Managh v Currie HC Napier CIV-2010-441-756 [2011] NZHC 1463 (28 March 2011)

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This judgment was delivered by Associate Judge Gendall on 28 March 2011 at 4.00 pm under r 11.5 of the High Court Rules.

[1] On 17 February 2011 I heard an application brought by Mr John Managh (Mr Managh), as liquidator of Titan Building (HB) Limited (Titan Building), under s 266 of the Companies Act 1993 (the Act) that the respondent, Mr Nicholas Currie (Mr Currie), be examined and produce documents relating to Titan Building. Mr Currie is a director of a third party company N.J. and S.R. Currie Limited t/as Home Plus Hawkes Bay which had received significant unexplained payments from Titan Building just prior to its liquidation. In particular, the applicant sought from Mr Currie all invoices recording monthly sales made by HomePlus Hawkes Bay from 1

April 2008 until 31 July 2010 to Titan Building or other statements of account recording the dealings between the two companies and any other documents showing the payment of money to or from Titan Building in that period.

comply with the requirement of the liquidator under s 261 of the Act that he be examined and bring documents in terms of the notice of requirement served upon him and dated 1st November 2010, and that such examination take place on oath and in the Court by way of a barrister or solicitor acting on behalf of the applicant, and there produces all invoices recording sales made by HomePlus Hawkes Bay from 1 April

2008 until 31 April 2010 to [Titan Building] and monthly or other statements of account recording the dealings between [Titan Building] and HomePlus Hawkes Bay and any other documents showing payment of money to or from the company in that period.

[3] At [38] of that judgment I reserved the issue of costs on the application and provided for counsel to file memoranda in the event that agreement could not be reached. No agreement was reached. This judgment deals with that issue of costs.

[4] Mr Managh was appointed as liquidator of Titan Building by shareholders’ special resolution on 8 July 2010. The application against Mr Currie was brought as Mr Managh argued that there were no records to show either what goods or services

were supplied in exchange for, or alternatively the reasons for, a number of “significant payments” made by Titan Building prior to its liquidation to various other parties including Mr Currie’s company. A number of those parties including Mr Currie’s company appeared to be associates of Titan Building’s controlling director, Mr Lans Hasselman. Mr Managh confirms that he made a number of direct enquiries of Mr Currie regarding the payments in question to his company, but those enquiries were all left unanswered pursuant to s 261 of the Act.

[5] In fact, in his affidavit filed in the substantive proceedings, Mr Managh stated that Mr Currie has “gone to extraordinary lengths to avoid providing me with information”. I expressed, in my 25 February 2011 judgment for the substantive hearing at [33], that I was satisfied that Mr Managh had made reasonable efforts to obtain the information that is now sought from Mr Currie.

hand over copies of the requested documents on the basis that Mr Managh discontinues legal proceedings and no costs are sought against our client.

[7] That offer it seems was declined, although no further correspondence has been provided to me.

[8] Rule 14.1 of the High Court Rules (the Rules) gives the Court a discretion to order costs in relation to proceedings brought in this Court. That discretion is generally to be exercised in accordance with the specific rules contained in rr 14.2-

14.10: Glaister v Amalgamated Dairies Ltd. An objective test is to be applied. Rule

14.2 lists the principles applying to determination of costs. Subrule (a) affirms the principle that the losing party should pay the costs to the successful party. Subrule (b) requires that the costs reflect the complexity and significance of the proceedings and refers specifically to the categorisation of a proceeding which is provided for in r

14.3. Subrule (c) requires a consideration of each step for which costs are sought and

an application of the daily rate having regard to the appropriate band which is to be applied after a consideration of r 14.5(2) and the Third Schedule to the High Court Rules.

[9] Counsel for Mr Managh, Mr MacFarlane, argues initially here that costs should be assessed as though this was an originating application. That is because, while an application such as the present one would ordinarily be brought as an interlocutory application, as a result of the appointment of a liquidator by the court, the liquidation in this case was voluntary. However, Mr MacFarlane does concede on reflection that it would be inappropriate to treat this claim as an originating one for the purpose of assessing costs. He contends that these proceedings, however, fit better with proceedings such as those relating to statutory demands and caveats. I agree. Mr MacFarlane goes on to submit that in considering commencement of the present application, item 25 of the third schedule to the Rules should be applied. On that assessment, he suggests that using a category 2B classification overall, and a general civil proceeding classification for steps taken after commencement of the

25.	Item Preparing and filing originating application and	Day/Part Day
	supporting affidavits	1.6
4.11	Appearance at case management conference	0.3
4.14	Preparation for hearing of defended interlocutory application	0.5
4.15	Appearance at hearing	0.5
	Total	2.9 days
	2.9 days x $1,880.00 per day = $5,452.00

[10] First, counsel for Mr Currie, Mr Cowan, notes that items 4.14 and 4.15 are calculated by quarter days under the Rules. As the hearing was only set down for an hour, he submits that should therefore only attract a quarter day, in each case. I agree. I consider, however, that otherwise counsel for Mr Managh’s approach is a sensible one here. These proceedings are not of a type that should be considered

generally as an originating application. However, in my view, preparation was required which was more onerous than if the application was brought as a simple interlocutory application. I consider, therefore, that it is appropriate here to use item

25 for commencement purposes, but costs should otherwise be assessed as though the application was brought on a general civil proceeding basis. Therefore, as the hearing here was only one hour in duration, items 4.14 and 4.15 should attract 0.25 days each and not 0.5 days each as claimed.

[11] Next, it seems there is some disagreement as to the complexity and significance of this matter. Counsel for Mr Managh, Mr MacFarlane, submits that this should be a 2B matter Mr Cowan counsel for Mr Currie, however, argues that the matter was one that could be properly handled by junior counsel and should be assessed on a 1B basis. I disagree. In my view, this is a matter which potentially involved some further development of the law regarding what might be a proper interpretation of s 261 of the Companies Act 1993. That development required counsel to distinguish and rationalise previous authority of this Court. As such, careful and thorough submissions were required. Therefore, I agree with Mr MacFarlane’s approach here and assess these proceedings as properly being category

2010 was in fact more beneficial to Mr Managh than the order obtained by him in these proceedings. As such, he suggests that r 14.11(3)(b) means that any award of costs to Mr Managh, as the successful party here, ought to be set off against the costs that Mr Currie is entitled to under that rule after that offer was declined.

[13] In response Mr Managh’s counsel argues that the 8 December 2010 offer did not meet the application that was before this Court as it did not allow for examination of Mr Currie. Calderbank offers are generally expressed as “without prejudice save as to costs”. That was not the wording of the offer in the present case. Mr Cowan, counsel for Mr Currie, expressed the offer as being merely “without prejudice”. Therefore, there being no express reservation to the “without prejudice” statement, in my view, the offer was not a Calderbank offer in the sense of falling

within the purview of r 14.10.[1] The document is not admissible, therefore, without waiver by both parties.[2]

[14] And, in any event, as I see the position, I do not consider that the offer avails Mr Currie in the present case. The central question in assessing whether a defendant is entitled to some mitigation of costs due to an earlier settlement offer is whether the plaintiff ought reasonably to have accepted the offer. In the present case, there can be no doubt that Mr Managh received considerably more under the 25 February 2011 orders of this Court than was offered by Mr Currie. For that reason, it was reasonable for him to decline the earlier offer.

[15] On the analysis above, I consider that Mr Managh is entitled to an award of costs here totalling $4,512.00. This is made up of a total of 2.4 days (being 1.6 days for the application, 0.3 day for case conference appearance, 0.25 day for hearing preparation and 0.25 day for appearance at the hearing) x $1,880.00 per day (category 2B) = $4,512.00. I make an order accordingly and add to that an order for disbursements, representing service fees of $80.50 which are appropriately sought here.

[1] Cutts v Head [1984] 1 Ch 290 at 310; Computer Machinery Co Ltd v Drescher [1983] 1 WLR 1379 at 1383.

[2] Sue v Old Fashioned Small Goods Ltd HC Auckland M427-SD98, 17 July 2000; Walker v Washer

(1889) 23 QBD 335 (CA); Somatra Ltd v Sinclair Roche & Temperley [2000] 1 Lloyd’s Rep. 311.

High Court of New Zealand Decisions

Managh v Currie HC Napier CIV-2010-441-756 [2011] NZHC 1463 (28 March 2011)