Acqua Pools and Spas Limited v CPC New Zealand Limited

[2014] NZHC 828

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2013-485-6485 [2014] NZHC 828

UNDER	The Companies Act 1993
BETWEEN	ACQUA POOLS AND SPAS LIMITED Plaintiff
AND	CPC NEW ZEALAND LIMITED Defendant

On the papers
Judgment:	17 April 2014

JUDGMENT OF ASSOCIATE JUDGE SMITH

[1]      The defendant claims costs following the withdrawal of a liquidation claim brought against it by the plaintiff.  The liquidation claim was based on an alleged debt of $5,900.71.  The claim referred to the defendant’s failure to comply with a statutory demand served on it on 15 July 2013.

[2]      The defendant filed a statement of defence and a supporting affidavit sworn by its director Mr Pharbhu.

[3]      The liquidation claim was listed for first call on 11 November 2013.  Shortly before the hearing, the plaintiff agreed to withdraw the application and issue proceedings in the Disputes Tribunal within ten working days.  The agreement was that the costs of the liquidation proceeding should be reserved to be determined following the conclusion of the Disputes Tribunal hearing.  The application was duly withdrawn when called on 11 November 2013 with costs reserved.

[4]      The plaintiff filed a claim in the Disputes Tribunal naming the defendant and

Mr Pharbhu as first and second respondents.  However the plaintiff failed to appear

ACQUA POOLS AND SPAS LTD v CPC NEW ZEALAND LTD [2014] NZHC 828 [17 April 2014]

at the hearing at the Disputes Tribunal, and did not provide any evidence in support

of its claim.  The Disputes Tribunal dismissed the plaintiff’s claim on 14 February

2014.

[5]      The defendant filed a memorandum on 24 February 2014 seeking an award of $9,145 for its costs and disbursements incurred in the liquidation proceeding.  By a minute dated 19 March 2014, I directed that the plaintiff could file a memorandum in reply by no later than 5pm on Friday 28 March 2014.   I indicated that I would make a ruling on the costs application on the papers after that date.

[6]      The plaintiff did not file any costs memorandum.

[7]      The defendant calculated scale 2B costs at $6,080: made up as follows:

The normal 2B scale would be as follows: Schedule 3

Item 2  Defence  2 days

(note, there is no specific provision for the defence, as opposed to a claim, in liquidation proceedings – see items 48 to 51. By analogy, see item 38)

Item 50  Appearance at first call           0.4 days

There is no provision for the filing of the affidavit in opposition but see item

38 noted above.

Item 11 (by analogy)	Filing costs memorandum	0.4 days
Item 29	Sealing costs order	0.2 days
Total	3 days
At $1990 per day	$5970.00
Filing fee on defence	$110.00
Total	$6,080.00

[8]      The defendant says that this is a case where solicitor/client costs should be awarded, or alternatively that there should be a 50 per cent uplift on scale costs.  In the event, there is very little difference between the two.  A 50 per cent uplift on the scale costs figure of $5,970 plus the filing fee on the defence produces a total figure of $9,065. The invoices rendered to the defendant show that solicitor/client costs totalled $9,145.50.

[9]      The justification for the claimed uplift is that the plaintiff well knew that there was a genuine dispute over the debt, but proceeded nevertheless to issue a liquidation claim.1

[10]     The plaintiff’s  claim related to the installation of a swimming pool  at a property occupied by Mr Parbhu in 2012.  An invoice for the small balance was sent to Mr Parbhu by the plaintiff. It is clear from his affidavit that the amount claimed was disputed.2

[11]     Nothing appears to have happened after that until the plaintiff issued the statutory demand on 15 July 2013.

[12]     The defendant wrote to the plaintiff challenging the statutory demand on

29 July 2013, and pointed out that the defendant was not a party to any transactions with  the  plaintiff:  the  transactions  were  between  the  plaintiff  and  Mr Parbhu personally, and related to Mr. Parbhu’s home.  The defendant’s letter dated 29 July

2013 pointed out various other respects in which the plaintiff ’s claim was disputed.

[13]     The plaintiff’s solicitor wrote to Mr Parbhu on 30 July contending that the statutory demand had expired, and advised that his instruction were to proceed with a liquidation claim against the defendant.  Mr Parbhu wrote back pointing out that 15 working days as referred to in the notice would not expire until 5 August 2013.  The plaintiff’s solicitor responded: “Yes, but you only had 10 working days to dispute it and that time has expired”.

[14]     The defendant also referred to Pramukh Enterprises Ltd v Johal Enterprises Ltd where increased costs were awarded when the court considered that it should have been appreciated at an early stage that setting aside of the relevant statutory

demand was inevitable.3

1      FD Builders & Joiners Ltd v M & H Properties Ltd HC Auckland CIV-2010-404-4195, 18

February 2011.

2      See exhibit I; Mr Parbhu contended in a 16 October 2012 email that the work the plaintiff was charging for as an addition was in fact covered by the plaintiff ’s original quote.

3      Pramukh Enterprises Ltd v Johal Enterprises Ltd (2004) 17 PRNZ 317 at [56].

[15]     I agree with the defendant that this is a case for an award of increased costs. In the similar decision FD Builders & Joiners Ltd v M & H Properties Ltd, Lang J held that it is “axiomatic that a creditor should not issue a liquidation proceeding based upon a debt that is the subject of a genuine dispute”.4

[16]     In this case, the plaintiff was well aware that the small balance claimed by it for the swimming pool work was disputed, both before the statutory demand was issued and after.   In my view the claim was never appropriate for the issue of a statutory demand, and still less appropriate for the issue of a liquidation proceeding following the plaintiff’s receipt of Mr Parbhu’s 29 July 2013 letter.   The plaintiff elected not to reply in substance to that letter, not to subsequently prosecute its claim in the Disputes Tribunal, and not to respond to the defendants’ costs application.

[17]     It is true that the defendant did not apply to the court to set aside the statutory demand within the prescribed period. However given the small size of the claim that was perhaps understandable.  In any event, costs which might have been awarded on an opposed application to set aside a statutory demand would likely have been no less than the costs award that is appropriate in this case.

[18]     In all of the foregoing circumstances, I agree that a 50 per cent uplift on ordinary scale costs (calculated on a 2B basis) is appropriate.   Accordingly, I fix costs in the defendant’s favour in the sum of $9,065, including disbursements.

Associate Judge Smith

Solicitors:

Hampton Horrocks, Auckland for Plaintiff

Queen City Law, Auckland for Defendant

4 FD Builders & Joiners Ltd v M & H Properties Ltd, above n 1, at [17].