Bell v BDO Spicers Manawatu Limited
[2013] NZHC 2272
•3 September 2013
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2012-485-166 [2013] NZHC 2272
BETWEEN ROBERT ARTHUR BELL Appellant
ANDBDO SPICERS MANAWATU LIMITED Respondent
Hearing: On the papers
Counsel: W Bevan for Appellant
A Darroch for Respondent
Judgment: 3 September 2013
JUDGMENT OF WILLIAMS J
[1] This is a further application for recall and a judgment as to costs. The appellant Mr Bell was the defendant in the original District Court proceedings. The respondent BDO Spicer Manawatu, an accounting practice.
[2] Before proceeding I am troubled to note that this matter has been with registry since both parties filed memoranda in late June of this year. It was only brought to my attention very recently. I apologise to both parties for the delay in dealing with this matter.
Background
[3] The appellant engaged the respondent in June 2008 and, over the next few months, the respondent produced several pieces of work. The appellant paid the first three of the invoices he received from the respondent but refused to pay the remaining two. The respondent claimed against the appellant for the balances owing
under these invoices, as well as interest at 2 per cent per month (pursuant to the letter
ROBERT ARTHUR BELL v BDO SPICERS MANAWATU LIMITED [2013] NZHC 2272 [3 September 2013]
of engagement)1 and reasonable solicitor-client costs (pursuant to cl 11(c) of the appendix to the letter of engagement).2
[4] On 9 December 2011, Judge Tuohy issued a decision finding the appellant liable to pay $10,793.71 in damages (the amounts owing), $11,554.59 in interest and costs of $38,877.58.
[5] The appellant appealed. On 11 July 2012, I dismissed the appeal for the most part, but I found in favour of the appellant on the issue of interest. The appellant argued that the interest clause in the letter of engagement imposing interest of 2 per cent per month was so excessive as to be unenforceable as a penalty. I agreed that the interest clause was excessive and determined that 15 per cent per annum was a fair substitution.3 That finding is relevant to the appellant’s most recent submission on the rate of interest.
[6] The appellant applied for that judgment to be recalled. On 31 May 2013, I granted this application on the basis that new evidence adduced by the appellant reduced the amount owing under each invoice. I recalculated the judgment sum and ordered the appellant to pay the respondent $6,580. This meant that the respondent had successfully claimed slightly under half of the sum it originally sought.
[7] With that result in mind, I ordered the appellant to pay half of the respondent’s legal costs for the appeal judgment, a total of $7,010.69. I invited the parties to file memoranda if they considered that costs should be dealt with on some other basis. I reserved costs on the recall application itself.
Recall
[8] The appellant now applies for further recall on the ground that the court
“seems unaware” of the definition of “accounting records” contained in the
1 Which states “... we reserve the right to charge interest at 2% per month on all unpaid amounts
(including any interest previously charged).”
2 Which states “You indemnify us, our directors, partners and employees against (a) any loss suffered or liability incurred by us, our partners and employees in connection with any breach of, or default under, this Agreement by you ... [and] (c) any reasonable costs or expenses, including legal costs and expenses (on a solicitor and own client basis), our partners and employees may incur in respect of such loss or liability.”
3 Bell v BDO Spicers Manawatu Ltd [2012] NZHC 1598 at [61].
New Zealand Institute of Chartered Accountants Ethical and Professional Standards (the Standards). The appellant submits that, if I had been aware of that definition, I would not have found any of the work claimed under one of the invoices (invoice #12721) owing.
[9] As I noted in my original recall judgment, the seminal guidance on recall is that of Wild CJ in Horowhenua County v Nash (No 2).4 The appellant submits that this case falls into the second category of cases in which a Judge may exercise his or her discretion to recall a judgment. The second category was described by Wild CJ as follows:5
... where counsel have failed to direct the Court’s attention to a legislative
provision or authoritative decision of plain relevance.
[10] I do not agree that this case falls into the second category. First, the definition of “accounting records” in the Standards is not a legislative provision and therefore is not binding on me. Second, this is, in reality, an attempt to relitigate the issue of whether the work done by the respondent was authorised by its contractual arrangement with the appellant. As such recall would be quite inappropriate.
[11] The appellant also submits that I incorrectly described the nature of his engagement with the respondent. I said that “Mr Bell engaged BDO to provide expert accounting evidence for an upcoming hearing”.6 The appellant complains that the engagement was not as broad or all embracing as that. But he accepts that I correctly quoted the actual terms of engagement two paragraphs later. This argument has no merit because:
(a) the appellant could have raised this point in his first application for recall, and he did not;
(b) in my view, the description is correct; and
4 Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC).
5 At 633.
6 Bell v BDO Spicers Manawatu Ltd, above n 1, at [4].
(c) even if my description is incorrect, it is immediately superseded by an accurate extract from the actual terms of engagement between the parties two paragraphs later.
[12] The further application for recall is dismissed accordingly.
Costs
[13] Both parties dispute my order as to costs. The appellant submits that he was “generally successful in his appeal” and is therefore entitled to costs. I have already decided that the respondent is entitled to costs so this horse has bolted. The only issue at large was quantum.
[14] The appellant also applies for costs in relation to the recall judgment. As noted above, I reserved costs on this application. I do not consider a costs award is appropriate on the recall application. Though the appellant made some progress as a result of the result, the outcome was effectively that the spoils were evenly shared. Both of those submissions are dismissed.
[15] The respondent submits that it is entitled to full costs because it made the appellant a Calderbank offer on 20 December 2010. The respondent’s memorandum on costs included its offer to the appellant. In it the respondent offered to accept
$3,458.25 in full and final settlement of all claims between the parties. The respondent (rightly) submits that this sum is lower than what the appellant was ultimately ordered to pay.
[16] In response, the appellant claims that he accepted this offer, but it was subsequently retracted by the respondent. The appellant has not produced any evidence in support of this contention so I accept the respondent’s version of events.
[17] In my view, the existence of this offer justifies an order for increased costs, but not an award of full costs.7 The appellant successfully reduced the sum he was
liable to pay on appeal. That is entitled to some recognition despite the
7 High Court Rules, rr 14.10 and 14.11.
20 December letter. Overall, I find that an order for increased costs of $1,000 is
appropriate to take into account the respondent’s prior offer.
Interest
[18] Both parties dispute the interest calculated for the judgment sum. The respondent correctly submits that interest on the sum owing was incorrectly calculated from 31 October 2008 to 11 July 2012 (the date of the appeal judgment) instead of from 20 October 2008 to 31 May 2013 (the date of the recall judgment). The correct period of interest is 1684 days.
[19] The appellant correctly submits that the adjusted interest rate of 15 per cent is higher than the prescribed rate for that period. The prescribed interest rate for the period 20 October 2008 to 30 June 2011 was 8.4 per cent. The correct sum of interest for that period is $957.541. The prescribed interest rate for the period 1 July
2011 to 31 May 2013 was 5 per cent. The correct sum of interest for that period is
$406.455. The total interest owing for the judgment sum is $1363.996.
Result
[20] The further application for recall is dismissed.
[21] I order Mr Bell to pay BDO $8,010.89 in costs in relation to the appeal proceeding.
[22] The recalculated judgment sum is $5,596.70.
Williams J