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Wagner v B Property Group Limited [2024] NZHC 1305 (23 May 2024)

Last Updated: 29 May 2024

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 23 May 2024 at 3.45 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

WAGNER v B PROPERTY GROUP LIMITED [2024] NZHC 1305 [23 May 2024]

• [1] The applicant (Mr Wagner) and the non-party (Mr McIntosh) are each 50 per cent shareholders in the respondent, B Property Group Ltd (BPGL). Mr McIntosh is, and has at all material times been, the sole director and in effective control of BPGL. Mr Wagner acquired his shares in the company when he invested

$10 million which was to be used to develop a hotel in Wānaka. The development has not proceeded.

• [2] Mr Wagner brought this proceeding under s 178 of the Companies Act 1993 (the Act) to obtain information about what happened to his investment in BPGL. This has resulted in substantive judgments of Dunningham J of 20 July 2023,¹ and Associate Judge Lester of 15 November 2023,² and a further judgment of Associate Judge Lester dismissing an application by Mr McIntosh for leave to appeal.³ In the first two judgments orders were made in Mr Wagner’s favour requiring disclosure of the information he sought.

• [3] Mr Wagner seeks an order that Mr McIntosh personally pay indemnity costs or, in the alternative, increased or scale costs on his applications under s 178. Mr McIntosh considers he should not have to pay costs and certainly not indemnity costs.

• [4] The issues are:

(a) Should Mr McIntosh be ordered to personally pay costs on the applications?

(b) If so, is an award of indemnity or increased costs justified?

(c) Were the legal costs and expenses of Mr Wagner reasonably and necessarily incurred?

(d) What sum should be awarded?

¹ Wagner v B Property Group Ltd [2023] NZHC 1898.

² Wagner v B Property Group Ltd [2023] NZHC 3230.

³ Wagner v B Property Group Ltd [2024] NZHC 911.

The background

• [5] The relevant background leading to the judgment of Dunningham J (following a hearing on 17 July 2023) is set out in her judgment, which I adopt as follows:⁴

• [6] In February 2022, Mr Andrew McIntosh, the sole director of BPGL at the time, provided Mr Wagner with an Information Memorandum describing an opportunity to invest in the development of the Kitea Hotel in Wanaka. Mr Wagner entered into a Subscription Agreement with BPGL under which he invested $10,000,000 in BPGL and became a 50 per cent shareholder of that company. The Subscription Agreement explained that BPGL had been established to own and operate a hotel at 67 Brownstown Street, Wanaka, New Zealand.

• [7] Following a visit to New Zealand in December 2022, Mr Wagner became concerned about the lack of apparent progress with the hotel and wanted to know how the funds he had invested in BPGL had been applied.

• [8] On 16 March 2023, Mr Wagner requested the following information from BPGL under s 178 of the Act:

(a) BPGL’s balance sheet as at that date;

(b) any relevant bank statements since Mr Wagner’s investment in 2022;

(c) the last financial year’s financial statements/annual report;

(d) the current business plan; and

(e) any other document which evidenced how Mr Wagner’s investment had been used, including any company records held at the registered office.

• [9] On 21 March 2023, Mr McIntosh said the information would be provided. When Mr Wagner’s lawyers asked for a timeframe, there was no response. The statutory timeframe passed, and no information was provided.

• [10] On 18 April 2023, BPGL confirmed it had engaged counsel and, on 21 April 2023, counsel for BPGL confirmed that an update on the request for information would be provided “early next week”. No update was provided. On 5 May 2023, this proceeding was served on BPGL and, on 12 May 2023, a copy of the draft orders sought was provided to BPGL.

• [11] BPGL filed a notice of opposition. The application was initially opposed on the grounds that the request for information lacked the specificity as required by s 178 of the Act. However, BPGL nevertheless agreed to provide the following categories of information:

⁴ Wagner v B Property Group Ltd, above n 1.

(a) the last year’s financial statements of the respondent;

(b) relevant bank statements of the respondent since 31 May 2022 to the present; and

(c) the respondent’s balance sheet as of April 2023.

• [12] By 2 June 2023, the concerns about the specificity of the request appeared to have been resolved with counsel for BPGL recording the following:

While the respondent had been seeking in its earlier memorandum that an amended notice of application be filed, it accepts that with the draft orders attached to the memorandum filed by the applicant this morning, those draft orders, coupled with the application, now provide sufficient details of exactly what orders are being applied for.

• [13] However, despite this concession, no information was provided and, on 20 June 2023, counsel for Mr Wagner filed a memorandum seeking an urgent fixture for hearing the application. I set the matter down for hearing on 17 July 2023.

• [14] By the time the applicant filed submissions on 11 July 2023, BPGL had still not provided Mr Wagner with any of the requested information. Some limited information ...was finally provided on 11 July 2023.⁵

• [15] In response, counsel for the applicant filed a further memorandum identifying various issues of concern arising from the documents provided, including that the funds invested appeared to have been advanced to unknown third parties. The applicant therefore sought amended orders for the provision of information which specified particular documents to be provided under several categories of requested information.

• [6] Dunningham J granted Mr Wagner orders that BPGL was to supply a range of information, and also granted Mr Wagner leave to apply for further information.

• [7] Relevantly for present purposes, Dunningham J said:

• [24] The only formal reason given for failing to provide the information is that the information was not specified in sufficient detail to enable the Court to make such an order. ...

• [25] I do not accept, therefore, that the application was so vague that the respondent was justified in providing no documents. Indeed, it is entirely unclear why these documents ... were not immediately supplied, nor why, when the respondent was given a draft order identifying the five groups of documents sought (which BPGL acknowledged had the requisite specificity), BPGL did not provide these documents.

5. That information consisted of a business plan for 2023, a profit and loss statement as of 31 March 2023, and a balance sheet dated 31 March 2023.
   • [26] At the hearing, there was still no explanation for why the request for information had not been complied with. While Mr Ahern for BPGL indicated there were other disputes between Mr McIntosh and Mr Wagner ... that did not explain why the requested information was withheld. Instead, Mr Ahern’s submissions focused on the wording of the draft orders, with him noting he was working with “limited instructions”.

...

[40] in the circumstances where no proper reason has been identified for failing to comply with the s 178 request and where the applicant was put to the expense of applying to the court and attending a hearing, I am readily satisfied that costs should be awarded in the applicant’s favour. ...

• [8] BPGL supplied some documents to Mr Wagner on 27 July 2023 and 7 August 2023 in response to Dunningham J’s judgment.

• [9] On 24 August 2023 Mr Wagner’s counsel wrote to counsel acting for BPGL and Mr McIntosh, requesting information that had not been supplied contrary to Dunningham J’s orders.

• [10] On 28 August 2023 BPGL’s counsel responded that the issues raised were being reviewed and that any application by Mr Wagner for further information would be opposed. No further response was forthcoming.

• [11] On 4 September 2023 Mr Wagner filed an interlocutory application which was in two parts. First, Mr Wagner sought orders requiring Mr McIntosh to provide full compliance with the orders of Dunningham J. Second, further disclosure was sought. The application was opposed by BPGL.

• [12] The application was heard by Associate Judge Lester on 8 November 2023. On 15 November 2023 he issued a judgment that all the information sought by Mr Wagner was to be provided by BPGL. In addition, Mr McIntosh was to provide an explanation in a sworn affidavit for his position that there were no documents relating to much of that information.⁶

⁶ Wagner v B Property Group Ltd, above n 2, at [38].

• [13] Associate Judge Lester noted:⁷

[4] ... [The disclosure provided by BPGL] showed that [Mr Wagner’s] money had been disbursed to “related parties”, that is, to companies associated with Mr Andrew McIntosh, the director of [BPGL] and the holder of the other 50 per cent of the shares, or to Mr McIntosh personally.

...

[9] The notice of opposition states the above information has already been provided or that no further documents exist. Mr McIntosh’s evidence that there are no further documents, is hard to accept ...

...

• [13] ... During the hearing, Mr Ahern, counsel for [BPGL], accepted this reasoning meant there must be material recording how the totals in the accounts were calculated and that material relating to the expenses paid must exist.

• [14] Mr Ahern’s concession was appropriate as, in my view, Mr McIntosh’s bare assertion that there are no further documents, is not credible.

...

• [23] ... First it is for [BPGL] to demonstrate sufficient reason to decline access to Mr Wagner or, that the access is sought for an improper purpose; and second, the reason for declining access must be linked to the interests of the company.

• [24] Accordingly, in a practical sense, the onus is on [BPGL] to explain why the disclosure is not in its interests. The present context is relevant. Mr Wagner’s funds were deposited into [BPGL’s] bank account on 16 June 2022. Within a matter of weeks all of those funds had been distributed. Mr McIntosh has not explained how the application of those funds is linked to the hotel development in Wānaka. Mr Wagner is a 50 per cent shareholder in [BPGL]. Circumstances relevant to the financial viability of [BPGL], in which Mr Wagner has made a substantial investment, are plainly relevant to him.

...

[34] Mr McIntosh’s resistance to disclosure required Mr Wagner to bring an application under s 178. Mr McIntosh’s then piecemeal disclosure along with bare assertions, that cannot be correct, he has no records in relation to transactions, entirely justifies Mr Wagner wanting access to as many hard records as possible. ...

...

[39] [Counsel for BPGL] submitted the issues between Mr Wagner and Mr McIntosh were much wider than just Mr Wagner’s introduction of funds to

⁷ Wagner v B Property Group Ltd, above n 2.

[BPGL]. [Counsel for BPGL] suggested Mr Wagner was seeking documents from [BPGL] for an ulterior purpose. That there are issues between Mr Wagner and Mr McIntosh does not of itself limit Mr Wagner’s rights under s 178 to obtain information from [BPGL] unless such a request would harm [BPGL’s] interests. No such harm is suggested here.

(footnotes omitted)

Principles

• [14] The court has a broad discretion to make an order for costs against a non-party in an appropriate case under either r 14.1 of the High Court Rules 2016 or its inherent jurisdiction. Leading authorities are the decision of the Privy Council in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2),⁸ and the New Zealand Court of Appeal in Kidd v Equity Realty (1995) Ltd.⁹

• [15] Non-party costs orders are exceptional in the sense they are outside the ordinary class of case where parties pursue claims for their own benefit and at their own expense.¹⁰ The ultimate question is whether in all the circumstances it is just to make the order, thereby requiring a fact specific inquiry.

• [16] A director of a closely held company which is engaged in litigation will often have a personal interest in the matter because the benefits derived by the company will likely be indirectly derived by those who own and control it.¹¹ It is also the case that the company may only be able to fund litigation through advances by its directors. The directorship and any such financial involvement in the conduct of litigation are on their own insufficient to make a director, who has not been named as a party to the claim, personally liable for costs.¹² William Young P noted in Kidd Equity Realty (1995) Ltd that something more is required, and that requirement might be regarded as satisfied if: ¹³

(a) there was any relevant impropriety on behalf of the non-party director; or

8. Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2004] UKPC 39, [2005] 1 NZLR 145 at [25].

⁹ Kidd v Equity Realty (1995) Ltd [2010] NZCA 452 at [14]–[20].

¹⁰ S H Lock (NZ) Ltd v New Zealand Bloodstock Leasing Ltd [2011] NZCA 675 at [14], citing

Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2), above n 8.

¹¹ Kidd v Equity Realty (1995) Ltd, above n 9, at [17].

¹² Metalloy Supplies Ltd (In liquidation) v MA (UK) Ltd [1996] EWCA Civ 671; [1997] WLR 1613 (CA) at 1620.

¹³ Kidd v Equity Realty (1995) Ltd, above n 9, at [16].

(b) the director was not acting in the interests of the company but rather in his or her own interests and was thus the real party.

• [17] I was also referred to de Vries v Queenstown.com Ltd where a costs order was made against a non-party director in respect of an application for information under s 178 of the Act.¹⁴ Panckhurst J said:

[7] Hence the key is to identify whether the defence of a proceeding (in this instance) was bona fide and for the benefit of the company, or whether [the director] acted in bad faith, not so much by defending the proceeding (since it went by default), but in refusing to supply the company information and thereby forcing Mr de Vries to obtain an order of the Court.

...

[9] In the final analysis the determinative fact is that Mr de Vries was forced to go the distance of obtaining a court order. He had a statutory right to the relevant information. On a number of occasions he exercised that right and made demand for information to be provided to him. It was not. Even faced with a formal application to the Court, and the threat of costs, [the director] did not comply. Compliance eventually occurred in the face of the Court’s order. All of this suggests bloody-mindedness on [the director’s] part. That amounts to bad faith.

The parties’ submissions

Mr Wagner

• [18] Mr Wagner argues Mr McIntosh was the sole director of BPGL and responsible for the company’s refusal to supply information, despite Mr Wagner’s statutory rights to that information. He submits Mr McIntosh resisted the applications in his own interests to conceal the use to which his investment had been put or for tactical reasons connected with a different dispute between the parties. He says Mr McIntosh’s conduct may be properly characterised as “bloody-minded” and as acting in bad faith. Mr Wagner further contends that, as demonstrated by the judgments of Dunningham J and Associate Judge Lester, all the arguments advanced by Mr McIntosh in opposition to the applications were without merit.

¹⁴ de Vries v Queenstown.com Ltd HC Invercargill CIV-2003-425-86, 23 December 2004.

Mr McIntosh

• [19] Mr McIntosh argues that the fact he is the sole director of BPGL does not alone justify an award of costs being made against him. He submits the Court should adopt a “but for” approach and ask whether but for his involvement the litigation would have taken place in any event.¹⁵ He says the litigation would have occurred in any event because a significant amount of information was sought that could not be supplied within a short timeframe, and it follows there is no basis to award costs against him personally.

• [20] Mr McIntosh submits he did not act in bad faith nor refuse to supply the information sought, and that at all times he acted for the benefit of the company. He says he sought legal and accounting advice “at an early stage” and has provided reasons for the delay in providing information. He argues that comments made in the judgments of Dunningham J and Associate Judge Lester (some of which I have referred to above) do not establish impropriety on his part.

• [21] Mr McIntosh considers his bona fides are established because some information was provided prior to the hearing before Dunningham J, and his counsel had suggested that a hearing was not necessary if leave was reserved for the matter to be brought back before the Court if further information was required. The inference I am asked to draw is that Mr Wagner was acting unreasonably in not accepting that proposal.

• [22] Mr McIntosh says if BPGL had more time the information requested would have been provided without the need for a hearing. Evidence of this, he submits, is that Dunningham J referred to draft orders submitted by Mr Wagner only shortly before the hearing as having “more specificity”, and that by the time of the second hearing before Associate Judge Lester all but one of the orders made by Dunningham J had been fully complied with.¹⁶

¹⁵ Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2), above n 8, at [20].

¹⁶ Wagner v B Property Group Ltd, above n 2, at [34].

• [23] Mr McIntosh says he raised other disputes between himself and Mr Wagner not to justify BPGL’s failure to provide the requested information but as “background”, and a possible explanation for why Mr Wagner commenced litigation rather than engaging with him directly.

• [24] Mr McIntosh submits that de Vries v Queenstown.com Ltd is distinguishable on its facts.¹⁷ He says he was neither stubborn nor bloody-minded, and had been working with accountants to provide the requested information but was simply not able to achieve that within the timeframes allowed.

Should an order for non-party cost be made?

• [25] An order for non-party costs should be made against Mr McIntosh. I reject the content of Mr McIntosh’s affidavit filed in opposition to this application insofar as he attempts to justify the failure to provide the information sought in a timely manner. I will deal with each of the arguments advanced on his behalf.

• [26] I reject the submission that given more time BPGL would have provided the information without the need for a hearing for several reasons. First, the original request for information was made to Mr McIntosh by Mr Wagner’s solicitors on 16 March 2023. The information consisted of five categories of documents, all of which should have been readily available for Mr McIntosh to supply to Mr Wagner. Despite Mr McIntosh responding to the request on 21 March 2023 that “[o]ur accountants will prepare the require [sic] information”, there is no such request to the accountants in evidence. Further, no documents were provided to Mr Wagner until 11 July 2023 and then not all the documents Mr McIntosh, and later his solicitors, had indicated would be supplied.

• [27] Second, Mr McIntosh made it clear he was in no hurry to provide information. In his email to Mr Wagner’s solicitors on 29 March 2023 he advised that “accounts information we supply will come at a time that suits myself and my accounting firm”. When Mr McIntosh later instructed solicitors to act for himself and BPGL there remained a lack of urgency about providing the information, despite that the statutory

¹⁷ de Vries v Queenstown.com Ltd, above n 14.

timeframe for doing so had long expired. On 2 May 2023 those solicitors advised that the “financial documents requested are being finalised and will be forwarded once they are completed” with no date provided as to when that was expected to occur. In those circumstances Mr Wagner understandably filed his application with the court. More than two further months passed before any documents were provided to him.

• [28] Third, it is plain from the correspondence sent by both Mr McIntosh and his solicitors that at the forefront of Mr McIntosh’s mind were other disputes between him and Mr Wagner unrelated to the request for information. For instance, in an email of 21 March 2023 Mr McIntosh expressed the view that he was reluctant to assist Mr Wagner “in any way given the numerous undertakings he has made that he has failed to honour”.

• [29] Fourth, once Mr Wagner made his application it was not Mr McIntosh’s position that the information sought would be provided or that he just required more time to do so. Despite both he and his solicitors initially advising that the information would be provided, Mr McIntosh’s position changed. He belatedly provided some information but opposed providing any more. Importantly, the information he did not wish to provide included bank statements which were of primary importance to Mr Wagner as it was from those statements that he learned how his $10 million investment had been disbursed to Mr McIntosh and entities related to him.

• [30] Fifth, contrary to the submission that it was the amount of information requested that “caused the issue”, alternative explanations have been advanced by Mr McIntosh. One of the matters raised by Mr McIntosh prior to the hearing before Dunningham J was that Mr Wagner’s application was “fundamentally flawed” because it was vague, and it was unclear what was being sought. However, there was no such concern when Mr Wagner initially requested information. In any event, Mr McIntosh’s counsel accepted, in a memorandum of 2 June 2023, that sufficient details of exactly what orders were being applied for had been provided, yet Mr McIntosh still did not provide all of that information prior to the hearing.

Dunningham J also rejected the argument that the application was vague, and in my view was correct in her assessment.¹⁸

• [31] Mr McIntosh also argues there was delay because of the need to have accountants “remove the intermingling in the BPGL accounts”. This refers to separating the financial affairs of BPGL from other companies Mr McIntosh controls. The first correspondence to the accountants concerning making BPGL a “standalone entity” was dated 30 April 2023, six weeks after Mr Wagner’s solicitors initially requested information. That is further evidence of an absence of any intention by Mr McIntosh to provide information in a timely manner. Further, Mr Wagner was asking for information that did, or should, exist. There was no need for the accountants to do anything to provide information such as bank statements or documents evidencing how Mr Wagner’s investment had been used. Despite this, such documents were not supplied.

• [32] Mr McIntosh says Dunningham J referred to the orders that were sought as having “more specificity”, suggesting there was some merit in the argument that a significant amount of information was sought.¹⁹ When read in context, that reference does not provide support for Mr McIntosh. Dunningham J was simply making the point that while orders had been provided that stated the documents sought with more specificity, there was no reason to give BPGL more than the statutory timeframe to provide them because:²⁰

... most of the documents are likely to be readily obtained from the bank or BPGL’s accountant, noting BPGL has advised it has an accountant which prepares its financial records.

• [33] The submission that Mr McIntosh acted in the best interests of the company cannot survive the findings of Dunningham J that there was no explanation for why documents were not supplied,²¹ and of Associate Judge Lester that it had not been explained how disclosure was not in the interests of BPGL and his reference to

¹⁸ Wagner v B Property Group Ltd, above n 1, at [24]–[26].

¹⁹ Wagner v B Property Group Ltd, above n 1, at [34].

²⁰ At [34].

²¹ At [24]–[25].

Mr McIntosh’s piecemeal disclosure and assertions that were not credible and could not be correct.²²

• [34] Contrary to the submissions made on Mr McIntosh’s behalf, it is telling that in opposition to Mr Wagner’s requests for information other disputes were raised for BPGL at both hearings. They were not raised only as background as is submitted. Before Associate Judge Lester the disputes were raised to support a submission that Mr Wagner was seeking disclosure for an ulterior purpose. As Associate Judge Lester noted, the existence of such disputes did not limit Mr Wagner’s rights under s 178 unless the request would harm BPGL’s interests.²³

• [35] I do not accept the submission that Mr McIntosh acted in good faith because some information was provided prior to the first hearing or that counsel had suggested a hearing was not necessary. The information supplied was incomplete and, in the face of Mr McIntosh’s resistance to providing information, counsel’s proposal was clearly not one Mr Wagner could be expected to accept.

• [36] It is also not correct that by the time of the second hearing Mr McIntosh had complied with all but one of the orders made by Dunningham J. It became clear at the hearing before Associate Judge Lester that there was a great deal of information that had not been provided and that Mr McIntosh’s assertions that documents did not exist were not credible.

• [37] While Mr McIntosh submits de Vries v Queenstown.com Ltd is distinguishable on its facts because he was neither stubborn nor bloody-minded, I disagree.²⁴ The person who obtained an advantage from the resistance to providing information was Mr McIntosh. There can be no suggestion that the disclosure of the information to a 50 per cent shareholder of BPGL was contrary to the company’s interests. However, disclosure was contrary to the interests of Mr McIntosh in circumstances where he was engaged in disputes and other litigation with Mr Wagner and had not disclosed to

²² Wagner v B Property Group Ltd, above n 2, at [33]–[34].

²³ At [39].

²⁴ de Vries v Queenstown.com Ltd, above n 14.

Mr Wagner that his $10 million investment in BPGL had been disbursed to the benefit of Mr McIntosh personally or entities with which he is associated.

• [38] In summary, Mr McIntosh had sole control of BPGL at all relevant times, he did not act promptly in response to Mr Wagner’s requests for information to which he was plainly entitled, he then caused BPGL to oppose Mr Wagner’s applications and in doing so was not acting in the interests of the company but in his own interests. The grounds he advanced to oppose Mr Wagner were without merit. Mr McIntosh did not act in good faith and was the real party opposing the applications Mr Wagner was forced to make to this Court. In those circumstances he should personally pay costs.

Is an award of indemnity or increased costs justified?

• [39] Counsel referred me to r 14.6(3) and (4) of the High Court Rules which relevantly provides:

14.6 Increased costs and indemnity costs

...

(3) The court may order a party to pay increased costs if—

...

(b) the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

(i) failing to comply with these rules or with a direction of the court; or

(ii) taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii) failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or

(iv) failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or

...

(d) some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.

(4) The court may order a party to pay indemnity costs if—

(a) the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or

(b) the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or

...

(f) some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.

• [40] I accept, as the Court of Appeal held in Bradbury v Westpac Banking Corporation, that indemnity costs are exceptional and require exceptionally bad behaviour to justify an order for such costs.²⁵

• [41] The question arising is whether Mr McIntosh acted vexatiously, frivolously, improperly or unnecessarily in defending Mr Wagner’s applications to an extent as to justify an award of indemnity costs being made against him. Mr McIntosh submits he did not do so and there is no basis to award indemnity costs. I disagree and am satisfied the high threshold for making such an award is met.

• [42] The grounds relied upon by Mr McIntosh to support his submission that he did not behave badly in relation to the first application determined by Dunningham J are some of the same to which I have already referred and rejected. Primarily it is said that, while there was delay in providing information, Mr McIntosh was prepared to work with Mr Wagner to supply the information without Court intervention. This is simply not a tenable assertion.

• [43] The frivolous nature of the position taken by Mr McIntosh in opposition to the first application is brought into sharp relief by some examples. As noted above, one matter relied upon was that the first application was vague and did not adequately specify the information being sought. Prior to the hearing before Dunningham J, counsel for BPGL filed a memorandum of 2 June 2023 accepting that sufficient detail

²⁵ Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [28].

of “exactly what orders are being applied for” had been provided. Despite that concession, it appears the matter was again relied upon before Dunningham J.²⁶ Further, while maintaining BPGL’s opposition to the application, its counsel advised that he was working with “limited instructions”. Another matter raised was that a realistic timeframe should be allowed to provide information when the first request for the information had been made four months earlier and most of the information was readily available.

• [44] It is then said that, insofar as it is asserted there was a failure to comply with the orders made by Dunningham J requiring a second application to the Court, Mr McIntosh believed BPGL had complied as much as possible. This submission is also not maintainable in light of Associate Judge Lester’s findings in his judgment, with which I agree.

Amount of costs sought.

• [45] Mr Wagner is seeking:

(a) indemnity costs for the first application determined by Dunningham J in the amount of $95,942; and

(b) indemnity costs for the second application determined by Associate Judge Lester in the amount of $102,428.40.

• [46] In addition, Mr Wagner seeks scale costs on a 2B basis for this costs application in the amount of $10,038 and disbursements in respect of all matters amounting to

$7,164.71.

• [47] Mr McIntosh submits indemnity costs must be reasonable. He argues that the costs sought by Mr Wagner are not reasonable as the applications were not complex, there were only four brief affidavits filed in support of them, and the hearings took in total less than half a day. He also submits that work on behalf of Mr Wagner was undertaken by senior lawyers (in this instance partners in Russell McVeagh) which

²⁶ Wagner v B Property Group Ltd, above n 1, at [24]–[25].

was not appropriate or necessary so that the median hourly rate charged is above what is reasonable.

• [48] Mr Wagner argues that the work was complex, the matter was of importance as it concerned a $10 million investment made in BPGL, and the work was undertaken by lawyers of an appropriate level of seniority so that the median hourly charge out rate was reasonable.

• [49] As Hinton J noted in Ryan v Lobb:²⁷

Indemnity costs are calculated on the basis of a reasonable allocation of actual costs in regard to the appropriate time taken, the significance and complexity of the work, and the median hourly rate reasonably applicable.

• [50] While indemnity costs are determined with reference to actual costs, an award may be (and often is) less than the costs actually incurred if the actual costs are excessive or were not reasonably incurred.

• [51] The legal work performed by Mr Wagner’s solicitors was of a very high quality representing, no doubt, the importance of the matter to Mr Wagner and the large amount of Mr Wagner’s investment in BPGL. I have no reason to doubt that the hours recorded by Mr Wagner’s solicitors are accurate. However, I do not consider those hours reflect the work that was reasonably necessary for the steps taken in this proceeding. I am also not able to accept the submission that the work was complex. In my view, there were no significant issues of law or fact arising, the evidence was relatively brief as were the hearings, and the information eventually provided should not have required a substantial amount of forensic analysis. The applications were of no more than average complexity for a matter in the High Court.

• [52] For all steps taken in the proceeding up to the conclusion of the hearing before Associate Judge Lester, Mr Wagner’s solicitors claim for 285.9 hours work. That is the equivalent of 47.65 days’ work for a single author if one adopts an average of six chargeable hours per day. This compares with just 10 days’ work (or 60 hours) if one

²⁷ Ryan v Lobb [2024] NZHC 386 at [26].

applies the time allocations in band B of sch 3 to the High Court Rules and 18.5 days’ work (111 hours’ work) if one applies band C.

• [53] I have gone through each step taken in the proceeding and made my best assessment of the time reasonably and necessarily required to undertake them having regard to the significance and complexity of the work. I have cross-checked my assessment against the narration and breakdown of indemnity costs which is schedule D to Mr Wagner’s counsel’s submissions. I have taken what I consider to be a robust and realistic approach and in my view an allowance of 100 hours is reasonable for the work undertaken.

• [54] Ms McKenzie takes issue with the hourly rates charged by Mr Wagner’s solicitors. She submits that not only are the hourly rates high but attendances by authors at partner level were excessive. I do not agree.

• [55] Both parties were represented by commercial law firms based in Auckland. Their hourly rates can be expected to be higher than those charged in smaller centres. I understand the hourly rates claimed are those ordinarily charged by Mr Wagner’s lawyers, and I have no reason to consider they do not reflect the market. Further, the work was carried out by a range of senior, intermediate and junior lawyers. The median hourly rate charged was somewhat less than that charged at senior associate level, which I consider appropriate reflecting the average complexity but importance of the proceeding.

• [56] I find that in relation to the proceeding, from commencement to the conclusion of the hearing before Associate Judge Lester, Mr Wagner is entitled to reasonable indemnity costs representing 100 hours at $675.60 or $67,500.

Result

• [57] Mr Wagner’s application for non-party costs is allowed.

• [58] Mr Wagner is awarded indemnity costs against Mr McIntosh in the sum of

$67,500.

• [59] No issue was taken with the disbursements claimed of $7,164.71 and that is allowed also.

• [60] Mr Wagner has been successful on his application for costs. There is no reason costs should not follow the event,²⁸ and I award him scale 2B costs on this application in the amount of $10,038 in accordance with the schedule attached to counsel’s submissions.

O G Paulsen Associate Judge

Solicitors:

Russell McVeagh, Auckland Morrison Kent, Auckland

²⁸ High Court Rules 2016, r 14.2(1)(a).