Hodder v Baker [2017] NZHC 548 (24 March 2017)

Last Updated: 11 September 2017

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2016-454-92 [2017] NZHC 548

UNDER	the Companies Act 1993
BETWEEN	WALLACE DOUGLAS HODDER AND ANN ADELE HODDER Plaintiffs
AND	CHRISTOPHER DUNCAN BAKER AND KATHRYN ANN BAKER First Defendants KADD FARM LIMITED Second Defendant

Hearing:	On the papers
Counsel:	M E Parker for Plaintiffs J W Maassen and S F Clark for Defendants
Judgment:	24 March 2017

_{JUDGMENT OF ELLIS J}

[1] On 6 October 2017 I delivered judgment in favour of the plaintiffs under conditions of some urgency. The judgment was concerned with both a substantive application for shareholder relief under the Companies Act 1993 and with an interlocutory application by the defendants relating to various matters that had arisen immediately prior to the hearing. My judgment recorded that I had not heard from the parties on costs and that memoranda could be filed.

[2] Subsequently:

(a) the plaintiffs have sought costs on a 2B basis (generally) and on a 2C

_{basis (in relation to particular steps) plus a 50 per cent uplift under}

HODDER v BAKER [2016] NZHC 548 [24 March 2017]

r 14.6 on the basis that (they say) the defendants’ conduct was

unreasonable and contributed to the costs of the proceeding;¹

(b) the defendants have said that:

(i) for a number of reasons, costs should be refused; or

(ii) an award of 2B costs reduced by 50 per cent should be made pursuant to r 14.7; and

(iii) they take issue with a number of the costs specific items claimed;

(c) the defendants also seek a stay of any costs order made, pending their appeal of my judgment.

Discussion

[3] I have carefully read the submissions for both sides. I can see no reason to depart from a standard 2B costs order (I deal with the specific disputed items later, below). Informing that view is the following:

(a) although the proceeding was brought under the Companies Act it is, at its heart, a family dispute;

(b) there was a period of 16 days from the filing of proceedings until the delivery of judgment. It is difficult to see how a costs award of approximately $85,000 (as sought by the plaintiffs) could possibly be justified;

(c) the fact that some of the steps took longer than is contemplated by the

2B scale is not, by and of itself, a reason to make a 2C award in relation to those steps;

¹ The increased costs and disbursements claimed total $85,338.88.

(d) the claim as it was originally framed did not really succeed. In particular, the statutory provisions relied upon and the relief sought changed as a result of the Court’s involvement;

(e) although I dismissed the defendants’ interlocutory application relating to alleged pre-hearing procedural defects on the grounds that any such defects caused them no significant prejudice, there is no doubt that some unfortunate mistakes were made by the plaintiffs which would certainly have added to the pressure that the defendants were put under;

(f) equally, there can be little doubt that the defendants were the unsuccessful party. While I am not wholly unsympathetic to their position, the comments in my judgment about the lack of reality with which they approached the dispute continue to pertain. I cannot therefore see any good reason why costs should not follow the event in the usual way. A number of the matters raised by the defendants in support of their contention that costs should be refused, have already been addressed by me (and rejected) in my judgment.

[4] In terms of the disputed costs items, there is force in some of the points raised by the defendants. As well as my rejection of any items claimed on a 2C basis I consider that:

(a) the full amount claimable for preparation for case management conferences should not be claimed for preparation for the various telephone conferences that were convened prior to the hearing; and

(b) the expert fee disbursement claimed for the preparation of a valuation report is not claimable (there is a separate costs claim for the preparation of the expert’s affidavit).

[5] The total amount of 2B fees and disbursements said by the defendants to be payable (if no reduction is ordered) is $35,272. The total amount of 2B and 2C fees and disbursements claimed by the plaintiffs was $60,028.38. Taking account of the matters just mentioned I consider that a round figure of $40,000 is the appropriate result.

[6] As noted earlier, the defendants have asked that I stay that order pending their appeal. They say that they cannot afford to pay it without urgently liquidating assets and that this would cause them undue hardship. No formal application has been filed and no evidence has been filed to support the defendants’ contention. Nor have the plaintiffs had an opportunity to be heard in that regard. I am not aware of the current status of the defendants’ appeal.

[7] Accordingly:

(a) I make an order that the defendants pay the plaintiffs’ costs and

disbursements in the amount of $40,000 accordingly; and

(b) if the stay application is to be pursued:

(i) the defendants are, within 10 working days to file a formal application accompanied by an affidavit and brief submissions;

(ii) on receipt of those documents the plaintiffs will have a further

10 working days to file a notice of opposition and brief submissions in response;

(iii) the matter should then be referred to me for decision on the papers.

Rebecca Ellis J