Reeves v Abano Healthcare Group Limited [2014] NZHC 2745 (5 November 2014)

Last Updated: 7 July 2015

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-1306 [2014] NZHC 2745

UNDER	Part 19 of the High Court Rules and section 123 of the Companies Act 1993
BETWEEN	JAMES LIVINGSTONE REEVES Plaintiff
AND	ABANO HEALTHCARE GROUP LIMITED Defendant

Hearing:	On the papers
Judgment:	5 November 2014

_{JUDGMENT OF THOMAS J}

This judgment was delivered by me on 5 November 2014 at 2.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

_{Date:...............................}

REEVES v ABANO HEALTHCARE GROUP LIMITED [2014] NZHC 2745 [5 November 2014]

Background

[1] At the time of the hearing the applicant, Mr Reeves, was the registered owner of 10,109 shares in the respondent, Abano Healthcare Group Limited (Abano). On 6

May 2014, Mr Reeves and Healthcare Industry Limited requisitioned a special meeting of Abano's shareholders to be held pursuant to s 121 of the Companies Act

1993 to vote on a resolution to remove a director from office.

[2] The applicant sought orders that the meeting not take place until three weeks after the scheduled meeting date, in order to give the shareholders time to make an informed decision on how to vote.

[3] In my judgment I held that:¹

(a) the notice period for the special meeting provided adequate time for shareholders to consider all relevant information; and

(b) the notice of special meeting was not misleading.

[4] I dismissed the application and found that the respondent was entitled to costs.

Summary of costs submissions

[5] Abano submits that the proceeding should be categorised as Category 2. It says that the Band C time allocation should be applied to items 38 and 40. Overall, Abano seeks costs of $21,691 plus disbursements and expert witness costs of

$16,346.43.

[6] Mr Reeves takes no issue with the Category 2 categorisation. However, he submits that the appropriate time band for each step, including items 38 and 40, is

_{Band B.}

¹ Reeves v Abano Heatlhcare Group Ltd [2014] NZHC 1316.

Second counsel

[7] I begin by addressing Abano’s claim for costs for second counsel. Abano submits that the Court should allow costs for second counsel’s appearance at the hearing. Due to the compressed timetable and voluminous evidence filed by Mr Reeves, second counsel was necessary. Abano says that senior counsel would not realistically have been able to prepare for these proceedings adequately without such assistance.

[8] Mr Reeves has no issue with this. I agree that costs for second counsel are appropriate in the circumstances.

Item 38 – filing statement of defence and supporting affidavits

[9] Abano submits that item 38 should be allocated under Band C for the following reasons:

Urgency

[10] Abano submits that the timetable was compressed and counsel had to prepare these documents on an urgent basis. Mr Reeves served his originating application on the afternoon of Friday 30 May, immediately before the start of Queen’s Birthday weekend. The matter was called in the Duty Judge list on Wednesday 4 June. Abano received the statement of claim on Thursday 5 June and had to file a statement of defence and affidavits by Friday 6 June. Affidavits in response to any additional affidavits were required by Monday 9 June. The hearing was set down for Tuesday

10 June.

[11] Mr Reeves denies that the timetable was very compressed. He says that Abano had 10 full calendar days or five working days (excluding Queen’s Birthday) to prepare and file its defence and “relatively brief” affidavits. The hearing was only set down for one day.

Length and complexity of evidence

[12] Mr Reeves’s first affidavit included 31 exhibits and occupied an entire lever- arch file. He also filed three other affidavits. Abano says that counsel for Abano had to review and respond to this extensive evidence. Five affidavits in support of its statement of defence were filed. Ms Paterson’s affidavit contained 31 exhibits and, Abano submits, the preparation of that affidavit was time consuming.

[13] Mr Reeves, however, notes that he did not respond to Mr Hutson’s affidavit. He says that the number of exhibits in his first affidavit was not unusual and Abano was already familiar with most of their content and the relevant issues. Mr Reeves points out that a number of the exhibits were duplicated in Ms Paterson’s affidavit.

[14] Mr Reeves submits that Abano did not engage in the detail of the issues raised in his affidavits and exhibits, and apart from Ms Paterson’s affidavits, Abano filed only brief affidavits in response.

[15] He points out that Abano itself argued at the hearing that its shareholders had been “fully informed as to the relevant issues” and in reality had been on notice about the issues to be discussed at the special meeting since 10 April 2014.

[16] A B and C allocation for item 38 would allow Abano six full days to prepare and file its defence and affidavits. Mr Reeves submits that it would be inappropriate and unreasonable for the Court to allow Abano to claim for such a large amount of time.

Analysis

[17] In many cases, urgency is cited as a reason for uplifting the time band.²

However, in Allen v Going (No 2), Associate Judge Bell noted:³

Under r 14.5(2), times are allocated to bands by reference to the amount of time considered reasonable; urgency is not the criterion.

² See for example Independent Liquor (NZ) Ltd v Hanssen [2013] NZHC 211 at [20] and Anzide

_{Properties Ltd v Dunedin City Council [2012] NZHC 3046 at [22].}

³ Allen v Going (No 2) [2012] NZHC 1562 at [8].

[5] In my view it is not appropriate in this case to increase the costs due to urgency. While this was a ground for increasing costs in Wellington International Airport, in Perry Corporation the Court of Appeal declined to increase costs on this basis because it viewed the high costs incurred as stemming not from urgency but from the complexity of the case and its importance to the parties.... I accept that the urgency meant that this was a “drop everything” proceeding but the costs implications of that in this case are appropriately dealt with by the category three allocation and by an allowance for second counsel.

[19] Similar reasoning applies in this case. The cost implications of the urgency and the nature of the evidence (which, in my view, was not exceptionally complex or voluminous in any event) are appropriately and sufficiently dealt with by the allowance for second counsel.

[20] I therefore fix the time band for item 38 at Band B.

Item 40 – preparation of written submissions

[21] Abano also submits that Band C is the appropriate time band for item 40.

Unique point of law

[22] Abano notes that it was not able to find any cases in New Zealand, Australia or England where the Court had postponed a meeting under s 123 on the grounds advanced by Mr Reeves.

[23] However, Mr Reeves says that the question of whether relief should be granted under s 123 was not a unique point of law; it merely involved the interpretation of a discrete section. In his view, the fact that there were no analogous overseas cases reinforces that the legal issues were straightforward.

Numerous particulars

[24] Abano says that its written submissions had to address specifically the numerous particulars alleged by Mr Reeves in support of his claim that the notice of special meeting was misleading and deceptive.

[25] Mr Reeves points out that he advanced five reasons why the notice of special meeting was misleading. Abano’s submissions only took one paragraph to answer each of these grounds. Mr Reeves says that this is not out of the ordinary.

[26] Furthermore, the submissions were prepared for a hearing which took one day only. Mr Reeves submits that in the Paper Reclaim case, which took 23 sitting days, the successful party only received a Band B allocation for all pre-trial steps (apart from discovery and inspection).⁵

[27] A Band C allocation would allow Abano three full days to prepare its written

submissions. Mr Reeves’ submits that this would be inappropriate and unreasonable.

Analysis

[28] I agree with Mr Reeves that a Band B time allocation is appropriate for the preparation of written submissions in this case. I acknowledge that the particular facts of the case were unique and no analogous cases could be found. However, this should not have resulted in substantially more time being spent on written submissions. Indeed the fact that there was no authority directly on point would in some ways have made the process of writing submissions simpler. Furthermore, I consider that the number of particulars in this case were not exceptional.

Disbursements

Filing fee for statement of defence

[29] Abano claims the $110 filing fee for the statement of defence.

Expert fees of Peter Hinton

[31] Abano seeks approval under High Court Rule 14.12(2)(a)(i) for recovery of Mr Hinton’s fee invoice of $16,346.43. Abano says it was necessary to engage Mr Hinton to provide expert evidence, as one of Mr Reeves’ main contentions was that the notice period given to shareholders was inadequate compared to similar notice periods given by other public listed companies. Mr Hinton gave evidence of market practice in relation to notice periods for special meetings of NZX listed companies to refute that contention.

[32] Mr Reeves takes issue with Abano claiming 20.3 hours of partner time for a single issue affidavit containing 23 paragraphs of analysis. He says the subject matter of the affidavit was narrow and consisted of assembling information available from the NZX about meeting notice periods. The research and initial preparation was undertaken by a Simpson Grierson law clerk. That information was overlaid with some expert and fairly general high level commentary. Mr Reeves submits that allowing 10-12 hours of Mr Hinton’s time is reasonable.

Analysis

[33] The expert witness bill breakdown attached to Abano’s submissions reveals that $3,061.50 of that bill is attributable to the 15.7 hours spent by the law clerk preparing a table on special meeting notice periods for NZX and NZAX companies in 2013 and 2014 and editing Mr Hinton’s affidavit. The 20.3 hours of partner time (at a cost of $13,195) claimed for the writing of the 27 paragraph affidavit seems excessive, given that much of the affidavit involves reference to and brief comments on data in the table.

[34] In light of that, I consider that it is reasonable for Abano to claim $12,500 for expert fees.

Conclusion

[35] Abano is entitled to costs on a 2B basis, costs for second counsel and disbursements. Abano is also entitled to $12,500 for expert fees.

Thomas J