East Wind Holdings Limited (in liquidation)

[2022] NZHC 903

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-2105

[2022] NZHC 903

UNDER

Part 6 of the Insolvency Act 2006 and Part 19 and Part 24 (11) High Court Rules 2016

IN THE MATTER AND

AND

AND

EAST WIND COMPANY LIMITED

(In Liquidation)

EAST WIND HOLDINGS LIMITED
(In Liquidation)

JAPAN BUSINESS CONSULTING PROGRAMME LIMITED

(In Liquidation)

EAST WIND PROGRAMME LIMITED
(In Liquidation)

EAST WIND NOMINEE COMPANY LIMITED

Applicants

Hearing:	On the papers
Appearances:	K F T Stolberger / B McKinlay for Applicants J D Turner for Interested Parties
Judgment:	3 May 2022

JUDGMENT OF LANG J

[on costs]

This judgment was delivered by me on 3 May 2022 at 2 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

In the matter of EAST WIND COMPANY LTD (in Liquidation) [2022] NZHC 903 [3 May 2022]

[1]    In this proceeding the applicants, both of whom are companies in liquidation, sought an order under s 381 of the Insolvency Act 2006 that the estate of the late Azalea Siu Tai Tsai (Mrs Tsai) be administered under Part 6 of the Insolvency Act 2006. They sought an order that the Official Assignee or some other suitable person be appointed to administer Ms Tsai’s estate.

[2]    By minute issued on 17 September 2021 the Court directed that a copy of the proceeding be served on Mrs Tsai’s two adult children, Ms Eliza Tsai and Mr Ethan Tsai, as interested parties. The Court also directed that the proceeding be served on the Official Assignee.

[3]    The Official Assignee subsequently advised that he abided the decision of the Court. Mrs Tsai’s children responded by filing documents in opposition to the application on 9 December 2021.

[4]    On 13 December 2021 Associate Judge Taylor directed that the application was to be heard at a fixture on 7 April 2022. He also gave directions for the filing and service of reply evidence and submissions.

[5]    Mr Ethan Tsai subsequently filed an application to be appointed as administrator of his mother’s estate. This prompted the applicants to withdraw their application on 31 March 2022.

[6]    The only remaining issue is the question of costs. Mrs Tsai’s children seek an award of costs in their favour on the basis that they were the successful parties in the proceeding. The liquidators of the applicant contend that the unusual circumstances of this case justify an order that costs should lie where they fall.

Relevant principles

[7]    The situation that has occurred in the present case is analogous to the situation where a plaintiff discontinues a claim against a defendant. Rule 15.23 of the High Court Rules 2016 provides that, unless the defendant otherwise agrees or the Court otherwise determines, a plaintiff who discontinues a proceeding against a defendant

must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.

[8]    In Kroma Colour Prints Ltd v Tridonicatco NZ Ltd, the Court of Appeal confirmed that the presumption in favour of an award of costs to a defendant when a proceeding is discontinued may be displaced if there are just and equitable circumstances not to apply it.1 In this context the Court will not speculate as to the respective strengths and weaknesses of the parties’ cases. However, the overall reasonableness of the stance taken by both parties needs to be considered.

Decision

[9]    In the present case I accept that the liquidators had a genuine reason to file the proceeding. They could not complete the liquidations of the applicants because they considered the companies had valid claims against Mrs Tsai’s estate. That issue could not be determined unless and until an administrator was appointed. During the 20 months that had elapsed since Ms Tsai’s death, no other party had taken steps to be appointed as administrator of her estate. This is despite the fact that her two children were the obvious candidates for that position.

[10]   Counsel for Mrs Tsai’s children contends the liquidators’ claims were unsubstantiated or baseless but I cannot proceed on that basis for present purposes. The liquidators instituted the proceeding so that those issues could be progressed. This obviously led to Mr Ethan Tsai applying for appointment as administrator himself. There is no evidence that he would definitely have taken that course of action had the present proceeding not been issued.

[11]   Viewed in that light, I do not consider the application was unnecessary or unreasonable as counsel for Mrs Tsai’s children contends. In the absence of one of the children applying to be appointed as administrator I do not accept the proceeding would have fallen at the first hurdle as he submits. The liquidators made similar claims against the estate of Mrs Tsai’s husband and the Public Trustee was appointed as administrator of his estate so they could be progressed. The only reason the liquidators

1      Kroma Colour PrintsLtd v Tridonicatco NZ Ltd [2008] NZCA 150 at [12].

did not seek to have the Public Trustee appointed as administrator of Mrs Tsai’s estate was that the Public Trustee considered it would have a conflict of interest if it was to administer both estates.

[12]   I consider, in fact, that the applicants were arguably the successful parties because they achieved the outcome they sought, namely the appointment of an administrator. They did not have any preference as to who the administrator was. As I have already observed, they sought an order that the Official Assignee or some other suitable person be appointed as administrator. Once Mr Ethan Tsai made it clear that he was prepared to take that step, the applicants discontinued the proceeding. I therefore consider the interests of justice do not favour an award of costs in favour of the interested parties.

Result

[13]I direct that costs are to lie where they fall.

Lang J