Young & Associates Limited v Ruscoe - [2012] NZHC 2059

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2012-485-65 [2012] NZHC 2059

UNDER the Companies Act 1993

IN THE MATTER OF Optimisationz Limited (in liquidation) BETWEEN YOUNG & ASSOCIATES LIMITED
Plaintiff

ANDDAVID IAN RUSCOE AND RICHARD GRANT SIMPSON
Defendants

Counsel: C J Tennet and K R Smith for Plaintiff
S R Sparksman and S H Backhouse for Defendants

Judgment: 15 August 2012

In accordance with r 11.5, I direct the Registrar to endorse this judgment with the delivery time of 1:00pm on the 15th August 2012.

COSTS JUDGMENT OF WILLIAMS J

Solicitors:
C J Tennet, Barrister, Wellington
Kensington Swan, Wellington

YOUNG & ASSOCIATES LIMITED V DAVID IAN RUSCOE AND RICHARD GRANT SIMPSON HC WN CIV-2012-485-65 [15 August 2012]

Introduction

[1] The liquidators of Optimisationz Limited (Optimisationz) apply for indemnity or, in the alternative, increased costs under r 14.6 of the High Court Rules. In the substantive proceeding, they successfully defended a claim brought by the present respondent, Young & Associates Ltd, one of Optimisationz’s two remaining creditors (the other being the Inland Revenue Department (IRD)). The respondent had alleged the applicants were in breach of their statutory duties by reaching a settlement with Optimisationz’s shareholders that was too favourable to the
shareholders and too neglectful of creditors’ interests. I disagreed.[1]
[1] Young & Associates Ltd v Ruscoe [2012] NZHC 1438.

[2] The applicants base both applications on the same grounds, namely: (a) the claim brought against them was hopeless; and
(b)by failing to articulate the statutory basis for its claim and by applying for an adjournment pre-hearing for which no grounds existed, the respondent pursued its case in a way that wasted time and caused undue expense; and

(c) the respondent’s submissions contained unfounded allegations,

including allegations of bias.

[3] The respondent opposes. In fact, it submits for several reasons that no costs award at all should be made. First, it submits its claim was made in good faith and had a general public benefit. Second, it raised an untested point which was reasonably arguable. Third, the applicants’ actual costs are being met by company money they are charged with recovering, so a costs award in their favour (indemnity, increased or otherwise) is unnecessary. In the alternative, the respondent says costs should not exceed the lowest (1A) scale costs.

[4] The respondent generally submits:

(a) indemnity or increased costs are inappropriate. The substantive claim was reasonably arguable. There was no actual delay. The respondent’s application for an adjournment before the substantive hearing (which the applicants rely on in part in their application) was caused by the applicants’ failure to disclose relevant information;

(b)scale 2B costs are inappropriate. The issue in the case was relatively simple and disposed of quickly.

Discussion

[5] I see no reason to depart from scale in the present case.

[6] On the one hand, the respondent’s submission that no costs order be made is not tenable. First, I do not accept that any potential benefits of making the initial claim extended to the public…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Young & Associates Limited v Ruscoe

Details

AGLC: Young & Associates Limited v Ruscoe [2012] NZHC 2059
Case: [2012] NZHC 2059
Decision Date: 15 August 2012

CaseChat Overview and Summary

Young & Associates Limited sought to recover costs from the liquidators of Optimisationz Limited. Young & Associates Limited argued that the liquidators were in breach of their statutory duties by reaching a settlement with Optimisationz's shareholders that was too favourable to them and too neglectful of creditors' interests. The liquidators sought indemnity or increased costs under r 14.6 of the High Court Rules, arguing that Young & Associates Limited's claim was hopeless, that it wasted time and caused undue expense, and that it contained unfounded allegations. Young & Associates Limited opposed the applications, arguing that its claim was made in good faith and had a general public benefit, that it raised an untested point which was reasonably arguable, and that the liquidators' actual costs are being met by company money they are charged with recovering. The court found that the liquidators' claim was not sufficiently hopeless to engage r 14.6(4), that the liquidators did not act very unreasonably or unreasonably, and that the extent of any unreasonable conduct was too limited to give rise to a claim for increased costs. The court awarded scale costs to the liquidators, including allowance for preparation for the hearing, but declined to make an allowance for second counsel.

The court awarded costs of $9,880 together with reasonable disbursements to the liquidators.

Orders