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Natural Dairy (NZ) Holdings (FSD 186 of 2016) (costs)

We previously reported on the case of Natural Dairy (NZ) Holdings (FSD 186 of 2016) (NSJ), where the Hon. Justice Segal confirmed that the Grand Court of the Cayman Islands could substitute a contributory petitioner on a contributory’s winding-up petition despite there being no express power to do so under the Companies Winding-up Rules 2008 (the Substitution Application). The Court recently released its unreported judgment on the matter as to costs. Justice Segal made two costs orders: (a) that the Company pay the Petitioner’s costs of the application on an indemnity basis with costs to be taxed if not agreed (the JPL Summons Costs Order); and (b) that the Company pay the Petitioner’s costs of its successful application to restore the Company to the register (the Section 159 Costs Order). The Company argued that the Petitioner should not be awarded costs because, inter alia, the Petitioner did not have locus to present the petition and therefore the Petitioner was not entitled to an order appointing the JPLs. The Court held that as a result of the order in the Substitution Application, the order appointing JPLs remained in force and was to be treated as properly made, and therefore the JPL Summons Costs Order was appropriate. Justice Segal explained that the alternative would be to dismiss the petition due to lack of standing and discharge the JPLs. It would follow that the substitute contributory petitioner in the Substitution Application would bring a fresh petition and application for appointment of PLs, which would be granted, in turn making the Company liable for the costs in that application. On the Section 159 Costs Order, Justice Segal held that it would be unjust for the Petitioner to have to bear the cost of bringing restoration proceedings in circumstances where restoration was for the benefit of the Company and other stakeholders, and the need for the application was due to the Company’s own default in failing to maintain its registration. In both circumstances, the Court adopted a pragmatic approach and did not find sufficient reasons to depart from the normal order as to costs. For any more information, please contact Ian Mann or Jo Verbiesen.

Natural Dairy (NZ) Holdings (FSD 186 of 2016) (costs)

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