Attard v Stuart
[2017] NZHC 918
•9 May 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2017-404-617 [2017] NZHC 918
UNDER the Companies Act 1993 IN THE MATTER
of an injunction to allow Lightning
Cleaning Service to continue tradingBETWEEN
LUKE TIMOTHY ATTARD Applicant
AND
GORDON JAMES STUART Respondent
Hearing: On the papers Counsel:
DJ Chisholm QC for respondent
L Attard, applicant in person
Judgment:
9 May 2017
JUDGMENT OF FITZGERALD J
This judgment was delivered by me on 9 May 2017 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Burton & Co, Auckland
To: L Attard, Auckland
Attard v Stuart [2017] NZHC 918 [9 May 2017]
Introduction and background
[1] I thank counsel and Mr Attard for their memoranda in respect of costs.
[2] On 7 April 2017, Mr Attard applied for an interim injunction. He sought an order pursuant to s 164 of the Companies Act 1993 that a bank account in the name of a company of which he is a director and (indirectly) a shareholder (“Company”) be “unfrozen”.
[3] By judgment delivered on 10 April 2017, I declined to grant Mr Attard’s
application. I invited the parties to file memoranda on costs.
[4] Mr Stuart seeks costs on the orthodox basis that costs follow the event. While acknowledging it is not standard practice, Mr Attard submits that, in the particular circumstances of this case, I ought to award costs to him1 or make an order that costs are to lie where the fall.
[5] The basis upon which Mr Attard proposes such an outcome is that:
(a) Mr Stuart and his legal representatives misled the Court, in terms of certain submissions made to the Court on the hearing of Mr Attard’s application and in seeking costs;
(b)Mr Stuart wrongly notified Westpac, the Company’s bank, of the fact there is a dispute between the parties (which led to Westpac “freezing” the Company’s bank account), rather than following what Mr Attard submits is the correct process of lodging a claim with the court;
(c) Mr Stuart’s actions in notifying Westpac of the dispute were not in the best interests of the Company; and
1 As Mr Attard represented himself in this proceeding, this would be in respect of disbursements only.
(d)In all of the circumstances, “while the Court declined the application, for valid reasons, [t]he application was in the best interests of the company”.2
[6] In reply, counsel for Mr Stuart submits that none of the above grounds are relevant to the question of costs, and refutes the suggestion that either Mr Stuart or counsel has misled the Court. In response, Mr Attard maintains his position as set out in his earlier memorandum and states that the matters raised in his memoranda are directly relevant to the issue of costs pursuant to r 14.7.
Approach
[7] Rule 14.2 sets out the guiding principles when determining costs:
14.2 Principles applying to determination of costs
The following general principles apply to the determination of costs:
(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:
(c) costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application:
(d) an appropriate daily recovery rate should normally be two-thirds of the daily rate considered reasonable in relation to the proceeding or interlocutory application:
(e) what is an appropriate daily recovery rate and what is a reasonable time should not depend on the skill or experience of the solicitor or counsel involved or on the time actually spent by the solicitor or counsel involved or on the costs actually incurred by the party claiming costs:
(f) an award of costs should not exceed the costs incurred by the party claiming costs:
(g) so far as possible the determination of costs should be predictable and expeditious.
2 Paragraph 18 of Mr Attard’s memorandum dated 26 April 2017.
[8] The default position is accordingly that costs follow the event. Pursuant to r 14.7, however, the court may refuse an order of costs, or order a reduction in costs, in certain circumstances. Although Mr Attard does not expressly state upon which subparagraph of r 14.7 he relies, it is apparent that he relies on:
(a) r 14.7(f), namely that the party claiming costs has contributed unnecessarily to the time or expense of the proceeding; and/or
(b)r 14.7(g), pursuant to which the court may refuse to order, or make a reduction in, costs for some other reason which justifies such an approach.
Discussion
[9] I am satisfied that costs should follow the event in the ordinary way. In relation to r 14.7(f), there is no suggestion that Mr Stuart contributed unnecessarily to the time or expense of the proceeding, once it had been brought by Mr Attard. On the contrary, very prompt action was taken by Mr Stuart and his counsel to provide Mr Stuart’s opposition (and evidence in support of that opposition) on the first call of this matter, so that, given the urgency involved, it was able to be dealt with on that day.
[10] Further, Mr Attard’s view that Mr Stuart took inappropriate action, or was otherwise “wrong”, in notifying Westpac of a dispute is not a valid reason for overriding the principle that costs will ordinarily follow the event. There may well be broader disputes and issues between Mr Attard and Mr Stuart that need and ought to be resolved through the appropriate dispute resolution mechanisms in the Company’s constitution and/or the shareholders’ agreement. The determination of costs on this application is not the time or place for the ventilation, let alone resolution, of those broader matters. Ultimately, the application failed for a number of reasons unconnected to the broader dispute between Mr Attard and Mr Stuart.
Quantum
[11] As counsel for Mr Stuart acknowledges, the calculation of the appropriate steps is not particularly clear cut in this case, given that Mr Attard did not file an originating document at the time he filed his application for an interim injunction. In those circumstances, is it correct to treat this simply as a free-standing interlocutory application? Or is it appropriate to make some allowance for getting up to speed with and responding to the claim more generally, despite the fact that a statement of defence was not filed?
[12] I consider it appropriate that a modest allowance be made to reflect the fact that this was not an interlocutory application dealt with in the context of an existing substantive proceeding. As a result, initial instructions and briefing needed to be given in respect of the application, in the context of the broader dispute. I note that a similar approach was taken in similar circumstances by Gendall J in FTG Securities Ltd v Bank of New Zealand (although by a slightly different route to that proposed by
Mr Chisholm).3
[13] However, I consider the allowances made at paragraph 13 of Mr Chisholm’s memorandum dated 13 April 2017 are slightly higher than appropriate in this case, given the limited time frames involved.
[14] I accordingly propose to award costs on the following basis:
(a) Subject to (b) below, the proceeding is categorised as 2B.
(b)One day is allocated for preparing a notice of opposition and affidavit in opposition (on the basis of Band A time allocation for filing notice of opposition and supporting affidavit to an originating application).
(c) Together, 0.5 days is allocated for preparation for the hearing and attendance at the hearing itself (reflecting that the matter was dealt with in Court in a relatively short time at the conclusion of the Duty
Judge list).
3 FTG Securities Ltd v Bank of New Zealand [2017] NZHC 358 at [14].
Result
[15] Mr Stuart is awarded costs on the basis of 1.5 days at $2,230 per day, plus the filing fee on the notice of opposition of $110.00, giving a total of $3,455.00.
Fitzgerald J
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