procedures should be effective in that regard.
[114] Mr Harrington traces his own attempts to settle from his offer to sell his shares for $7.73 each in June 2014 when TML (it seems) had more assets. He was prepared to ‘sell and go’. However, Mr Wilding wanted to argue “loss of value” to TML by then, and stock neglect, to impact on the value of the shares. On 4 September 2014, Mr Harrington offered to buy Mr Wilding’s shares and Mr Hong’s shares, at $4.00 each, more than the price determined in the interim judgment, but that is not for comparison against the judgment. There was no response. On 4 July 2015, the defendants offered to sell their shares for $5.08 per share, again exceeding the amount determined by the Court. This took into account amounts that Mr Wilding owed to TML which he has repaid, reflected in the interim judgment. He would not have had to repay TML in excess of $300,000.00 had he accepted the proposal. Another offer to purchase his shares at $4.08 per share was made, with adjustment for the debts owed by Mr Wilding to TML. This is more than the Court determined as of November 2016.
There was no response. Mr Wilding said he should be the buyer, not the seller of shares, but the submission remains that he had a chance to put an end to the dispute by accepting a good price for his shares and it is submitted he could have started his own stud on TMPL land. Instead, he said he was a buyer only, but contemplated sale to an angel investor in 2013, and put Te Mania on the market in 2014.
[115] I have referred to the offer on 3 June. The 23/26 June offer was couched differently to the other offers. For completeness, I refer to the following. On 15 June
2016, Young Hunter for Mr Harrington said he would purchase Mr Wilding’s shares for $3.80 per share or sell for $3.65 per share, with no costs. This offer was better than the final share valuation of $3.43 per share, after adjusting for liquidation costs. However, Mr Wilding fought for and won the right to acquire the shares, so I disregard this offer. On 16 June 2016, the defendants offered to sell their shares for $3.10 per share and to pay $150,000.00 for the transfer of the 5.4 hectare pump shed land and assignment of the DOC licence. That offer was thus 33 cents less per share than the figure fixed by interim judgment. Mr Dale’s proposal of 17 June 2016 counter-offered at $3.00 per share with 5.4 hectares of land to be purchased for $220,000.00 and the DOC land to remain under Mr Wilding’s control. Mr Russell re-presented the offer of
16 June 2016, and repeated it on 17 June 2016, at $3.10 per share, $150,000.00 for the pump shed land, and assignment of the DOC licence, the last offer before trial. These are not “clear” offers for direction comparison with the judgment. That of 3 June was closer.
[116] On 23 June 2016, Young Hunter proposed that trial be restricted to fix the fair valuation of the shares and all claims discontinued. Mr Wilding could acquire the shares. The costs implications were pointed out should Mr Wilding not accept this proposal. His response was that the trial had begun. Lane Neave wrote on
26 June 2016 confirming the Young Hunter proposal of 23 June 2016, and time was extended for a reply. On 27 June 2016, Mr Wilding rejected that offer, and said that the proposal made no allowance for the damages claims against TML and the defendants, nor costs. The time for acceptance ran out.
[117] I do not have regard to all the offers above other than to recognise the spirit of compromise was advanced by the defendants and Mr Harrington and Mr Wilding also
made an effort. However, only the offers of 2 June and 23/26 June 2016 in my view bear on the question of increased costs in my judgment as they have the stamp of immediacy, just before and at the commencement of trial, and are directly referable to judgment.
[118] The failure by Mr Wilding to accept what are submitted “reasonable offers of settlement” is submitted to influence costs. Mr Hunt and Mr Light recognise that there must be allowance for the fact that the value of TML between March 2016 and November 2016 fell by about $800,000.00, in part by seasonal variation associated with crop and stock operations. However, through the series of offers made from
3 June 2016, it is submitted that Mr Wilding would have been better off by accepting one of these proposals than taking the case to its litigation conclusion. He is submitted to have declined to settle because he wanted his and TMPL’s claims to impact on the share value, so the defendants would lose value by the impact of the TMPL claims and otherwise have to offset the amount received for their shares by their liability under the claims against them, even if they got some of that liability back in the share valuation of TML.
Category and Banding
[119] Mr Hunt submits Category 3 should apply across the board apart from
Mr Harrington’s earlier winding up proceedings, for which Category 2 is said to have been agreed on 28 June 2016.
[120] As with the WHHL defendants, Band B is submitted applicable, with some steps in Category C. Costs so calculated are subject to an increased costs claim. The Band C steps include steps 20 and 21, (see Schedule 3). For discovery and inspection Band B 2.5 days and 1.5 days are submitted insufficient. For step 31, preparation of list of issues, authorities and a common bundle, 2.5 days is submitted insufficient. Step 33, preparation for hearing, is not adequately addressed by three days under Band B.
“Success”
[121] Judgment as to “success” in the end requires a nuanced approach, but first involves consideration of the various claims and counterclaims, then standing back to consider success, failure or neutrality of outcome viewed overall. This layering of a particularised analysis and a more impressionistic view of the result is a case specific exercise, such as the way in which the litigation has been conducted by a party. I say now that I do not accept Mr Harrington was neutral as to who bought the shares,
Mr Wilding or him. He opposed Mr Wilding in this regard, whether by submitting he and not Mr Wilding should have the chance, or later by seeking liquidation rather than
Mr Wilding being given the opportunity to buy the shares.
[122] As to overall success and failure, Mr Wilding is submitted to have failed in all his claims for damages or compensation and focus should fall on the valuation of shares unaffected by the damages claims. While he gained the shares in the end, despite the failure of his monetary claims, that was only what he had been offered by Mr Harrington and the other defendants, and it is submitted he should be liable for Mr Harrington’s costs other than the malicious prosecution/abuse of process claim and the liquidation proceedings for which costs it are said, have been agreed at $10,481.00, together with Mr Hagen’s fee which had not been agreed. Counsel submit that personality differences caused Mr Wilding to react in the way that he did to make claims that were not upheld. Scale costs for the malicious prosecution claim are
$17,490.00 but because of the submitted overlap with s 174 issues, it is submitted they should be reduced to $7,500.00. I say now that I do not agree with that as these claims in tort stood on their own and were employed in the s 174 setting so Mr Wilding should have full advantage.
[123] The semen valuation was not resolved by the interim judgment, and dispute developed as discussed above. The defendants say they should have costs for that exercise because it is part of an overall proceeding where they have succeeded. They took a pragmatic commercial approach to a relatively low value item and finally settled for $75,000.00, but they were prepared to accept less than that. As of 28 November
2016, the second, fourth and fifth defendants said they would accept $50,000.00 as the
semen valuation and take the discard list semen which Mr Wilding said had no value. That was rejected.
The uplift sought by Mr Harrington
[124] The principles behind the award of standard Scale, increased, and indemnity costs were addressed by Baragwanath J in Bradbury v Westpac Banking Corporation.13 The distinction is drawn between the standard scale applying by default, increased costs where a party has failed to act reasonably, and indemnity costs where a party has behaved very badly or very unreasonably. The last is exceptional, and thus requires exceptionally bad behaviour. Increased costs may be ordered where unnecessary steps are taken, where a party has failed to admit facts or other evidence, or legal argument, or failed without reasonable justification to accept an offer of settlement. Mr Harrington does not seek indemnity costs, rather a 75 per cent uplift. The first step in the process is to categorise, then address time bands, then increased costs if any of the grounds in r 14.6(3) are made out. An increase of 50 per cent over scale costs may apply for a step unnecessarily forced on a party, sometimes more. Costs can be awarded in relation to an application for costs.
[125] Mr Harrington says that he is entitled to, but does not seek, costs on an indemnity basis as Mr Wilding ran damages claims for what Mr Hunt describes as a “hopeless case”. Otherwise, Mr Wilding’s conduct in the litigation is submitted relevant, to include the hacking of emails which gave him a litigation or strategic advantage, the alleged use of Mr Ryan to send emails accusing Mr Harrington of stock neglect, and the fact that the allegations against Mr Harrington were hurtful, and part of a campaign by Mr Wilding to have him leave Te Mania. A claim in negligence against Mr Harrington arising out of stock neglect was not available at law, as TML’s counsel Mr McKenzie, advised. Mr Harrington submits that allegations of deliberate stock neglect should never have been advanced and that Mr Wilding redacted an email from Mr Scanlon, for his own purposes, but no finding has been made to this effect. Nor has a finding been made that Mr Wilding campaigned to have Mr Harrington leave Te Mania. Overall, Mr Harrington seeks an uplift for Mr Wilding’s pursuit of
claims that lacked merit, for his failing to accept the offers of settlement that would
13 Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400.
have put an end to the litigation. Uplifts have been ordered of up to 75 per cent,14 and this is submitted appropriate in this case and while actual costs are not determinative, Mr Harrington incurred costs of $587,937.50.
D4. MR WILDING’S REPLY TO THE DEFENDANTS’ SUBMISSIONS
[126] Faced with these large costs claims Mr Wilding replied. I record this and then address the defendants’ replies under “Discussion”.
[127] Mr Dale submits this is not a Category 3 proceeding, as there is nothing out of the ordinary or of particular legal or factual complexity, it was simply a trial that was “long and draining”. He submits that there was nothing particularly complex about the legal issues, and most issues fell for factual determination.
[128] He resists a finding that Mr Harrington succeeded on all issues except the malicious prosecution/abuse of process claims as he tried and failed to stop
Mr Wilding having the right to acquire the shares and he was not “neutral” in that regard. He also says Mr Harrington failed in his s 174 claim to wind up TML, failed in the earlier liquidation proceedings, and succeeded “only in part” with the stock neglect issue, as there was serious stock neglect, but it was not held to be deliberate.
[129] Mr Dale says the second, fourth and fifth defendants did not support
Mr Wilding’s case to acquire the shares until near the end of the trial. When Mr Harrington pleaded s 174 counterclaim allegations against Mr Wilding, they replicated those.
[130] As to which party/parties succeeded, Mr Dale referred to Driessen v Earthquake Commission.15 He emphasised that the parties all had their qualities, and once held a mutual intention to advance the interests of TML. He submits that avoiding liquidation of TML was critical to protect TML as a going concern, and Mr Wilding achieved that. Mr Wilding succeeded in acquiring the shares and had to fight for that, resisting liquidation at the suit of Mr Harrington twice. To achieve this, he had to resist “aggressive counter attacks” made on him, including the
14 For example, Mueller v Hendren (2009) 19 PRNZ 432.
15 Driessen v Earthquake Commission [2016] NZHC 1048 at [25].
malicious prosecution claim. His concerns about stock neglect he submits were to a large extent upheld on the facts.
[131] The stock valuers’ costs and those of the accountancy experts were inputs into the valuation process. Everyone had to engage experts and to agree on valuation principles. The valuation issues included goodwill, sought by Mr Harrington then abandoned, liquidation costs, commission on sales, and the value of the assets.
Mr Dale submits that the experts’ costs should be borne equally by the parties, because the result is essentially neutral. While a seasonal adjustment to the balance sheet was ordered in the sum of $200,000.00, Mr Dale says that did not add to costs, but of course it did involve evidence and submissions.
[132] The settlement proposal of 23 June 2016 is submitted to have come “so late”, that it is irrelevant in assessing the reasonableness of Mr Wilding’s response. I say now that it is never too late. By that date, Mr Dale says there were claims mounted for stock neglect and the lease of Lagoon Flat, which it is submitted were not found to be “hopeless”, as opposed to the cases mounted at trial and before for liquidation of TML and malicious prosecution/abuse of process. Mr Wilding’s allegations of stock neglect are submitted to have been properly pursued, although in the end it only would have been relevant to whether he or Mr Harrington could buy the shares, and that only fell away when this outcome was conceded. Mr Harrington at no stage admitted the severely depleted stock condition when the circumstances cried out for an open acknowledgement of that. Mr Wilding was entitled to have legitimate concerns about the stock neglect, Mr Harrington’s determination to liquidate TML, and the availability to TML of the part irrigated Lagoon Flat land, in a drought prone area.
[133] No one anticipated the trial would take seven weeks, and Mr Dale submits that is not Mr Wilding’s responsibility, and that he was cross-examined beyond any useful or necessary extent. Mr Heyward did not have to be called as a witness about email hacking, as it was a fact, and calling him was an expensive and unnecessary “gambit” on the part of the defendants, so disbursements for his attendance should not be the subject of a costs order. Other allegations against Mr Wilding are submitted to be hopeless, such as that he failed to adequately market and advertise the annual bull sale, as there was no persuasive evidence to that end.
[134] Mr Dale submits that there was no agreement as Mr Harrington asserts about costs of his winding up proceeding, and indemnity costs should be awarded for that as but for Mr Wilding’s resistance, the company would have been liquidated when there was no proper case. Band C is opposed for the statement of claim as it is not a particularly lengthy or complex document. The defendants seek Band B for their counterclaim. The memorandum referred to does not justify Band C, and Mr Harrington accepted Band B. If Band C is fixed, Mr Dale submits there should be an allowance for Mr Harrington’s failed counterclaim. Joint memoranda were prepared for all defendants, so there is overlap in costs. He submits Band B should be fixed for the list of issues, the authorities and common bundle, and there should be no two sets of costs relating to preparation for trial. Mr Wilding seeks three days of hearing fees at Scale 2B for the malicious prosecution and abuse of process claims reflected in Schedule One.
[135] He says that Mr Harrington first offered to settle at $7.73 per share, and would not agree to an independent valuation by PGGW. He resists the allegation that he was prepared to sell TMPL land against TML’s interests, and says he was only trying to attract an investor, and would never have allowed the situation to develop where TML no longer had TMPL land available to it.
[136] Overall, the submission is that it was reasonable for Mr Wilding to think there should be compensation and damages paid to TML when Mr Wilding rejected the offers of 3 June, then 23/26 June 2016. Mr Dale resists the assertion that Mr Wilding prolonged the litigation and says his case was never “hopeless”, but rather there was a hopeless pursuit of the malicious prosecution and abuse of process claims, and liquidation. He says that no party is without some degree of “fault”. He says Mr Wilding “discouraged” access to hacked emails even though he should have brought the hacking to an end, and that he did not use the emails. They were put before the Court because the third defendant chose to produce them. Otherwise, he says that Mr Ryan as a witness was independent and was not “used” by Mr Wilding. Mr Dale resists any uplift on scale costs.
[137] Some residual submissions include Mr Oxnam giving evidence in support of
WHHL’s unsuccessful claim to the DOC land, and Mr Dale submits his costs are not
the responsibility of Mr Wilding. Beeteck was a party to the proceedings but Mr Dale submits no extra costs were incurred by his being joined as he could not have been liable and his interests were bound up with WHHL. The claim against WHHL failed but Mr Dale submits the lease of Lagoon Flat was employed as leverage by the defendants against Mr Wilding to put TML in a difficult position, and Mr Wilding reasonably pursued his claim in this respect.
E. DISCUSSION
[138] In reaching judgment, a sequence is followed as follows:
Discretion Success Valuation
Categorisation } scale costs without allowance for success or other Banding } adjustments, or the exercise of overall discretion Increased (uplift) costs
Indemnity costs
Refusal of or reduction in costs Calderbank and other offers The two offers
Application of the above to the schedules of costs claimed
Overall discretion
Disbursements – Mr Wing and other experts
ConclusionCosts on the issue of costs and interest on costs
Discretion
[139] Costs are at the discretion of the Court,16 although that discretion is not unfettered, and must be guided by the principles in rr 14.2 – 14.5 HCR. Costs will usually follow the event under r 14.2(1)(a) so a party who “fails” with respect to a proceeding or an interlocutory application should usually pay the costs of the successful party. The Rules should be applied to provide a consistent framework for costs orders, but unique features of any case will often find expression in the exercise of discretion.
16 High Court Rules 2016, r 14.1.
Success
[140] As it is of overarching import, I first address “success”. A common-sense approach is to be taken as to which party has succeeded in whole or in part.17 This involves analysis of individual causes of action or claims where monetary or other relief is sought, but on the way to judgment there may be other elements of success and failure, and the conduct of the parties, not reflected in such obvious outcomes, but which are relevant in the exercise of overall discretion.
[141] Mr Wilding gave evidence for the best part of nine days in the 2016 phases of trial, and was recalled and cross-examined at length on several occasions. Mr Dale submits that his very lengthy cross-examination took an “extraordinary amount of time”. At trial Mr Dale on more than one occasion complained that this was deliberate, a tactic simply to place financial pressure on him, but I do not reach that conclusion. I am of the view, however, that a great deal of time was spent in the very determined pursuit of allegations against Mr Wilding which were really quite straightforward, such as email hacking and the mixing of Wilding finances with TML accounts. Such issues were well laid out before trial began, and warranted only limited evidential testing.
[142] Mr Dale’s primary submission is that by an overall measure of success and failure costs should lie where they fall, but otherwise he referred to judgments which calculate an off-setting of costs where a party had success and failure. I do not find that sort of calculation apposite here because the evidence conflates claims for damages or compensation with the many other issues advanced as relevant to who might acquire the TML shares, or whether TML should be liquidated. Nevertheless, there are some clear “wins” and “losses” which must be recognised. The complexity for this costs judgment lies in reaching a fair and objective conclusion, when all outcomes are brought to account. Overall, the Court must do justice to all sides.
[143] There is something to be gained in coming to judgment by looking at a case where the Court addressed a mixed bag of success and failure. The nuances of the evaluation of success, and the “netting” of success and failure, were demonstrated in
17 Driessen v Earthquake Commission, above n 15.
a more simple setting by the Court of Appeal in Paper Reclaim Ltd v Aotearoa International Ltd.18 The Court had clear-cut causes of action before it. Aotearoa pleaded seven causes of which five failed and one stood adjourned, so only one cause of action succeeded, and even that succeeded only in part. On the face of it that suggests Aotearoa failed, but this degree of relative success and failure was accounted for by the Court based on how much trial time was spent on issues on which each party succeeded. The issue on which they had success went to the fundamental issue of whether an oral contract could be unilaterally discharged. About 70 per cent of the trial was spent on the matter on which Aotearoa succeeded and 30 per cent on matters where Paper Reclaim was successful. Using the number of days at trial the Court netted that to 10 days for which Aotearoa was entitled to costs, working from the premise that a “no costs” award applies where a plaintiff and a defendant have been equally successful.
[144] Here the position is more complex, because discrete elements of the monetary or property claims failed on all sides, and the judgment comprehends some of those same matters in the s 174 setting. The malicious prosecution claim overlapped with the s 174 proceeding from Mr Harrington’s perspective, directed against Mr Wilding’s bona fides. A striking example of the contest in the s 174 context is the number of personal allegations against Mr Wilding made by Mr Harrington, overall said to disqualify him from having the right to purchase the shares. These allegations included the hacking of emails. A great number of separate allegations of “oppressive” conduct were pleaded by Mr Harrington, most of which were repeated in the pleading of the second, fourth and fifth defendants to establish the s 174 jurisdiction. This is relevant in assessing overall success and failure, and in the exercise of discretion. Beyond that, Mr Wilding says the defendants behaved in a way that should be reflected in costs, and in this they reciprocate.
[145] On the threshold issues for judgment as to (for most of the trial) who might buy the shares, and (second) whether TML should be liquidated, Mr Wilding succeeded against Mr Harrington notwithstanding elements of his conduct which were properly criticised. On the other issues he had wins and losses. He failed in his very
18 Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZCA 544, (2007) 18 PRNZ 743.
personal allegations of deliberate stock neglect and there being a strategy to bring down TML.
[146] His “success” in that regard and some elements of the valuation exercise must involve analysis of offers which the defendants say should have been accepted by
Mr Wilding, and a finer grained analysis is required of the components of the valuation. The share valuation was significantly affected by the duration of the trial, which brought seasonal elements into play, and that must not be ignored.
[147] In the end, judgment was reached under s 174 based on the certain ungovernability of TML, but the relief sought, whether of liquidation or the right to buy the shares, was based on looking forward and back, as to whether Mr Wilding or
Mr Harrington behaved in such a way that they should not have the chance to buy the shares, or whether the company should otherwise be liquidated. There were broader considerations such as the uncertainty of the outcome of liquidation and the prospect of further claims by TML in Mr Wilding’s hands. Mr Wilding says there is success and failure all round but it is unarguable that on several major claims he was unsuccessful, although some evidence in those respects remained relevant to non-monetary outcomes, such as whether the stock was in a seriously neglected condition and whether Lagoon Flat was used against TML, by WHHL not making it available to it but leasing to Terra Firma, whatever the legal position. Mr Dale submits that Mr Wilding was motivated throughout to protect TML and in that he succeeded, despite the defendants saying that he acted to the contrary as he was prepared to sell TMPL land and deprive TML of occupation. That was never finally tested but Mr Wilding certainly left the impression Wilding interests came first.
[148] I return to the most visceral allegation, that the young stock had been deliberately neglected by Mr Harrington. Mr Wilding’s concerns were held justified, to the extent the defence of hard farming, winter, and selenium deficiency did not succeed. This was potentially relevant to the s 174 outcome in Mr Wilding’s favour, although there was no evidence of loss to TML, as Mr Dale had submitted on opening. There was no legal basis to allege the defendants caused loss to TML by not employing this stock neglect allegation against Mr Harrington’s employment claim. Stock neglect occupied a great deal of trial time and many witnesses. Interim judgment held
there was a serious risk to the stock and to TML, but that was saved through excellent interventions and TML’s genetics. There was clearly relevance in this issue, of threat to the stud’s reputation and thus to the fate of TML, as to whether Mr Harrington or
Mr Wilding should have the opportunity to acquire the shares. In the end, this did not influence that outcome because Mr Harrington withdrew his claim in that regard, but until then it was a live factor. While Mr Dale says the costs of trial for the stock neglect issue should be met by Mr Harrington, the merits of Mr Wilding’s position are offset by his allegation of deliberate stock neglect and his failure to establish any loss. I accept there was relevance in the fact of stock neglect for the s 174 cause, and that there was some attribution of fault to Mr Harrington, although not of deliberate neglect.
[149] Mr Wilding’s own “misconduct” was pleaded and developed in evidence in intense detail by Mr Harrington. The WHHL defendants pleaded much the same allegations against him as did Mr Harrington, so in that sense were engaged in an outcome which involved judgment about Mr Wilding’s conduct, although they did not seek the opportunity to buy his shares, nor in the end pursue liquidation of TML as did
Mr Harrington. Their complete success in the monetary s 174 claims against them is tempered by the fact they did not distance themselves from the pleaded allegations, although they accepted Mr Wilding could purchase the shares after Mr Harrington withdrew in that regard, and liquidation remained their alternative ground for relief.
[199] I conclude that Mr Wilding should have accepted the offer to confine issues to valuation, and that warrants costs recognition. Nevertheless, judgment must comprehend the time which would have been taken at trial on valuation issues if the offer had been accepted. The whole purpose of the offer to confine trial was to remove all litigation elements except valuation, which exercise has, and would have, taken in my estimation, two weeks of trial. “Success” does not figure any longer in the period after 29 June 206 as the offer to confine trial meant all risks of success and failure would be avoided, except as to valuation. The costs incurred to that point would also lie where they fell. They had been already incurred, not avoided altogether. The risks of litigation over those issues would have been avoided by this offer if accepted.
[200] There will be no uplift based on the Calderbank offer as it contained an element in relation to the DOC land which counts against it but otherwise it was close to a reasonable offer which by the Rules may be brought to account. However, I have concluded that would be to unfairly compare the valuation fixed at trial with that offer, and the overarching factor is that this trial went far longer than it should have done and that significantly influenced the share valuation. All parties had their part to play in this, given the intensity of the case mounted first by Mr Wilding in his various allegations, including monetary claims, and then in the particularised set of allegations against him, primarily pursued by Mr Harrington, but pleaded by the other defendants. However, the offer to confine trial to valuation should have been accepted.
Disbursements – including Mr Wing, and experts
[201] Mr Wing was pivotal to the fact that TML exists as a going concern today. His work and the support of Heartland Bank, together with the remedial work of William Wilding, are recorded in the judgment and Reasons as instrumental to its survival. It was really the contest between Mr Wilding and Mr Harrington for himself and the other defendants which required Mr Wing’s engagement and the expense incurred. Viewed in the round, it was an expense required, and his stewardship was successful. At present his costs lie in TML, thus impacting on Mr Wilding and his interests. Those costs should remain there without separate adjustment, but I bring this to account in the exercise of discretion as all parties should share those costs. The other disbursements sought are subject to orders in the exercise of discretion.
Conclusion
[202] I have recalculated the schedules for categorisation and banding, but that does not reflect success and failure, the offer to confine trial, any resultant uplift or reduction in costs, nor the overall exercise of discretion.
[203] Costs claimed by the defendants are for the whole of the trial, with limited recognition by them of Mr Wilding’s “success” except in the three causes to which he is entitled to costs: malicious prosecution/abuse of process, the DOC licence claim by WHHL, and Mr Harrington’s separate liquidation proceedings. I reach judgment to reflect overall success and failure using a measure of “success” not confined to monetary outcomes before addressing the offer to confine trial which I conclude should have been accepted.
[204] Mr Wilding’s principal adversary was Mr Harrington and vice versa. They contested the right to purchase the shares until late in trial, after which they still contested liquidation. Mr Wilding aimed his most trenchant criticism at
Mr Harrington in respect of deliberate stock neglect and it can in a sense be understood why he did so, as given Mr Harrington’s first class historic performance, something went very wrong. In turn, Mr Harrington vigorously pursued his claims for malicious prosecution and abuse of process and earlier liquidation, and lost. These were very personal allegations, wounding to both decent men.
[205] From the beginning to the end of the trial, and before, Mr Wilding fought against liquidation of the company, and sought the right to purchase the shares.
Mr Wilding should have accepted the offer to confine trial, but seriously misjudged his claims for damages and compensation which would impact on share valuation. Once trial began he had to fend off the multiplicity of allegations against him which Mr Hunt and Mr Light submitted should count against him having the right to buy the shares. I do not accept Mr Dale’s submission that it was by then too late as trial had begun – these were early days in the trial. Mr Wilding was undoubtedly successful in this respect against Mr Harrington, and the WHHL defendants pleaded against him on similar lines for the purpose of s 174. Mr Wilding succeeded against Mr Harrington and the other defendants in respect of the allegations regarding his conduct in entering
the GoBeef contract, also reflected in the valuation outcome. He succeeded against the WHHL defendants in respect of the DOC grazing licence. He won and lost on other sub issues within the share valuation. He failed in all his damages and compensation claims.
[206] Leaving aside the 23/26 June settlement offer, there is a sense of balance about the litigation outcomes between Mr Wilding and Mr Harrington which to a degree lends itself to Mr Dale’s submission that costs should lie where they fall. That submission does not have the same weight against the second, fourth and fifth defendants. He had less and limited success against these defendants, and they had undoubted success against him, but in my view there is more to it than a superficial analysis of wins and losses.
[207] Mr Wilding was the author of a good deal of the trial’s duration in his unsuccessful pursuit of monetary claims, but he had distinct successes, none more so than in twice resisting the attempt to have the company liquidated by Mr Harrington, and in gaining the right to acquire the shares. There must be allowance for that and the more mechanical approach to costs urged on me by the defendants, particularly Mr Harrington, fails to recognise this success, who in effect says he has succeeded overall in resisting the separate allegations against him whether they have a monetary element to them or not. He successfully resisted the allegation of deliberate stock neglect, as part of a concerted strategy of the defendants to get out of TML.
[208] He says in the context of the offers before trial he should have an uplift for
Mr Wilding’s conduct over all, or the way he prosecuted his claims, or should have costs from 29 June 2015. He does not allow at all for his contest with Mr Wilding for the TML shares and liquidation of TML which ran throughout most of the trial. He simply proposes an offset of limited costs where Mr Wilding succeeded.
Mr Harrington’s approach does not reflect success or otherwise viewed overall. I must again bear in mind the TMPL claims settled as to costs, which cannot be reflected in this judgment.
[209] By their Statement of Defence and Counterclaim dated 24 May 2016 the second, fourth and fifth defendants were clearly aligned with Mr Harrington in terms
of relief under the s 174 counterclaim. They alleged oppressive conduct on the part of Mr Wilding and concluded that “in all the circumstances it is just and equitable that TML be placed into liquidation”. That position changed at the commencement of trial. In opening submissions Mr Russell characterised the relief question for the Court under the counterclaim as what price either Mr Wilding or Mr Harrington should pay for the shares. Liquidation of TML was sought as alternative relief. That position was maintained throughout as reflected in closing submissions. WHHL lost the DOC licence claim. Otherwise, the defendants succeeded in all the monetary claims made against them. Their position regarding the offers to settle is the same as that of
Mr Harrington.
[210] There were elements of behaviour by all parties including WHHL, Beeteck and Mr Wong, that in the exercise of discretion should be considered. They took
Mr Harrington’s position on nearly every element of dispute, and their conduct in not resisting the liquidation of TML at his suit was opportunistic and wrong. The Wilding indebtedness to TML through Beeteck became something much more than it was for him to allege a criminal breach of trust. For WHHL through Beeteck to deny the existence of a lease of Lagoon Flat was hard to credit. The tenure of land by TML was left so uncertain and gave rise to a great deal of dispute and all directors, and Mr Harrington as manager, had a play in that. The tepid way in which the WHHL defendants responded to what was found to be serious stock neglect was a provocation, just as they allege Mr Wilding provoked them. It can only be a matter of impression and discretion, but the overall conduct of the parties leading into the litigation should not be ignored as there is a background of very personal antagonism and governance failure in the foundations to this litigation.
[211] The considerations above are wide ranging. The case is unusual in its prolongation and the multiplicity of issues. Reaching a costs conclusion has proved unusually difficult and to a degree caused the regrettable delay in delivery of judgment, but I do not cast responsibility for that. The submissions on costs are lengthy, meticulous and all have merit. They are proportionate to the duration of trial, and the Interim Judgment and Reasons.
Revised Scale costs schedules
[212] I have prepared a revised calculation of costs claimed in the Schedules to this judgment (red inclusions). I have re-categorised and re-banded the defendants’ schedules, but there is no equivalent for Mr Wilding who seeks costs for his three separate causes where he succeeded and does not advance a costs claim based on an overall Scale assessed basis because he says that costs should lie where they fall. It is implicit that he recognises his failure to secure a judgment in damages or compensation against the defendants, and there were several aspects of his conduct which warranted criticism. That is his view of an overall assessment of “success”.
[213] The sequence of considerations reflected in the Schedules is as follows:
(a)The defendants’ costs claims are categorised and banded and new totals are calculated. This does not involve success or failure, the offer of
23/26 June 2016, or the overall exercise of discretion.
(b)“Success” is measured as discussed above. No party has had absolute success. Against Mr Harrington, Mr Wilding won the threshold issues of share purchase/liquidation and the tort claims. He failed in all his other monetary claims and the allegations of deliberate neglect and strategy. He failed in his claims against the other defendants but for the DOC claim, and elements of valuation fell both ways.
(c) There is no uplift for the personal or litigation conduct of Mr Wilding.
(d)There must be recognition of the offer to confine trial. This is a decisive consideration. The comparative measure of success is to be applied against the schedule of costs claimed by the defendants, but there must be recognition that Mr Wilding should have confined the trial to valuation, about 10 days, so approximately four weeks of Court time would have been saved. After 28 June 2015, there should be costs against Mr Wilding for two-thirds of costs by reference to the recalculated schedules. The calculation was not made in this way for
Mr Harrington, so I have made it. The costs incurred before 29 June would have been lain where they fell, not avoided in the litigation.
(e)The overall exercise of discretion, to do justice to all parties, is reflected in the final analysis. I have stood back to reflect on the genesis of the dispute, which includes a laxity in governance about land tenure, and lessor/lessee relationships which found much of these proceedings. The proceedings took far too long and the actual costs reflect that. The Schedules reflect these elements in the final outcome.
The final assessment
[214] These calculations are necessarily less than fine grained, but reflect such a complex web of considerations, and the end result brings to account that Mr Wing’s costs lie in TML, a cost to Mr Wilding and his family which all parties should bear. It also comprehends Mr Wilding’s entitlement to costs against Mr Harrington, and WHHL. It also recognises the TML defence costs absorbed by TML.
[215] The offer of 23/26 June dictates that Mr Wilding should pay some costs to
Mr Harrington but I otherwise gave close consideration to a “no costs” order before that. Against the other defendants there is no doubt some costs are payable.
[216] In coming to final judgment that some costs be ordered in Mr Harrington’s favour, I am most influenced by the following factors. The first is that viewed overall,
Mr Wilding had distinct success with regard to share purchase and avoiding liquidation, and the malicious prosecution/abuse of process claim, and in preventing Mr Harrington from winding up TML, but he failed completely in his claims against the defendants, including Mr Harrington, and separately in the TMPL claims which of course impacted on him as a shareholder, but excised from costs. An overall view is that there was some equality of success. However, Mr Harrington’s part in the offer to confine trial would have seen the merits of all but valuation set aside. The costs of the valuation exercise would still have been incurred, but the costs of all other issues would have fallen away without recognition of success or failure, an effective draw at that date. So, Mr Harrington should at least have his Scale costs after that offer was rejected, on 28 June 2016 allowing for a one-third deduction for a valuation trial. As
to the costs before the offer had been incurred, the offer, if accepted, would not have “prevented” those costs. Thus, while the overall measure of success is about even, in order to recognise the merits of the offer and just what it would have meant to all parties, particularly here Mr Harrington, an uplift on costs is warranted in excess of the recalculated Scale. I therefore take the estimated Scale costs post 28 June 2016 and uplift by 50 per cent as reflected in the calculation in Schedule 3.
[217] I regard success otherwise between Mr Harrington and Mr Wilding to reflect in no costs for the litigation phase 1 January 2015 to 28 June 2016.
[218] Against the WHHL defendants he failed in most respects but the DOC licence claim. The defendants overall had a measure of success in the valuation, but I would not have awarded costs on the outcome, had that been the only issue, and do not do so here. Schedule 2 reflects the costs recalculated for the period from 29 June 2016 to
28 April 2017, less a one-third allowance for the costs which would have been incurred in any event and an uplift of 50 per cent. In the litigation phase from 1 January 2015 to 28 June 2016, success by the above reasoning lies largely with the second, fourth and fifth defendants, but Mr Wilding succeeded in the DOC licence claim. In order to avoid a doubling up in this respect, I have allowed for approximately one-half of the fees properly claimed by him in that regard under Scale 2B.
[219] The the exercise of discretion in trying to achieve justice between all parties, is to recognise that Mr Wilding has regained control of the Te Mania Angus Stud, with his family, and with his lands, will go forward with the vision of the family and the Stud, whereas the defendants have done poorly with their investment when actual costs and the share value are brought to account. That may not be the case with the WHHL holding of Lagoon Flat of course. After the calculation described, I have thought about the conduct of the parties which laid the seeds for much of the dispute and a rounding down to reflect the overall excessive litigation. I allow one-half of the disbursements, as these cover expenses relevant to all trial issues. Mr Wilding has his own disbursements.
[220] The end result is reflected in the Schedules.
Costs on the issue of costs and interest on costs
[221] Costs are sought in respect of these very thorough and lengthy submissions, accompanied by large volumes of authorities, bundles of supporting documents, and associated memoranda. Each party has had some wins and some losses and I decline to make an order for “costs on costs”.
[222] Mr Hunt submitted I should make the equivalent of an order for interest on costs. The law he cites is against this but there is a “use of money” impact on the defendants by delay in judgment. It is, however, very small, and would not impact the broad exercise of discretion which is at the date of judgment.
F. DISPOSITION
[223] Orders for costs are made in terms of the Schedules to this judgment.
Mr Wilding is to pay the second, fourth and fifth defendants $201,000.00 costs and
$30,000.00 disbursements. He is also to pay the third defendant $103,500.00 costs and $27,500.00 disbursements. I reserve leave for any clarification required as to mathematical calculation.
Note:
This Judgment is reissued because Schedule Three has been amended under the
HC Rule 1.9 “slip rule” given errors which do not affect the orders under para [223] above.
…………………………………….
Nicholas Davidson J
Solicitors:
Lane Neave (Christchurch) Young Hunter (Christchurch)
Ewart & Ewart (Auckland)
Cc: P J Dale, Barrister, Chancery Street Chambers (Auckland)
SCHEDULE ONE
COSTS AND DISBURSEMENTS CLAIMED BY FIRST PLAINTIFF, TIMOTHY WILDING
2015-409-232: WHHL v WILDING SCHEDULE OF COSTS & DISBURSEMENTS
Costs
2B basis - $2,230 per day
Step no.
2
Description
Commencement of defence by defendant
Allocated days
2.0
$ value
4,460.00
9
Pleading in response to second amended statement of claim
0.6
1,338.00
20
List of documents on discovery
2.5
5,575.00
21
Inspection of documents
1.5
3,345.00
31
Preparation of common bundle
2.5
5,575.00
33
Preparation for hearing
3.0
6,690.00
34
Appearance at hearing for principal counsel
2.0
4,460.00
35
Appearance at hearing for second counsel
1.0
2,230.00
Total costs 15.1 $33,673.00
Disbursements $ value Filing fee on statement of defence
110.00
Filing fee on statement of defence to second amended statement of claim
110.00
Total disbursements
$220.00
TOTAL COSTS AND DISBURSEMENTS $33,893.00
SCHEDULE ONE
COSTS AND DISBURSEMENTS CLAIMED BY FIRST PLAINTIFF, TIMOTHY WILDING
2014-409-899: WILDING & ANOR v TML & ORS (MALICIOUS PROSECUTION and ABUSE OF PROCESS) SCHEDULE OF COSTS & DISBURSEMENTS
Costs
2B basis - $2,230 per day
Step no. Description Allocated days $ value
2 Commencement of defence by counterclaim defendant 2.0 4,460.00 9
Pleading in response to counterclaim
0.6
1,338.00
20
List of documents on discovery
2.5
5,575.00
21
Inspection of documents
1.5
3,345.00
31
Preparation of common bundle
2.5
5,575.00
33
Preparation for hearing
3.0
6,690.00
34
Appearance at hearing for principal counsel
3.0
4,460.00
35
Appearance at hearing for second counsel
1.5
2,230.00
Total costs 16.6 $37,018.00
Disbursements $ value Filing fee on statement of defence to counterclaim
110.00
Total disbursements
$110.00
TOTAL COSTS AND DISBURSEMENTS $37,128.00
SCHEDULE ONE
COSTS AND DISBURSEMENTS CLAIMED BY FIRST PLAINTIFF, TIMOTHY WILDING
Costs
CIV-2015-409-777: HARRINGTON v TML SCHEDULE OF COSTS & DISBURSEMENTS
2B basis - $2,230 per day
Step
Description Allocated
$ value
no. days 7 Filing notice of appearance 0.2 $446.00 11 Filing memorandum for mention 28/1/16 0.4 $892.00 22 Filing application for stay 0.6 $1338.00 11 Filing memorandum for mention 11/2/16 0.4 $892.00 12 Appearance at mentions hearing 11/2/16 0.2 $446.00 24 Preparation of written submissions 1.5 $3,345.00 25 Preparation of bundle for hearing 0.6 $1,338.00 26 Appearance at hearing (1 day) 1.0 $2,230.00 2 Commencement of defence 2.0 $4,460.00 Total c osts 6.9 $15,387.00
Disbursements $ value Filing fee on notice of appearance
$110.00
Filing fee on application for stay $500.00 Filing fee on statement of defence $110.00 Airfares $906.00 Christchurch taxis $61.31 Auckland Airport parking $102.00 John Hagen ($7,475 + GST) 8,596.25 Total disbursements $10,384.56
$10,385.56
TOTAL COSTS AND DISBURSEMENTS $25,771.56
$25,772.56
SCHEDULE TWO
COSTS CLAIM – SECOND, FOURTH AND FIFTH DEFENDANTS
Amended Appendix 1 – Calculation of Scale Costs
| Step No1 | Description of Step | Days | Time Band | Amount | Judgment |
| From commencement of the proceeding to 30 June 2015, category 3 had a daily recovery rate of $2,940.00 per day Category 2 had a daily recovery rate of $1,990.00 | |||||
| 22 | Filing opposition to interlocutory application - 30 January 2015 | 0.60 | B | $1,764.00 $1,194.00 | 2B |
| 11 | Filing memorandum for mentions hearing - 4 February 2015 | 0.40 | B | $1,176.00 $796.00 | 2B |
| 12 | Appearance at mentions hearing - 4 February 2015 | 0.20 | B | $588.00 $398.00 | 2B |
| 10 | Preparation for first case management conference - 24 March 2015 | 0.40 | B | $1,176.00 $796.00 | 2B |
| 11 | Filing memorandum for case management conference - 24 March 2015 | 0.40 | B | $1,176.00 $796.00 | 2B |
| 12 | Appearance at case management conference - 24 March 2015 | 0.30 | B | $882.00 $597.00 | 2B |
| 2 | Commencement of defence - 8 May 2015 | 6.00 2.00 | C B | $17,640.00 $3,980 | 2B |
| 4 | Counterclaim - 8 May 2015 | 4.80 1.60 | C B | $14,112.00 $3,184.00 | 2B |
| 11 | Filing memorandum for case management conference - 2 June 2015 | 0.40 | B | $1,176.00 $796.00 | 2B |
| 12 | Appearance at case management conference - 2 June 2015 | 0.30 | B | $882.00 $597 | 2B |
| From 1 July 2015 to the present, category 3 had a daily recovery rate of $3,300.00 per day Category 2 had a daily recovery rate of $2,230.00 | |||||
| 11 | Filing memorandum in respect of timetable orders - 13 October 2015 | 0.4 | B | $1,320.00 $892.00 | 2B |
| 11 | Filing memorandum for case management conference – 11 November 2015 | 0.40 | B | $1,320.00 $892.00 | 2B |
| 12 | Appearance at case management conference - 11 November 2015 | 0.30 | B | $990.00 $669.00 | 2B |
| 9 | Filing amended statement of defence - 25 January 2016 | 2 0.60 | C B | $6,600.00 $5,575 | 2B |
| 11 | Filing memorandum for case management conference - 9 February 2016 | 0.40 | B | $1,320.00 $892.00 | 2B |
| 12 | Appearance at case management conference - 9 February 2016 | 0.30 | B | $990.00 $669.00 | 2B |
| 20 | List of documents on discovery – 25 February 2016 | 7.00 | C | $23,100.00 $15,610 | 2C |
| 11 | Filing memorandum for case management conference - 15 March 2016 | 0.40 | B | $1,320.00 $892.00 | 2B |
| 12 | Appearance at case management conference - 15 March 2016 | 0.30 | B | $990.00 $669.00 | 2B |
| 11 | Filing memorandum for case management conference - 21 April 2016 | 0.40 | B | $1,320.00 $892.00 | 2B |
| 12 | Appearance at case management conference - 21 April 2016 | 0.30 | B | $990.00 $669.00 | 2B |
| 9 | Filing amended statement of defence - 24 May 2016 | 2.00 0.60 | C B | $6,600.00 $1,338.00 | 2B |
| 21 | Inspection of documents | 6.00 | C | $19,800.00 | 2C |
| 0.5 15 | Preparation for and appearance at pre-trial conference - 9 June 2016 | 1.00 0.5 | C B | $3,300.00 $1,115.00 | 2B |
| 11 | Filing memorandum in response to memorandum for plaintiff - 14 June 2016 | 0.40 | B | $1,320.00 $892.00 | 2B |
| 12 | Appearance at teleconference for pre-trial issues - 16 June 2016 | 0.40 | B | $1,320.00 $892.00 | 2B |
| 30 | Preparation of briefs | 5.00 | C | $16,500.00 | 2C |
| 32 | Preparation of list of issues, authorities and common bundle | 4.00 2.00 | C B | $13,200.00 $4,460 | 2B |
| 33 | Preparation for hearing - June 16 | 5.00 | C | $16,500.00 $11,150 | 2C |
| 34 | Appearance at hearing for senior counsel – 21 June to 28 June 2016 | 6.00 | - | $19,800.00 $13,380.00 | |
| 35 | Appearance at hearing for junior counsel – 21 June to 28 June 2016 | 3.00 | - | $9,900.00 $6,690.00 | |
| 34 | Appearance at hearing for senior counsel – 29 June to 8 July 2016 | 8.00 | - | $26,400.00 $17,840.00 | |
| 35 | Appearance at hearing for junior counsel – 29 June to 8 July 2016 | 4.00 | - | $13,200.00 $8,920.00 | |
| 11 | Filing memorandum in relation to interim management issues – 6 July 2016 | 1.00 0.40 | C B | $3,300.00 $892.00 | 2B |
| 11 | Filing memorandum for case management conference – 25 July 2016 | 0.40 | B | $1,312.00 $892.00 | 2B |
| 12 | Appearance at case management conference - 25 July 2016 | 0.30 | B | $990.00 $669.00 | 2B |
| 11 | Filing memorandum in relation to evidence of Bruce Orr and valuation issues - 19 | 0.40 | B | $1,320.00 $892.00 | 2B |
| 12 | Appearance at case management conference - 21 October 2016 | 0.30 | B | $990.00 $669.00 | 2B |
| 11 | Filing memorandum regarding stock valuation and budget – 27 October 2016 | 1.00 0.40 | C B | $3,300.00 $892.00 | 2B |
| 11 | Filing memorandum regarding livestock and share valuation – 4 November 2016 | 1.00 | C | $3,300.00 $2,230.00 | 2C |
| 33 | Preparation for hearing - November 2016 | 5.00 | C | $16,500.00 $11,150.00 | 2C |
| 34 | Appearance at hearing for senior counsel – 7 November to 2 December 2016 | 18.25 | - | $60,225.00 $40,697.50 | |
| 35 | Appearance at hearing for junior counsel – 7 November – 2 December 2016 | 8.50 | - | $27,637.50 $18,955.00 | |
| 11 | Filing memorandum regarding valuation issues - 21 November 2016 | 1.00 0.40 | C B | $3,300.00 $892.00 | 2B |
| 11 | Filing memorandum regarding balance sheet and adjustments - 22 December 2016 | 1.00 | C | 2,230.00 $3,300.00 | 2C |
| 11 | Filing memorandum regarding interim management - 20 January 2017 | 1.00 | C | $3,300.00 | |
| 12 | Appearance at case management conference - 23 January 2017 | 0.30 | B | $990.00 $669.00 | 2B |
| 12 | Appearance at case management conference - 17 March 2017 | 0.30 | B | $990.00 $669.00 | 2B |
| 11 | Filing memorandum regarding semen valuation - 20 March 2017 | 1.00 0.40 | C B | $3,300.00 $892.00 | 2B |
| 11 | Filing memorandum regarding share sale - 28 April 2017 | 0.40 | B | $1,320.00 $892.00 | 2B |
| 12 | Appearance at case management conference - 28 April 2017 | 0.30 | B | $990.00 $669.00 | 2B |
| Scale Legal Costs from 1 January 2015 to 28 June 2016 (rounded) | $189,072.00 | $106,000.00 | |||
| Less ½ Mr Wilding’s costs in CIV-2015-409-777 | -$18,500.00 | ||||
| Sub-totalone: | $87,500.00 | ||||
| Scale Legal Costs from 29 June 2016 to 28 April 2017 (rounded) | $175,972.50 | $113,500.00 | |||
| Less 29 June 2016 to 28 April 2017 adjust to exclude estimated valuation component which would have been incurred 331/3% (rounded): | -$38,000.00 | ||||
| 50% Uplift on All Steps After 29 June 2016 (rounded) | $87,986.25 | +$38,000.00 | |||
| Sub-totaltwo: | $113,500.00 | ||||
| Total ScaleLegal CostsSought | $453,030.75 | ||||
| Total by this judgment (sub-total one and sub-total two) | $201,000.00 | ||||
| Disbursements (see over) | $60,043.84 | $30,000.00 | |||
TOTAL (including disbursements) | $231,000.00 | ||||
NOTES: 1. Calculation Scale components before and after 28 June 2016. 48.55% : 51.45% 2. Overall discretion – bring to account all matters in this judgment, the fact Mr Wing’s costs lie in TML, that there are unrecoverable losses from the investment for the defendants, whereas Mr Wilding has Te Mania and its tax losses, TMPL must be excised in costs calculation, and WHHL defendants contributed to the underlying issues by conduct described in the judgment. 3. Disbursements to reflect the valuation case experts.
SCHEDULE TWO
2ND, 4TH & FIFTH DEFENDANTS
Appendix 2 – Disbursements
Filing fees Statement of Defence and
Counterclaim (s.174 relief)
1,350.00 Amended Statement of Defence and
Counterclaim
110.00 Amended Statement of Defence and
Counterclaim
110.00 $1,570.00 Photocopying and other administration expenses NZLS Library charges 41.63 Photocopying 4,743.25 Law Flow 1,330.44 LINZ 84.99 Bank fees 18.00 $6,218.31 Witnesses expenses Property Advisory Ltd (David Oxnam) 2,303.46 AbacusBio Ltd (Simon Glennie) 9,884.63 PricewaterhouseCoopers (Wayne
Munn)
22,353.13 GE NZ 2008 Ltd (Allan Donald) 1,182.77 BDO Christchurch Ltd (Simon Wing) 3,349.43 Rural Livestock Ltd (Simon Cox and
Anthony Cox)
13,052.50 Agri-Gene Pty Ltd (Chris McIlroy) 129.61 $52,255.53 TOTAL $60,043.84
SCHEDULE THREE
THIRD DEFENDANT’S COSTS AND DISBURSEMENTS
| Scale costs until 30 June 2015 (at $2,940 / day) (at $1,990 / day for Category 2) | |||||||||
| General civil proceedings | Band B allocation | Band C allocati on | Occurrenc e | Sub- total | Allowance | Judgment | |||
| Commencement | |||||||||
| 2 | Commencement of defence by defendant | 2 | 1 | 2 | $3,980 5,880 | 2B 2B 2B 2B | |||
| Case management | |||||||||
| 10 | Preparation for first case management conference (including discussion about discovery) | 0.4 | 1 | 0.4 | $796 1,176 | ||||
| 11 | Filing memorandum for first or subsequent case management conference or mentions hearing hearing | 0.4 | 2 | 0.8 | $1,592 2,352 | ||||
| 13 | Appearance at first or subsequent case management conference | 0.3 | 3 | 0.9 | $1,791 2,646 | ||||
| Scale costs after 30 June 2015 (at $3,300 / day) (at $3,300 / day for Category 2) | |||||||||
| Reply | |||||||||
| 4 | Counterclaim | 1.6 | 1 | 1.6 | $3,568 5,280 | 2B | |||
| 9 | Pleading in response to amended pleading | 0.6 | 3 | 1.8 | $4,014 5,940 | 2B | |||
| Case Management | |||||||||
| 11 | Filing memorandum for first or subsequent case management conference or mentions hearing | 0.4 | 15 | 6.0 | $13.380 19,800 | 2B | |||
| 13 | Appearance at first or subsequent case management conference | 0.3 | 12 | 3.6 | $8,028 11,880 | 2B | |||
| Interrogatories, discovery and inspection | |||||||||
| 20 | List of documents on discovery | 7 | 1 | 7 | $15,610 23,100 | 2C | |||
| 21 | Inspection of documents | 6 | 1 | 6 | $13,380 19,800 | 2C | |||
| SCHEDULE THREE HARRINGTON – 3RD DEFENDANT | ||||||||||||
| Interlocutory applications (including applications for summary judgment and for review of interlocutory decisions) | ||||||||||||
| 22 | Filing interlocutory application | 0.6 | 1 | 0.6 | $1,338 1,980 | 2B | ||||||
| 23 | Filing opposition to interlocutory injunction | 0.6 | 1 | 0.6 | $1,338 1,980 | 2B | ||||||
| Trial Preparation and appearance | ||||||||||||
| 30 | Plaintiff’s or defendant’s preparation of briefs or affidavits | 2.5 | 1 | 2.5 | $5,575 8,250 | 2B | ||||||
| 32 | Defendant’s preparation of list of issues, authorities and common bundle | 2 | 1 | 4 | $4,460 13,200 | 2B | ||||||
| 33 | Preparation for hearing | 5 | 1 | 5 | $11,150 16,500 | 2C | ||||||
| 33 | Preparation for hearing | 5 | 1 | 5 | $11,150 16,500 | 2C | ||||||
| 34 | Appearance at hearing for sole or principal counsel | 31 | 31 | $69,130 102,300 | ||||||||
| 35 | Second and subsequent counsel if allowed by Court | 23.25 | 11.6 | $25,868 38,280 | ||||||||
| 36 | Other steps in the proceeding not specifically mentioned | 2 | 1 | 2 | $4,460 6,600 | 2B | ||||||
| 36 | Other steps in the proceedings not specifically mentioned | 0.4 | 3 | 1.2 | $2,676 3,960 | 2B | ||||||
| 3B 2B SCALE COSTS TO THIRD DEFENDANT UNTIL 30 JUNE 2015 (@$2,940 per day) | 3.7 | 12,054 | $8,159.00 | |||||||||
| 3B/3C 2B and 2C SCALE COSTS TO THIRD DEFENDANT AFTER 1 JULY 2015 (@$3,300 per day) | 81.9 | 295,350 | $195,125.00 | |||||||||
| Scale costs pre 28 June 2016 | $97,058.20 | |||||||||||
| Scale costs post 28 June 2016 | $102,855.80 | |||||||||||
| Result: Costs awarded Scale costs post 28 June 2016 (rounded) | $103,000.00 | |||||||||||
Less Note2: | -$34,000.00 | |||||||||||
| Result: Adjusted costs post 28 June 2018 (rounded) | $69,000.00 | |||||||||||
Uplift50% | $34,500.00 | |||||||||||
TOTAL | $103,500.00 | |||||||||||
| 307,404 | ||||||||||||
DISBURSEMENTS | 55,300.51 | $27,500.00 | ||||||||||
| TOTAL | $362,704/51 | $131,00.00 | ||||||||||
| NOTES: | |
| 1. | Pre - 28 June 2016 (48.55%) - $97,058.20 From 29 June 2016 (51.45%) - $102,855.80 |
| 2. | 10 days hearing adjusted for valuation only trial. Only 331/3% $34,000.00 |
9
9
0