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

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NZHC 3932
Decision Date: 19 December 2024

CaseChat Overview and Summary

This case involves an application for costs by 59 Karaka Limited, following the withdrawal of a statutory demand by Anson Development Limited. The statutory demand, which sought payment of $505,000, was served on 59 Karaka, who subsequently filed an application to set it aside. Anson withdrew the demand without filing a notice of opposition, and the parties were unable to agree on costs. 59 Karaka applied to the High Court for costs, which were reserved pending the filing of memoranda. Only 59 Karaka filed its memorandum, and the Court now determines costs in the absence of a response from Anson.

The primary legal issue before the Court was whether 59 Karaka, having successfully had the statutory demand set aside, was entitled to costs. The Court considered whether the presumption under Rule 15.23 of the High Court Rules that a discontinuing plaintiff must pay costs to the defendant applied, and if not, whether 59 Karaka was entitled to costs under other principles. The Court referred to previous cases, including Greys Avenue Investments Ltd v New Zealand Mint Ltd and Propellor Property Developments Ltd v MJB Construction Properties Ltd, which established that where a statutory demand is withdrawn without payment, the debtor is the successful party and the creditor should pay costs.

The Court concluded that the presumption in Rule 15.23 did not apply because the statutory demand was withdrawn due to the application to set it aside, not because 59 Karaka had discontinued its application. The Court held that 59 Karaka was the successful party, as it had not paid any amount in connection with the demand and was put to the cost of filing the application. The Court found that costs should follow the event, as established in Greys Avenue Investments Ltd v New Zealand Mint Ltd.

Regarding the quantum of costs, the Court accepted that the costs claimed for the preparation of the application and affidavits were appropriately claimed. However, the disbursements included GST, which the Court reduced to their GST exclusive figures. The filing fee and disbursements for the costs of a process server were adjusted accordingly. The Court ordered Anson to pay costs of $5,258 on a 2B basis and disbursements of $1,009.43, totaling $6,267.43.

In conclusion, the Court ordered Anson Development Limited to pay the costs of $5,258 on a 2B basis and disbursements of $1,009.43, making a total of $6,267.43.

Orders