Mana Property Trustee Ltd v James Developments Ltd

JurisdictionNew Zealand
JudgeElias CJ,Blanchard,Tipping,McGrath,Anderson JJ
Judgment Date11 October 2010
Neutral Citation[2010] NZSC 124
Docket NumberSC 105/2009
CourtSupreme Court
Date11 October 2010
BETWEEN
Mana Property Trustee Limited
Appellant
and
James Developments Limited
Respondent

[2010] NZSC 124

court:

Elias CJ, Blanchard, Tipping, McGrath and Anderson JJ

SC 105/2009

IN THE SUPREME COURT OF NEW ZEALAND

Application for costs by appellant against liquidators of respondent company personally, following a successful appeal to the Supreme Court, after respondent company had been successful in having an order for specific performance overturned in the Court of Appeal — whether costs should be awarded against liquidators personally.

counsel:

J M McCartney SC for Appellant

C S Withnall QC for Respondent

D M Lester for Liquidators of Respondent

  • A The application for costs against the liquidators personally is dismissed with costs to the liquidators of $2,500.

  • B The costs award made by the Court of Appeal in favour of the respondent is reversed.

  • C The appellant is awarded costs in this Court against the respondent in the sum of $15,000 together with reasonable disbursements to be fixed by the Registrar.

JUDGMENT OF THE COURT (COSTS)
REASONS

(Given by Blanchard J)

1

Mana Property Trustee Ltd has made an application for costs following its successful appeal to this Court. 1 It seeks costs in relation to both the Court of Appeal and Supreme Court stages of the proceeding not only against James Developments Ltd but also against its liquidators personally.

2

James agreed to purchase some land from Mana for $4.5 million. It paid a deposit of $450,000 but later failed to settle. It alleged that it had validly cancelled the contract and asked for refund of the deposit. Mana brought the proceeding against James in the High Court seeking specific performance of the contract. On Mana's application for summary judgment, the High Court made an order for specific performance. 2

3

James appealed to the Court of Appeal and paid for security for costs in the sum of $4,740. It also applied to the High Court for a stay of execution pending appeal. On 28 May 2009 the High Court granted a stay on terms that James would, within 10 days, pay Mana's costs awarded by the High Court and also pay $821,214.80 into Mana's solicitors' trust account. A further condition of the stay was that James would obtain a hearing of the appeal in the week commencing 20 July 2009 and diligently prosecute the appeal.

4

These conditions, which necessarily related to the stay rather than to James's ability to pursue the appeal (it was not an “unless” order), were not complied with. On 6 July Mr Chris James, the sole shareholder of James, by resolution placed James into liquidation and appointed two Dunedin insolvency practitioners, Mr Jenkins and Mr Nellies, to be its liquidators.

5

On 17 July counsel for Mana asked the liquidators whether they intended to pursue the appeal. It was not until 20 August that the liquidators advised that they did. Mana then applied to the Court of Appeal for orders adjourning, staying or striking out the appeal. It also sought an increase in the amount of the security for costs if the appeal was to proceed. The appeal had been set down for hearing by a Court of Appeal panel on 15 September. The presiding Judge, Hammond J, convened a telephone conference on 7 September. He declined to grant an adjournment and, in the absence of the other members of the panel, did not make any of the other orders which had been sought.

6

Before the appeal was heard, Mana obtained from the High Court an order discharging the specific performance decree but leaving it free to seek damages from James.

7

The Court of Appeal hearing took place on 15 September and that Court subsequently delivered a judgment allowing James's appeal. 3 Disagreeing with the High Court, it took the view that James had been entitled to cancel the contract because Mana had on the settlement date been in breach of an essential term relating to the minimum area of the property. It also, briefly, rejected an argument from Mana that it was entitled to a reasonable time for complying with the essential obligation, which time had not run out when the cancellation notice was given.

8

Mana obtained leave to appeal to this Court which has now allowed its appeal. We agreed with the Court of Appeal that the minimum area stipulation was an essential term but we held, in response to a reformulated argument from Mana, that, in the circumstances, James's cancellation was invalid because it had not served a settlement notice on Mana giving it 12 working days in which to adduce a compliant title. This Court has made a declaration that James's purported cancellation of the contract was of no effect. The proceeding has been remitted to the High Court for outstanding issues to be determined in light of this Court's judgment. The costs order made by the Court of Appeal has been set aside.

9

We deal first with Mana's application for costs against the liquidators personally. The commencement or continuance of a proceeding against a company in liquidation requires the consent of its liquidator or the Court 4 but a liquidator has power under para (a) of Schedule 6 to the Companies Act 1993 to commence, continue or defend a proceeding on behalf of the company in liquidation without any court consent being needed. The party to the litigation is the company, not the liquidator, even in the case of a proceeding commenced against the company after it is in liquidation. It was therefore James itself which was the successful appellant in the Court of Appeal and the unsuccessful respondent in this Court. The liquidators were merely its agents in relation to the litigation, having taken over the conduct of its affairs from its director.

10

A non-party like a director or liquidator is not at risk of a costs award in other than exceptional circumstances, that is, circumstances outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. 5 In the case of a liquidator that is a principle of very long standing. 6 There is certainly jurisdiction to order a liquidator as a non-party to pay costs personally but such an order will not be made unless there has been some relevant impropriety on the part of the liquidator. 7 The courts recognise that the other party can protect its position, should it be successful, through its ability to seek in advance an order for payment of security for costs. 8 In Metalloy Supplies Ltd v MA (UK) Ltd Millett LJ summarised the position: 9

The court has a discretion to make a costs order against a non-party. Such an order is, however, exceptional, since it is rarely appropriate. It may be made in a wide variety of circumstances where the third party is considered to be the real party interested in the outcome of the suit. It may also be made where the third party has been responsible for bringing the proceedings and they have been brought in bad faith or for an ulterior purpose or there is some other conduct on his part which makes it just and reasonable to make the order against him. It is not, however, sufficient to...

To continue reading

Request your trial
33 cases
  • Waterhouse v Contractors Bonding Ltd
    • New Zealand
    • Supreme Court
    • 20 September 2013
    ...Court recognised Dymocks as the leading case on costs against non-parties in Mana Property Trustee Ltd v James Developments Ltd (No 2) [2010] NZSC 124, [2011] 2 NZLR 25 at [11]. We also note that the English Court of Appeal held in Arkin, above n 45, that a professional funder should be po......
  • Fern Ltd ((in Liquidation)) v Financial Trust Ltd and Anor
    • New Zealand
    • High Court
    • 30 November 2010
    ...4 Total Spares & Supplies Ltd & Anor v Antares SRL & Anor (2006) EWHC 1537 (Ch). 5 Mana Property Trustee Ltd v James Developments Ltd [2010] NZSC 124 at 6 At [49]. 7 Hamilton v Al Fayed (No. 2) [2002] 3 All ER 641. 8 Globe Equities Ltd v Globe Legal Services Ltd [1999] BLR 232. 9 Byrne v......
  • Shanghai Neuhof Trade Company Ltd v Zespri International Ltd
    • New Zealand
    • High Court
    • 13 May 2020
    ...2), above n 6, at [25] and [29] (citations omitted); approved by the Supreme Court, Mana Property Trustee Ltd v James Developments Ltd [2010] NZSC 124, [2011] 2 NZLR 25. 8 Waterhouse v Contractors Bonding Ltd [2013] NZSC 89, [2014] 1 NZLR 91 at [67]. 9 Arklow Investments Ltd v MacLean HC ......
  • Warren Metals Ltd v Grant and Khov Hc Ak
    • New Zealand
    • High Court
    • 20 February 2013
    ...v North Shore Marine & Industrial Ltd (in liq) (1981) 1 NZCLC 95,019 (HC). 3 See Mana Property Trustee Ltd v James Development Ltd [2010] NZSC 124, [2011] 2 NZLR 25 at [9]; Dunphy v Sleepyhead Manufacturing Ltd [2007] NZCA 241, [2007] 3 NZLR 602 at [19]– [25]; Gilbert v About Body Corporat......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT