United Finance Limited v Cooper HC Auckland CIV 2009-404-004918 [2011] NZHC 205 (11 March 2011)

Last Updated: 29 May 2011

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

_{CIV 2009-404-004918}

BETWEEN UNITED FINANCE LIMITED Plaintiff

AND MARK ALAN COOPER Defendant

Hearing: on papers

Counsel: N S Gedye for plaintiff

D M Hughes/K van Houtte for defendant

Judgment: 11 March 2011 at 4:30 PM

_{COSTS JUDGMENT OF ASSOCIATE JUDGE ABBOTT}

This judgment was delivered by me on 11 March 2011 at 4:30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

A MacDonald, Hanover Finance Limited, Private Bag 92129, Auckland 1142 for plaintiff

Kensington Swan, Private Bag 92101, Auckland 1142 for defendant

Counsel:

N S Gedye, Barrister, PO Box 2097, Auckland 1140

UNITED FINANCE LIMITED V COOPER HC AK CIV 2009-404-004918 11 March 2011

[1] On 23 December 2010 I declined an application by the plaintiff (United) for summary judgment, and stated:

[70] ... the only reason that United did not obtain an order for summary judgment was that the judgment debt was satisfied at some time in August

2010, following an order of the Receivership Court made on 11 June 2010. In these circumstances, I regard United as the successful party on this

application.

[71] On the basis of the information currently before the Court, I consider that United should be entitled to its costs on this application on a 2B basis, together with disbursements as fixed by the Registrar. However, as counsel did not address me specifically on costs, and having regard to the subsequent events (and particularly the settlement reached in August 2010) I will give the parties opportunity to address me if any other order is sought, or if there is any dispute as to the amount of the costs that would be payable in accordance with the indication I have given.

[2] The parties have been unable to agree on the incidence of costs. Accordingly, United has applied, pursuant to the leave reserved, for an order that the defendant (Mr Cooper) pay costs of $9,776 (calculated on a scale 2B basis) and disbursements of $1,140.89 to United.

[3] Mr Cooper resists any order for costs on the grounds that United no longer has legal standing to seek costs or to continue this proceeding. He seeks an order that the proceeding be struck out.

[4] There is a further issue over costs incurred as a result of the present application which I will address at the end of this judgment.

[5] The reason advanced on Mr Cooper’s behalf for resisting an order for costs, and seeking strike out of the proceeding, is that United has been struck off the Companies Register (as has its shareholder Hanover Finance Limited). He contends that as a matter of law United no longer exists as a legal entity once it is removed from the Companies Register,[1] and is unable to bring or continue any form of legal

_{proceeding once it is removed.}[2]

[6] In particular, Mr Cooper relies on the following comments made by this court in Wire Supplies Ltd v Commissioner of Inland Revenue:[3]

In my view, a company ceases to exist for all relevant legal purposes upon removal from the register under s.318. I do not see any basis for resisting the obvious effect that removal of a company from the register has. That effect cannot be denied simply because the company concerned may one day be restored to the register.

[7] In further support of his position, Mr Cooper produces extracts from the Companies Register showing that both United and Hanover were removed from the Companies Register on 30 August 2010.

[8] In reply, United says:

(a) On 30 August 2010 United amalgamated with UF Newco Limited under Part XIII of the Companies Act 1993, to become UF Newco Limited, and UF Newco Limited subsequently changed its name to United Finance Limited;

(b) The amalgamated entity has succeeded to all of the property rights, powers and privileges of United;[4] and

(c) Proceedings pending by an amalgamating company may be continued by the amalgamated company.[5]

[9] A copy of a certificate of amalgamation dated 30 August 2010 has been produced in support of the above.

[10] I accept, on the basis of that evidence that the amalgamated entity, United

finance Limited has succeeded to United’s entitlement to costs, and may pursue this

_{proceeding by seeking an award.}

[11] Mr Cooper has not taken issue with the costs or disbursements being sought by United. I am satisfied that United is entitled to the costs sought in accordance with the items listed under Schedule 3 of the High Court Rules on a category

2 timeband B basis. The disbursements for filing fee and sealing fee are also unobjectionable.

[12] I make an order that Mr Cooper pay United Finance Limited the costs of

$9,776 together with disbursements of $1,140.89 as sought.

Claim for additional indemnity costs

[13] Mr Cooper’s contention that United no longer exists was raised in his counsel’s memorandum dated 8 March 2011, in answer to United’s initial memorandum requesting costs (also dated 8 March 2011). In a second memorandum (dated 10 March 2011) filed in reply, in addition to refuting Mr Cooper’s argument as set out above, counsel for United challenged Mr Cooper over the factual basis for his contention, and submitted that he had misled the court. He sought indemnity costs for the time engaged in refuting the contention, on the grounds:

(a) The solicitor for Mr Cooper raised the matter of United having been struck out when costs were first discussed;

(b) Counsel for United advised the solicitor for Mr Cooper by email sent on 1 February 2011 of United’s amalgamation with UF Newco Limited on 30 August 2010, and referred the solicitors to s 225 of the Companies Act;

(c) The certificate of amalgamation (which is dated 30 August 2010) is the first document in the “documents” tab on a search of the Companies Office website for United.

Counsel submitted that, in the face of that information, it must have been a conscious choice to produce only United’s original certificate of incorporation showing it to have been struck off on 30 August 2010.

[14] Counsel for the defendant has filed a memorandum in response (also dated

10 March 2011), refuting that there was any intention to mislead the court either by Mr Cooper or his counsel. Counsel makes the point that Mr Cooper cannot be expected to have full knowledge of matters relating to the amalgamation, and that Mr Cooper “was unable to accurately assess the correct position” from the limited information provided by the email of 1 February 2011 and was not persuaded that United remained in existence so as to be entitled to costs. Counsel states that neither Mr Cooper nor his counsel was aware of the certificate of amalgamation, and had only the documents annexed to its first memorandum (including the certificate of incorporation showing that United was struck off) at the time of submitting his first memorandum on 8 March 2011.

[15] I have no reason to question the statement by counsel for Mr Cooper that neither Mr Cooper nor his counsel was aware of the certificate of amalgamation at the time of submitting the memorandum of 8 March 2011. I can accept that the certificate may have been overlooked by whoever obtained the electronic search (the documents produced bear dates showing that they were obtained from the Companies website on 8 March 2011. However, the point ought to have been picked up, particularly in light of the advice in the email of 1 February 2011. Mr Cooper’s contention was untenable in light of s 225 of the Companies Act 1993.

[16] I accept that United has been put to additional costs in having to file a further memorandum to address a point that should not have been made if it had been properly researched. I am satisfied that the information was readily available on the Companies website before Mr Cooper’s memorandum was filed.

[17] Counsel for Mr Cooper argued that United ought to have advised the court of the amalgamation in its first memorandum. On the facts before the court I can see no need for it to have done so. The email of 1 February 2011 should have put the matter to rest, particularly if a proper search had been undertaken. It was reasonable for United to take the view that there was no longer an issue by the time that it filed its memorandum seeking costs on 8 March 2011 (more than a month later).

[18] In these circumstances I consider that United is entitled to costs in respect of its second memorandum, in addition to the costs order I have already made. United has sought indemnity costs in respect of the time it has expended on the present application including its attempts to reach agreement between January and the present date. Indemnity costs will only be ordered where truly exceptional

circumstances exist.6 I do not see that it is entitled to costs prior to the filing of the

memorandum, and counsel has not given me a breakdown of the costs claimable from that point. I consider that the matter is properly addressed by an order that Mr Cooper pay United costs in respect of preparation of its second memorandum on

_{a 2B basis. I order accordingly.}

_{Associate Judge Abbott}

6 Hedley v Kiwi Co-operative Dairies Ltd (2002) 16 PRNZ at 18.

---

[1] _{Companies Act 1993, s 15.}
[2] Floor Lines (New Zealand) Ltd v Commissioner of Inland Revenue (2001) 20 NZTC 17,249 (HC).
[3] _{Wire Supplies Ltd v Commissioner of Inland Revenue (No. 2) (2005) NZTC 19,390, (HC) at [22].}
[4] _{Companies Act 1993, s 225(d).}
[5] Companies Act 1993, s 225(f).