Agape-Holistic Retreat Corporation Limited (in liq) v Agape-High Q-Holistic Horsemanship Corporation Limited HC Auckland CIV 2007-404-6917

[2010] NZHC 1624

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2007-404-6917

BETWEEN  AGAPE-HOLISTIC RETREAT CORPORATION LIMITED (IN LIQUIDATION)

Plaintiff

ANDAGAPE-HIGH Q-HOLISTIC HORSEMANSHIP CORPORATION LIMITED

First Defendant

AND  BANK OF NEW ZEALAND Second Defendant

Appearances: Mr C T Jones for Official Assignee as liquidator of the plaintiff

Mr G W Hall and Ms S R Willetts for first defendant

Judgment:      16 September 2010 at 11 am

[INTERIM] JUDGMENT OF LANG J

[on costs in respect of application for summary judgment against first

defendant]

This judgment was delivered by me on 16 September 2010 at 11 am, pursuant to Rule

11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:
Buddle Findlay, Auckland

Insolvency & Trustee Services, Auckland

AGAPE-HOLISTIC RETREAT CORPORATION LTD (IN LIQUIDATION) V AGAPE-HIGH Q-HOLISTIC HORSEMANSHIP CORPORATION LTD AND ANOR HC AK CIV-2007-404-6917  16 September 2010

[1]      On 6 August 2008, His Honour Associate Judge Hole delivered a judgment in which he dismissed an application by the plaintiff for summary judgment against the first  defendant.     In  doing  so  the  Associate  Judge  invited  counsel  to  submit memoranda in relation to the issue of costs.

[2]      Associate Judge Hole ceased his period of tenure as an Associate Judge before he had determined the issue of costs.   As a result, I have assumed responsibility for determining that issue.

[3]      The first defendant seeks indemnity costs against the plaintiff in relation to its unsuccessful application  for  summary judgment.    The  liquidator  of  the plaintiff abides the decision of the Court in relation to this issue.

[4]      I am satisfied that an award of indemnity costs is appropriate.  Having regard to the fact that the plaintiff is now in liquidation, I do not propose to give detailed reasons for reaching that decision.  Instead, I summarise them as follows:

a)       The plaintiff’s own evidence was described by the Associate Judge as confusing and inconsistent on material points.

b)The plaintiff must have been aware from the outset of the fact that the factual basis for its claim was far from clear-cut.   The financial relationship between the plaintiff and the first defendant involved significant intermingling of finances, with little thought being given to the legal consequences of the transactions that occurred.  This meant that it was always going to be difficult for the plaintiff to establish the nature and consequences of transactions that were relevant to the application for summary judgment.

c)       The plaintiff ought to have realised that these difficulties meant that it would be inappropriate to invoke the summary judgment procedure.

d)The first defendant placed the plaintiff squarely on notice of the fact that   material   factual   disputes   existed   well   before   it   filed   the application for summary judgment.

e)       After it commenced the proceeding, but before the hearing of the application for summary judgment, the first defendant’s solicitors reiterated their view that the application could not succeed.

f)        The solicitors acting for the first defendant also advised the plaintiff’s counsel on several occasions before the hearing that they would seek indemnity costs in the event that the plaintiff proceeded with its application for summary judgment.

g)       The plaintiff’s counsel was also presented with an opportunity at the commencement  of  the  hearing  to  withdraw  the  application  for summary judgment at that point but elected not to do so.

[5]      In  the  event  that  either  party  seeks  fuller  reasons  for  my  decision,  the

Registrar should be advised of that fact within seven days of today’s date.

[6]      I have a concern, however, regarding the quantum of costs that the first defendant seeks.  It is clear from the material filed in support of the application that not all of the attendances for which an award of costs is sought relate to the summary judgment  application.     By  way  of  example,  some  attendances  relate  to  the application for a Mareva injunction and for preservation orders.

[7]      I  note  that  Associate  Judge  Hole  awarded  the  Bank  of  New  Zealand indemnity costs in the sum of $78,534.35 when the plaintiff withdrew its summary judgment application against the bank.  Given the fact that the application against the first defendant went to a hearing, I accept that the first defendant should receive a greater award of costs.

[8]      I propose making an award of costs in favour of the first defendant in the sum of $95,000 inclusive of disbursements.  If either counsel wishes to make submissions

in relation to that issue, he should file a memorandum no later than 5 pm on Friday

20 September 2010.

Lang J