KLR Hong Kong Limited v Trilogy International New Zealand LLC [2012] NZHC 2150 (24 August 2012)

Last Updated: 3 September 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-003554 [2012] NZHC 2150

IN THE MATTER OF an application under section 175 of the Companies Act 1993 in relation to the affairs of Two Degrees Mobile Limited

BETWEEN KLR HONG KONG LIMITED Plaintiff

AND TRILOGY INTERNATIONAL NEW ZEALAND LLC

First Defendant

AND TWO DEGREES MOBILE LIMITED Second Defendant

AND TESBRIT BV Third Defendant

AND HAUTAKI LIMITED Fourth Defendant

Hearing: On the papers

Judgment: 24 August 2012

_{COSTS JUDGMENT OF VENNING J}

This judgment was delivered by me on 24 August 2012 at 2.15 pm pursuant to Rule 11.5 of the High

_{Court Rules.}

Registrar/Deputy Registrar

Date...............

Solicitors: Carter & Partners, Auckland [e-mail]

Minter Ellison Rudd Watts, Auckland [e-mail]

Gilbert Walker, Auckland [e-mail]

Lee Salmon Long, Auckland [e-mail]

DLA Phillips Fox, Wellington [e-mail]

KLR HONG KONG LTD V TRILOGY INTERNATIONAL NZ LLC HC AK CIV-2012-404-003554 [24 August

2012]

[1] The first and second defendants seek an order for costs against the plaintiff

on the defendants’ application to strikeout.

[2] The defendants’ applications to strikeout were brought on the basis the plaintiff had been struck off the Hong Kong Companies Register when it brought the proceedings and remained so when the applications were filed. The plaintiff has addressed that position and been restored to the Register. The strike-out applications have been withdrawn by leave. The first and second defendants seek an order for costs on their applications. The plaintiff opposes the application for costs and in the alternative submits any costs award should be reduced.

[3] I note at the outset that the third and fourth defendants do not pursue an order for costs.

[4] The plaintiff argues that the Court should not make an award of costs in favour of the first and second defendants because:

(a) pursuant to r 14.2 the plaintiff has not failed in its opposition to the strike-out applications, which did not succeed; and/or

(b) pursuant to r 14.7(f) the defendants took an unnecessary step with their applications; and/or

(c) pursuant to r 14.2(f) an award of costs should not exceed the costs incurred by the party claiming.

[5] In a supplementary memorandum of 15 August 2012 the plaintiff also argues further in reliance on r 14.7(f) that the defendants knew the plaintiff had been struck off before the proceedings were issued but elected not to raise the issue.

[6] Although I had previously indicated I considered costs on a 2B basis to be appropriate I have reviewed the file in light of counsels’ submissions. Having done so my judgment remains the same.

[7] The short point is that the plaintiff, which had been removed from the Register, purported to issue proceedings when it had no standing to do so. Even if the defendants were aware the plaintiff had been struck off they were quite entitled to apply to strike out the plaintiff on the grounds that it had been removed from the Register and there was no standing to bring the proceedings. The defendants were not obliged to accept the stay offered to them by the plaintiff while it applied to be restored. The plaintiff, or more accurately, those behind it, for their own reasons chose to commence the proceedings. The defendants were quite entitled to take steps to protect their interests which, when faced with a claim by a company not on the Register, was obviously to apply to have the proceedings dismissed on that basis.

[8] Mr Carter is correct the applications were withdrawn without being determined on their merits. However, they were withdrawn because the plaintiff took the step it should have taken before issuing the proceedings and arranged to be restored to the Register. If the plaintiff had not taken that step it is inevitable the proceedings would have been struck out.

[9] I do not accept the plaintiff’s criticism of the defendants’ actions in applying to strike out. The plaintiff now seeks to avoid the costs consequences of the situation it has created.

[10] Mr Carter also suggests the costs sought are in excess of scale and there should be a reduction because the first and second defendants joined in a joint memorandum.

[11] In this case I accept there is force in Mr Walker’s submission for the first defendant that the time required to prepare a joint memorandum is no less than what would have been required in order to file a separate memorandum.

[12] The first and second defendants are each entitled to costs on a 2B basis for the steps they have taken to apply to strike out.

[13] To avoid further dispute those costs are fixed in the sum of $3,113.00 including the filing fee of $725.00 in each case.

Venning J