Abernethy v Coughlan HC Auckland CIV-2010-404-000939

[2011] NZHC 748

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-000939

UNDER  the Property Law Act 1952

BETWEEN  VANESSA EILEEN ABERNETHY AND ALAN RICHARD ABERNETHY Applicants

ANDRICHARD FRANCIS COUGHLAN First Respondent

ANDTREVOR JAMES HUMPHREY Second Respondent

ANDRICHARD WILLIAM COUGHLAN Third Respondent

ANDJOHN WYBER PETERSEN Fourth Respondent

ANDBRIAN NELSON REECE Fifth Respondent

Hearing:         On the Papers

Counsel:         S E Mitchell for Applicants

A G MacLean for Respondents

Judgment:      29 June 2011

JUDGMENT OF WHATA J

This judgment was delivered by Justice Whata on

29 June 2011 at 10.30 a.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors:

Grimshaw & Co., PO Box 6646, Auckland

Alistair MacLean, PO Box 477 422, Ponsonby, Auckland

ABERNETHY V COUGHLAN HC AK CIV-2010-404-000939 29 June 2011

[1]      This matter concerns a notice of discontinuance filed by the applicants in respect of an originating application for freezing orders without notice.

[2]      The respondents to that application seek costs on the discontinuance.

[3]      By way of background, freezing orders were granted on the terms sought by the applicants on a temporary basis and the matter was set down to be called before a Duty Judge shortly after the issuance of the order.  At that Duty Judge mention, the matter was procedurally aligned to  sister proceedings, namely appeals  against a Weathertight Homes Tribunal decision.  It was further sent off for a further call in the Duty Judge List on 25 March 2011.

[4]      At the 25 March call, the respondents did not seek to set aside the freezing orders, but all costs in relation to the orders were reserved.

[5]      The sister proceedings were then determined with both the applicants and the respondents failing in their respective appeals.   The respondents in this case then paid a sum of $60,310.86, being the amount owing from the date of the decision of the Weathertight Homes Tribunal.

[6]      The applicants in these proceedings see no further purpose in pursuing the freezing orders, given the payment.  The respondents, however, seek costs given the attendances that they have had to make in relation to these proceedings.

[7]      The respondents rely on r 15.23 of the High Court Rules, which provides that a  plaintiff  who  discontinues  a  proceeding  is  to  pay  costs  on  discontinuance, including   all   costs   incidental   to   the   proceeding   up   to   and   including   the discontinuance, unless the defendant otherwise agrees or the Court otherwise orders.

[8]      The applicants say they should not have to pay costs on the basis that:

(a)      The freezing orders were entirely necessary, especially given the fact that the Court had granted the orders against a backdrop of an allegation of fraudulent intent on the part of the respondents.

(b)It was reasonable for the applicants to seek freezing orders to prevent the equity in the respondents’ assets being dissipated or otherwise transferred.

(c)      In any event, the respondents have not incurred any costs because they did not oppose the application.  The two appearances in the Duty Judge’s List dealt with appeal matters as well as freezing order applications.  The only other costs incurred have arisen from advising the respondents on the application and preparing the memorandum of costs.

(d)Overall  it  is  just  and  equitable  that  the  costs  arising  out  of  the application lie where they fall.

Discussion

[9]      I do not agree with the applicants’ submission that the presumption in r 15.23 should be displaced.  Freezing orders were a mechanism employed by the applicants to protect their position.  They achieved that on a without notice basis.  In doing so they forced the respondents to incur cost.  They therefore took the risk that a costs order might be imposed in the ordinary way.

[10]     In reaching this conclusion, I accept entirely that costs are not punitive, but reflect an appropriate measure of the time and attendances incurred in meeting the application.

[11]     As to the applicants’suggestion that the orders were necessary to defeat an intention to defraud, naturally, in granting the freezing order the Court satisfied itself that there was a serious arguable case that such an intention existed.  However, this could hardly be said to be a final determination of the issue.

[12]     The respondents did not seek to defend the interim freezing orders, but rather focused on the merits of the relevant associated proceedings.  In my view, this cannot be a basis for refusing costs that they incurred for the attendances in respect of the

freezing orders.   If anything, the respondents have saved time and costs for all parties and for the Court in seeking to focus on the substantive merits rather than seeking to unpick the freezing orders granted.

[13]     I note for completeness that this case should not be confused with those cases where the plaintiff has succeeded through the capitulation of the defendant.[1]   While the substantive proceedings have been resolved, the respondents have never accepted that the freezing orders were necessary or appropriate.   If anything, it might be inferred that the speedy payment of the judgment sum suggests that the freezing orders may have been unnecessary.

[1] Consider for example Ford v First National Real Estae Ltd (2006) 18 PRNZ 432 (HC) and Small v

A Judicial Committee HC Christchurch CIV-2009-409-2622, 20 April 2010

[14]     In these circumstances, I am not prepared to reverse the presumption overt in r 15.23.

[15]     There is a dispute as to the quantum of costs.  It appears that the respondents are seeking full costs in relation to appearances at the two Duty Judge Lists of 25

February  and  24  March  2011.     Given  that  these  attendances  also  included attendances in relation to the related appeals, there should be some discount.   I reduce that aspect of their claim by 50 per cent.

[16]     In relation to the balance of the costs sought, I agree with the respondents that attendances  and  preparation  for  dealing  with  the  proceedings  are  reasonably claimable by them.  I consider, however, that a full day for considering the freezing orders, and advising on them with the result that no opposition was taken, is excessive.    I also  reduce this,  and  the costs of the memoranda associated with discontinuance by 50 per cent.

[17]     On the basis of the foregoing I make the following orders as to costs in favour of the respondents:

(a)       Costs for appearances at mentions hearing, filing of memorandum for mentions hearing and sealing of order (one half day at $1,880 per

day): $940.

(b)Costs associated with dealing with the application for freezing orders and  in  relation  to  the  discontinuance  (.7  day  at  $1,880  per  day):

$1,316.

(c)       I also grant reimbursement of $40 for the sealing fee.

Whata J