Zwiers v Waipa Corporation Limited HC Auckland CIV 2003-404-7359
[2010] NZHC 2301
•17 December 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2003-404-007359
BETWEEN J P ZWIERS Plaintiff
ANDWAIPA CORPORATION LIMITED First Defendant
ANDG H CATLEY Second Defendant
ANDP A VERRY Third Defendant
Hearing: 15 December 2010
Appearances: B Dickey for First and Third Defendants/Applicants
Mr Zwiers in Person
M Black for Second Defendant
Judgment: 17 December 2010 at 11.00 a.m.
JUDGMENT OF VENNING J
ON APPLICATION TO SEAL JUDGMENT AND COSTS
This judgment was delivered by me on 17 December 2010 at 11.00 am, pursuant to Rule 11.5 of the
High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Meredith Connell, Auckland
Copy to: M C Black, Auckland
J Zwiers, Hamilton
ZWIERS V WAIPA CORPORATION LIMITED AND ORS HC AK CIV-2003-404-007359 17 December
2010
Application
[1] The first and third defendants seek the following orders:
a) sealing the decision of Harrison J dated 14 August 2008;
b) that these proceedings be struck out;
c) that the plaintiff pay the first defendant costs; and d) that the plaintiff pay the third defendant costs.
Brief procedural background
[2] In his judgment of 14 August 2008 Harrison J described this proceeding as having a regrettably tortuous history. Unfortunately that tortuous history has continued even after the delivery of His Honour’s decision that day.
[3] I take the background to the substantive proceedings from Harrison J’s summary as follows. Mr Zwiers filed the proceeding in late 2003. He originally sought damages of $26.5 million against Waipa and Mr Verry as well as Mr Catley. By August 2008 he had settled with Mr Catley. Mr Zwiers alleged that Waipa and Mr Verry had wrongfully acquired a sawmilling business near Rotorua. Mr Zwiers says they misused confidential information which they acquired from him. The statement of claim alleged breach of fiduciary duty, breach of contract and misleading or deceptive conduct. As against Waipa, Mr Zwiers sought a declaration the company hold the sawmilling business in trust for him.
[4] The matter before Harrison J on 14 August 2008 was an application by the first and third defendants for leave to apply for an order for further security for costs against the plaintiff. Harrison J granted leave and made an order in the following terms:
I order Mr Zwiers to pay the sum of $125,000 or to provide adequate security in substitution to the Registrar by 4 pm on 12 September 2008.
Failing strict compliance with the terms of this order the proceeding is to be struck out: for the avoidance of doubt, a failure by Mr Zwiers will have the automatic consequence of ending this litigation which does not require either Waipa or Mr Verry to take any further steps.
[5] No appeal was taken from that decision.
[6] Mr Zwiers sought to provide security in a form that was not accepted by the Registrar. In the result, Mr Zwiers did not comply with the order. As a consequence, by operation of the order, the proceeding by Mr Zwiers against the first and third defendants was struck out.
[7] The first and third defendants then sought to have the Court fix costs but for reasons which it is unnecessary to detail in this decision, costs have not yet been fixed. To bring the matter to a head and resolve issues the first and third defendants have made this application to the Court.
The status of the proceeding
[8] Given the order of the Court of 14 August 2008 and the undisputed fact that security has not been provided, the Court’s order has taken effect. The proceeding by Mr Zwiers against the first and third defendants has been struck out. There is no need for this Court to make a further order striking out proceedings which are already struck out. The second order sought by the applicants is therefore otiose. The first and third defendants are, and have been for some time, free to seal an order confirming that the proceedings were struck out. If leave is required, and I do not apprehend any reason why it would be, the first and third defendants may seal an order confirming the proceedings against them have been struck out.
Costs
[9] That leaves the issue of costs. Mr Zwiers sought an adjournment of the application. He said that he wanted to obtain further discovery from the first and third defendants.
[10] Mr Zwiers submitted that the third defendant in particular had acted oppressively towards him and misled the Legal Services Agency about his claim and that he had evidence suggesting the third defendant had deliberately taken steps to delay the proceeding and to avoid Mr Zwiers having his case heard. Mr Zwiers submitted that with further time and further discovery he would be able to put that information before the Court.
[11] Mr Black, who appears for Mr Catley, suggested this proceeding was inextricably linked with a separate but related proceeding under s 174 of the Companies Act 1993, involving a dispute between the second and third defendants in relation to shareholding in Waipa, the first defendant. That matter has been assigned to Potter J and is before that Judge on 22 February next year. Mr Black suggested the application for costs in this proceeding could be adjourned for consideration by that Judge.
[12] I declined the application for adjournment of the costs application for the following reasons.
[13] There is an issue as to whether the second defendant, represented by Mr Black, has standing for the purposes of this costs application by the first and third defendants against the plaintiff Mr Zwiers.
[14] Next, Mr Zwiers’ application for an adjournment to enable him to obtain further discovery is based on a misapprehension. As these proceedings are at an end they can no longer be a vehicle for any interlocutory steps such as discovery.
[15] Further, and in any event, I note that the issue of Mr Verry’s communication with the Legal Services Agency and the criticism of Mr Verry’s conduct were both matters raised before Harrison J at the hearing of 14 August 2008 by counsel on behalf of Mr Zwiers at that time. There is no utility in further adjourning this matter to revisit those issues.
[16] In any event, these proceedings were concluded in September 2008. The only outstanding issue is that of costs. That issue of costs should be dealt with.
[17] The first and third defendants are prima facie entitled to costs. They have succeeded in relation to the proceeding to the extent that the claim against them has been struck-out, albeit that it has not been determined on its merits: r 14.2(a).
[18] Mr Zwiers raised two other issues. First, he suggested that given the issues in the related proceedings Mr Dickey may not have authority to act for the company and second, he submitted that the third defendant may not have incurred any costs.
[19] In response on the first point Mr Dickey confirmed that he had instructions from a director of the first defendant to pursue this application. As to the second point, r 14.2(f) confirms that a costs award should not exceed the costs actually incurred. Counsel will be well aware of his obligation to advise the Court if the costs sought have not been incurred. This application is pursued on the basis the costs sought have been incurred.
[20] Costs are sought on a 2B basis for all steps taken in the proceeding. Until Mr Zwiers settled with the second defendant the first and third defendants were represented by the same firm. However, because of the arrangements resulting out of that settlement, it was necessary to instruct counsel for the third defendant. It was for that reason that the trial date of 7 March 2005 was vacated. Costs for the third defendant are only claimed from February 2005 when separate representation became necessary.
Should costs be increased?
[21] Mr Dickey sought costs on an increased basis for the first and third defendant, uplifted by 50 per cent on the basis:
a) the plaintiff’s claim was weak and overstated;
b) it was unnecessary for the first defendant to be a party;
c) the plaintiff prolonged the proceedings unnecessarily.
[22] While Harrison J expressed some reservations about the strength of the plaintiff’s claim, particularly as to quantum, the proceedings were struck out for failure to comply with an order for security for costs. They have not been determined on their merits and were not struck out on the basis of no arguable cause of action.
[23] On the basis of the material before the Court I am in no position to determine whether it was necessary for the first defendant to be a party throughout and nor, on the information before the Court, am I prepared to find that responsibility for the delay lay entirely with the plaintiff. For those reasons I am not prepared to make an order for an increased cost award.
[24] However, as noted, the first and third defendants have been successful to the extent that the plaintiff’s claim against them is struck out. The prima facie presumption they are entitled to costs is not displaced. Category 2 and timeband B are appropriate.
Orders
[25] There will accordingly be orders for costs in the first and third defendants’
favour against the plaintiff on a 2B basis, in the following terms:
a) costs in the sum of $77,920.00 together with disbursements of
$87,730.54 (subject to (c)), in total $165,650.54, in favour of the first defendant;
b) costs in the sum of $41,605.00 together with disbursements of
$180.00 totalling $41,785.00, in favour of the third defendant;
c) to seal the order in a) above, the first defendant is to provide the Registrar with copies of accounts to support the following disbursements:
• Inspection fee payable to Russell McVeagh $2,323.35;
• Fees/disbursements paid re expert evidence by G Utteridge
$2,644.00;
• Fees/disbursements paid re expert evidence by K Wood
$4,725.00.
• Fees/disbursements paid re brief from S Panckhurst
$22,050.00
• Fees/disbursements paid re expert evidence by T Frankham
$53,676.00.
Costs on this application
[26] The first and third defendants are entitled to one order for costs on this application on a 2B basis which I fix at $2,068.00 together with disbursements,
being the filing fee.
Venning J
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