East Coast Aluminium Limited (in liquidation) v Perry

[2018] NZHC 1210

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE ROTORUA-NUI-Ā-KAHU ROHE

CIV-2014-463-184

[2018] NZHC 1210

BETWEEN

EAST COAST ALUMINIUM LIMITED (IN LIQUIDATION)
First Plaintiff

VIVIEN JUDITH MADSEN-RIES AND

HENRY DAVID LEVIN as Liquidators of East Coast Aluminium Limited (In

Liquidation) Second Plaintiffs

AND

PATRICIA MERTLE PERRY

First Defendant

DONALD GRAEME PERRY
Second Defendant

ANTONY DAVID SANDFORD FLEMING

Third Defendant

Hearing:

On the papers

Appearances:

N H Malarao and G A Campbell for the Plaintiffs

B L C Shepherd for the First and Second Defendants Appearances excused for the Third Defendant

Judgment:

28 May 2018

JUDGMENT No 2 OF PALMER J

This judgment is delivered by me on 28 May 2018 at 3.00 pm

pursuant to r 11.5 of the High Court Rules.

Solicitors:

Meredith Connell, Auckland Holland Beckett, Tauranga

.....................................................

Registrar / Deputy Registrar

EAST COAST ALUMINIUM LTD (IN LIQ) v PERRY NO 2 [2018] NZHC 1210 [28 May 2018]

[1]                  On 5 March 2018, I delivered judgment in these proceedings.1 I awarded costs to the plaintiffs and granted leave for the parties to file submissions within specified periods if the amount of costs could not be agreed.2

Defendants’ application for recall and costs

[2]                  After the specified period expired, the defendants applied to recall the judgment in regard to costs and, instead, to be awarded costs. Mr Shepherd, for the defendants, submits counsel did not direct my attention to the legal principles regarding costs for the legally aided and refusal of a without prejudice settlement offer.

[3]                  Mr Shepherd submits Mrs Perry, the first defendant, was legally aided and was successful. He submits the plaintiffs did not plead a claim for costs against Mr Perry in respect of the causes of action on which they succeeded. He submits, for all practical purposes, Mr Perry successfully defended the causes of action that would have had a financial impact on him. Alternatively, Mr Shepherd submits costs should be refused or reduced because the plaintiffs failed in relation to the breach of duty/unjust enrichment cause of action which significantly increased costs, and because of the refusal of a settlement offer.

[4]                  The defendants provide evidence they made an offer to settle the proceedings and some 19 months earlier for $42,980 less than I awarded in the judgment, which Mrs Perry is likely unable to pay. He submits Mrs Perry should be awarded costs.

Plaintiffs’ response

[5]                  Mr Malarao, for the plaintiffs, submits the defendants’ submissions could have been made in terms of the leave reserved regarding costs and an application for recall was not necessary. He submits the application for recall should be dismissed and the plaintiffs should be awarded costs against Mrs Perry on a 2B basis and disbursements.

[6]                  Mr Malarao submits the plaintiffs did not seek costs against Mr Perry because he was bankrupt. He submits the defendant’s request costs be awarded to Mr Perry is

1      East Coast Aluminium Ltd (in liq) v Perry [2018] NZHC 317.

2 At [61].

inconsistent with the judgment and flies in the face of what he says is a declaration I made against Mr Perry and the joint liability I found of Mr and Mrs Perry.

[7]                  Mr Malarao submits the exceptional circumstances threshold, for awarding costs against Mrs Perry even though she was legally aided, is met. He submits, in incurring liability as a trustee, Mrs Perry has a right of indemnity against trust assets. He also submits the defendants’ failure to comply with timetabling directions caused the plaintiffs unnecessary costs. And he submits the Perrys causing the plaintiff’s losses should result in a grant of costs against Mrs Perry.

[8]                  Mr Malarao submits the settlement offer was to pay $90,000 sometime in the future, without security, so it was not “certain”. It came a day before a formal proof hearing. He says the plaintiffs put a counter-proposal which the defendants rejected and they made no further offer. He submits the plaintiffs were successful in obtaining a significantly greater sum at trial.

Decisions

[9]                  Rule 11.9 of the High Court Rules 2016 provides a judge may recall a judgment. In Unison Networks Ltd v Commerce Commission the Court of Appeal cited with approval the following examples identified by the English Court of Appeal of cases where recall might be justified:3

[A]  plain mistake on the part of the courts; a failure of the parties to draw to the court’s attention a fact or point of law that was plainly relevant; or discovery of new facts subsequent to the judgment being given. Another good reason was if the applicant could argue that he was taken by surprise by a particular application from which the court ruled adversely to him and that he did not have a fair opportunity consider.

[10]              Here, in making the costs order in the judgment, adverse to the Perrys, I was not aware Mrs Perry was legally aided or an offer of settlement had been made without prejudice save as to costs. I recall the judgment in respect of costs, only, and substitute that costs award with the decision in this judgment not to award costs.

3      Unison Networks Ltd v Commerce Commission [2007] NZCA 49 at [32], quoting Neuberger J’s statement in Re Blenheim Leisure (Restaurants) Ltd (No 3) The Times, 9 November 1999 (Ch) adopted in Stewart v Engel [2000] 1 WLR 2268 (EWCA) at 2274.

[11]              I do not award costs against Mr Perry because the plaintiffs did not seek costs against him in respect of their successful claims. I do not award costs in his favour because I found he breached his duties as a company director.4

[12]              I do not award costs against Mrs Perry because she was legally aided. Section 45 of the Legal Services Act 2014 provides no order may be made against an aided person in a civil proceeding unless the court is satisfied there are exceptional circumstances. I do not consider any such exceptional circumstances here. Mrs Perry was liable as a shareholder or director not a trustee. The Perrys’ failures regarding timetabling orders were not sufficiently exceptional to overcome the usual rule of costs not being awarded against the legally aided. I do not award costs in Mrs Perry’s favour because she was unsuccessful in opposing the claim to repay company drawings.

[13]              I consider costs lying where they fell appropriately reflects the degree of success of the parties in the circumstances.

………………………….

Palmer J

4      East Coast Aluminium Ltd (in liq) v Perry, above n 1, at [58].