Adventure Brands Limited v Davies

[2017] NZHC 381

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2016-409-000798 [2017] NZHC 381

BETWEEN

ADVENTURE BRANDS LIMITED

Plaintiff

AND

MURRAY REX DAVIES Defendant

Hearing:	8 March 2017 (Determined on the papers)
Counsel:	S D Munro and C Houghton for Plaintiff M J Borcoski for Defendant
Judgment:	8 March 2017

COSTS JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1]      On this proceeding the plaintiff sought and the defendant opposed the entry of summary judgment.  The defendant then withdrew its opposition, resulting in the plaintiff applying for judgment.  A draft judgment was submitted for sealing.  The judgment included a sum for costs on a solicitor and client basis.

[2]      I issued a Minute on 1 February 2017 in relation to the amount of the costs for which judgment was sought.  This resulted in counsel for the plaintiff filing a memorandum dated 21 February, which I have now considered.

[3]      The claim will result in judgment for a principal sum of $98,543.55 and interest of $19,331.61.  Costs claimed amount to some $26,000 for professional fees together with GST and disbursements, making a total of $32,522.02.

[4]      The plaintiff is entitled to indemnity costs under the terms of the guarantee on which it sued.  In the Minute issued on 1 February, however, I indicated that it was not apparent how fees could amount to the sum for which judgment was sought, on a

relatively straightforward case.  I directed that a further memorandum was to be filed

ADVENTURE BRANDS LTD v DAVIES [2017] NZHC 381 [8 March 2017]

setting  out  the  basis  on  which  the  claimed  fees  had  been  assessed.     That memorandum has now been filed, and considered.

[5]      Counsel has now provided a brief outline of the attendances undertaken for each of the five invoices comprised in the overall charge.

[6]      The plaintiff relies on clause 1 of the guarantee on which this proceeding is based, which provides that the debt which is guaranteed includes any legal and other costs and expenses incurred in seeking payment or in enforcing the guarantee and indemnity against the guarantors.  Clause 1.2(b) reinforces this by providing that the guarantor will pay the costs and expenses, including legal costs determined as between solicitor and client, which may be incurred in the recovery or attempted recovery of the overdue amounts from the guarantor.

[7]      In Black v ASB Bank Ltd,1  the Court of Appeal set out matters which the Court is to consider when making an assessment of whether indemnity costs claimed under a contract are reasonable. These are:

(a)     What tasks attract a costs indemnity on a proper construction of the contract?

(b)     Whether the tasks undertaken were those contemplated in the contract.

(c)     Whether the steps undertaken were reasonably necessary in pursuance of those tasks.

(d)Whether  the  rate  at  which  the  steps  were  charged  was  reasonable having regard to the principles normally applicable to solicitor/client costs; and

(e)     Whether any other principles drawn from the general law of contract would in whole or in part deny the claimant its prima facie right to judgment.

[8]      Having considered these factors, and as this claim is based on a contractual entitlement and not under r 14.6(4), I will allow costs in the sum claimed, together

with  disbursements.    Had  the  claim  been  pursuant  to  r  14.6  I would  not  have awarded  costs  as  sought.    I accept,  given the  detail  provided by the  plaintiff’s solicitors, that the hours charged for have been spent, but I am far from satisfied that it was necessary to spend as much time in bringing this case to the point at which it was concluded.   I would not, therefore, have been satisfied that indemnity costs should be awarded in the full amount claimed, under r 14.6.

[9]      Given  the  nature  of  the  plaintiff’s  business,  as  is  apparent  from  this proceeding,  I proceed  on  the assumption  that  it  is  registered  for GST.    In  this circumstance GST is not awarded on indemnity costs: New Zealand Venue & Event Management Ltd v Worldwide NZ LLC.2

[10]     The judgment may be sealed accordingly.

J G Matthews

Associate Judge

Solicitors:

Anderson Lloyd, Christchurch

Saunders Robinson Brown, Christchurch