59 Karaka Limited v Anson Development Limited

[2024] NZHC 3932

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-2431

[2024] NZHC 3932

BETWEEN

59 KARAKA LIMITED

Applicant

AND

ANSON DEVELOPMENT LIMITED

Respondent

Hearing:	On the papers
Appearances:	JC Suyker for Applicant D Tan for Respondent
Judgment:	19 December 2024

COSTS JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 19 December 2024 at 4 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors

Duthie Whyte, Auckland ACS Law, Auckland

59 KARAKA LTD v ANSON DEVELOPMENT LTD [2024] NZHC 3932 [19 December 2024]

Introduction

[1]                  This is an application for costs by 59 Karaka Ltd (59 Karaka), following the withdrawal of a statutory demand served on it by Anson Development Limited (Anson). 59 Karaka had applied to set aside the demand served but Anson withdrew the demand without filing a notice of opposition.

[2]                  Following the filing of a joint memorandum, I made directions granting leave to 59 Karaka to discontinue the application by consent and reserving costs to be determined following the filing of memoranda.

[3]                  A memorandum was filed by 59 Karaka as directed, but no memorandum has been filed by Anson. The date by which Anson was required to file its memorandum was 8 November 2024. Sufficient time has now been allowed and so I determine costs in the absence of a response.

[4]59 Karaka seeks costs on a 2B basis plus disbursements of $6,418.85 including:

(a)$4,780 for filing and service of the originating application and affidavits in support;

(b)$478 for filing a memorandum in advance of the first call;

(c)$702 disbursement for the filing fee; and

(d)$458.85 disbursement for the costs of a process server to serve the proceeding.

Costs principles

[5]                  The starting point in any costs decision is that costs are at the discretion of the Court.1 Although the discretion is a wide one, it is not unfettered. Rule 14.2(1) of the High Court Rules 2016 sets out the general principles and includes:

1      High Court Rules 2016, r 14.1.

(a)the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds:

(b)an award of costs should reflect the complexity and significance of the proceeding:

…

(g)so far as possible the determination of costs should be predictable and expeditious.

[6]                  Rule 15.23 of the High Court Rules provides a presumption that a discontinuing plaintiff must pay costs to the defendant. I accept the applicant’s submission that this presumption does not normally apply to an application to set aside a statutory demand where the reason for the discontinuance is because the statutory demand is withdrawn.2 As the Court held in Greys Avenue Investments Ltd v New Zealand Mint Ltd, where a creditor withdraws a statutory demand before hearing, without obtaining payment of the demanded amount, the debtor is the successful party in an application to set aside the demand, and the creditor will ordinarily be required to pay costs.3

[7]                  Counsel for 59 Karaka also relies on Propellor Property Developments Ltd v MJB Construction Properties Ltd.4 In that case MJB issued a statutory demand, Propellor applied to set it aside, and MJB immediately conceded, electing not to file an opposition to the application. MJB submitted that costs should lie where they fall because at the time MJB issued the demand it did not know Propellor had a defence and was acting reasonably. The Court awarded Propellor costs, relying on Greys Avenue Investments Ltd v New Zealand Mint Ltd, referred to as the “normal approach”.5

Should a costs award be made in favour of 59 Karaka?

[8]                  In this case, the respondent, Anson, issued the statutory demand in September 2024, demanding payment of $505,000. Anson was a limited partner in 59 Karaka Development Limited Partnership. The applicant, 59 Karaka, was the general partner.

2      Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR15.23.08]

3      Greys Avenue Investments Ltd v New Zealand Mint Ltd [2015] NZHC 2633, (2015) 22 PRNZ 801 at [35]–[40].

4      Propellor Property Developments Ltd v MJB Construction Properties Ltd [2017] NZHC 2745.

5      At [16]–[17].

The limited partnership was incorporated to carry out a property development. When the development was completed in 2020 and properties were sold, 59 Karaka says it returned Anson’s capital contribution together with a profit. 59 Karaka submits there is a dispute between the parties about whether 59 Karaka owes further funds to Anson and that the parties have engaged in correspondence in relation to this. 59 Karaka’s position is that it communicated to Anson in 2022 that no further funds are owing.

[9]                  Following service of the statutory demand on 11 September 2024, 59 Karaka’s solicitor wrote to Anson confirming that the alleged debt was disputed and asking that the demand be withdrawn. 59 Karaka then filed and served an application to set aside the demand. Two days later, counsel for Anson confirmed that the statutory demand was withdrawn without condition. The parties discussed costs but were unable to agree.

[10]              It is not in dispute that 59 Karaka has not paid Anson any amount in connection with the demand.

[11]              Anson’s withdrawal of the demand without payment makes 59 Karaka the “successful party” for the purposes of the proceeding. Anson elected to serve the statutory demand. It rightly withdrew it following the application to set aside being filed. However, 59 Karaka was put to the costs of filing the application. Costs therefore ought to follow the event, as was held in Greys Avenue Investments Ltd v New Zealand Mint Ltd.

Quantum of costs

[12]              The 2B costs claimed for the preparation of the application and affidavits in support together with the cost of preparing the memorandum in advance of the first call are appropriately claimed. The disbursements however include GST in circumstances where I presume the applicant will be registered for GST. The filing fee and disbursements for the costs of a process server are therefore reduced to their GST exclusive figures of $610.43 and $399 respectively. If 59 Karaka is not registered for GST, a memorandum may be filed.

Result

[13]              Anson is to pay costs on a 2B basis of $5,258 and disbursements of $1,009.43 for a total of $6,267.43.

Associate Judge Sussock