MAINZEAL PROPERTY & CONSTRUCTION LTD (IN REC AND IN LIQ) v RICHINA GLOBAL REAL ESTATE LTD [2014] NZHC 3104

MAINZEAL PROPERTY & CONSTRUCTION LTD (IN REC AND IN LIQ) v RICHINA GLOBAL REAL ESTATE LTD [2014] NZHC 3104 [5 December 2014]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2013-404-3047[2014] NZHC 3104UNDER the Companies Act 1993IN THE MATTER OF the liquidation of Richina Global RealEstate LimitedBETWEEN MAINZEAL PROPERTY ANDCONSTRUCTION LIMITED (INRECEIVERSHIP AND INLIQUIDATION)PlaintiffAND RICHINA GLOBAL REAL ESTATELIMITEDFirst DefendantRICHARD CILIANG YANSecond DefendantHearing: On the papersCounsel: Z G Kennedy & M D Pascariu for PlaintiffsD J Chisholm QC and T Mullins for DefendantsJudgment: 5 December 2014JUDGMENT OF BROWN J[As to costs]This judgment was delivered by me on 5 December 2014at 3 pm, pursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors: Minter Ellison Rudd Watts, AucklandLee Salmon Long, AucklandRussell McVeagh, AucklandCounsel: D J Chisholm QC, AucklandCIV-2013-404-2317UNDER the Companies Act 1993IN THE MATTER OF the liquidation of Isola Vineyards LimitedBETWEEN MAINZEAL PROPERTY ANDCONSTRUCTION LIMITED (INRECEIVERSHIP AND INLIQUIDATION)First PlaintiffKING FACADE LIMITED (previouslyknown as RICHINA LAND LIMITED)(IN LIQUIDATION)Second PlaintiffAND ISOLA VINEYARDS LIMITED(previously known as WAIHEKEVINEYARDS LIMITED)Defendant[1] The judgment of the Court of Appeal in Yan v Mainzeal Property & Construction Ltd (in rec and in liq):1(a) set aside my decision putting Richina Global Real Estate Limited (RGREL) into liquidation;(b) dismissed the Plaintiffs' appeal in the Isola proceeding; and(c) ordered that costs in relation to the High Court stage of both proceedings were to be fixed by the High Court, absent agreement between the parties.[2] The parties being unable to agree, the following memoranda have been filed:(a) Memorandum on behalf of RGREL and Isola as to costs dated 15 October 2014;1 Yan v Mainzeal Property & Construction Ltd (in rec and in liq) [2014] NZCA 190(b) Memorandum of the plaintiffs in response dated 10 November 2014;(c) Reply memorandum on behalf of RGREL and Isola dated 14 November 2014.[3] Costs are sought by RGREL and Isola on a category 2B basis except in respect of their preparation for both the application for leave to defend and for the hearing itself in respect of which Band C costs are sought. Allowance for second counsel is also sought in relation to the hearing.[4] The plaintiffs submit that no costs should be allowed on the leave to defend as that application involved the seeking of an indulgence from the Court. In respect of the liquidation hearing the plaintiffs resist costs on the ground that the proceeding concerned a matter of public interest and that r 14.7(e) of the High Court Rules is engaged. In the event that the Court elected to make an award of costs, the plaintiffs resist an award on a Band 2C basis.[5] So far as the application for leave to defend is concerned, I recognise that inHoldgate v Holdgate2 it was said that the grant of an indulgence conventionally is made at the expense of a costs order against the party obtaining the indulgence. However in every case the particular circumstances need to be considered. Here the plaintiffs were aware from 3 September 2013 that the defendants intended to apply for leave to file defences out of time. The statements of defence were filed and served. The applications for leave to defend were opposed by the plaintiffs with a hearing date set for 4 October 2013.[6] It was only on 3 October 2013, the day before the application was to be heard, that the plaintiffs consented to the orders sought. Consequently the defendants were put to significant preparation costs on the basis that the applications were opposed, including preparation of bundles and written submissions. In my view in those circumstances the usual rule that costs should follow the event should apply. The defendants are entitled to costs on the application for leave to defend.2 Holdgate v Holdgate HC Auckland CP303/96, 24 September 1996 at 3 HC.[7] So far as the liquidation hearing is concerned, the defendants accept that there is a public interest in the liquidation of insolvent companies and that the liquidation procedure itself may be considered a matter of public interest. However I accepttheir submission that the plaintiffs' interest is a private interest in the repayment ofunsecured private creditors and that it is inappropriate for defendants who successfully resist liquidation proceedings to be denied costs on the basis of the public interest exception.[8] Consequently the defendants are entitled to costs on the liquidation application. I allow for second counsel.[9] However I do not consider that it is appropriate for costs to be awarded on a Band C basis. Neither the nature and complexity of the case nor the amount of work which I consider was involved justify Band C costs in respect of either the preparation for the leave application or the preparation for the liquidation hearing.Decision[10] The defendants are entitled to costs on a category 2B basis. I allow for second counsel.[11] Neither of the parties have been entirely successful on the issue of costs. I direct that costs are to lie where they fall on the application to fix costs.[12] As a result of standstill arrangements in place in respect of the defendants their associated company Richina Pacific Ltd (Bermuda) has met all of the legal costs and disbursements associated with these proceedings. In order to enable RPL to be reimbursed, the defendants invite the Court to order that the defendants be released from their undertakings to the Court to the extent of the costs orders made to enable them to reimburse RPL. As the defendants note in their reply memorandum, there has been no objection by the plaintiffs to the defendant'srequest. Accordingly I order that the costs as approved are to be paid directly to RPL being the entity that funded the defence of the proceedings.________________________________Brown J