Blue Daisy Limited v Compton

[2023] NZHC 3519

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-002281

[2023] NZHC 3519

BETWEEN

BLUE DAISY LIMITED

Plaintiff

AND

LISA TINA COMPTON

Defendant

Hearing:	(On the papers)
Judgment:	5 December 2023

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 5 December 2023 at 3.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           K3 Legal Ltd, Auckland

Websterlaw, Takapuna, Auckland

BLUE DAISY LTD v COMPTON [2023] NZHC 3519 [5 December 2023]

[1]The Registrar has referred this file to me as duty Judge.

[2]        Blue Daisy Limited (the Company) brought proceedings against Ms Compton, a director of the Company. It alleged Ms Compton had made a number of unauthorised withdrawals from the Company bank account for her personal benefit.

[3]The Company sought a without notice freezing order in relation to the sum of

$195,000 approximately. By minutes of 5 and 6 October 2023, Fitzgerald J made without notice freezing orders over certain funds in Ms Compton’s bank accounts on a Pickwick basis. The orders were extended by Anderson J on 9 October 2023. A fixture was directed.

[4]        On 26 October 2023, Gault J noted that counsel had filed a joint memorandum seeking consent orders providing that the freezing orders be partially discharged to enable payment of $193,000 from Ms Compton’s ANZ account to the Company’s Kiwibank account and recording that, on receipt of that sum, the freezing order would be fully discharged, the fixture which had been scheduled for 1 November would be vacated and the proceedings would be discontinued. The payment has been made. Save for the issue of costs, the proceedings are now at an end. The only remaining issue is costs. Gault J directed costs to be dealt with by way of memorandum (with submissions to be limited to three pages).

[5]        The Company seeks costs on an indemnity and/or increased basis as it says Ms Compton behaved inappropriately and unreasonably resulting in the Company having no choice but to bring these proceedings. The Company says it has succeeded and seeks solicitor client costs of $67,185.49.

[6]        Ms Compton’s position is that the Company is owned by her and her ex- husband. The Company no longer trades. She says its assets are effectively relationship property. Ms Compton considers that costs should either be paid for by Mr Compton or, in the alternative, be deferred to the relationship property proceedings currently before the Family Court. There is also a suggestion during the course of counsel’s costs submissions on Ms Compton’s behalf that, as a derivative action, the costs would normally be payable by the Company.

[7]        The costs memorandum on behalf of Ms Compton (which does not comply with Gault J’s direction as to length) is largely unhelpful. It attempts to relitigate the merits of the particular application and raises relationship property issues between Ms Compton and her husband, which as noted, are before the Family Court.

[8]        This was a High Court proceeding brought for the purposes of obtaining a freezing order given Ms Compton’s unauthorised use of the Company’s bank account by transferring Company funds to her personal account. The proceeding was resolved on the basis that the money withdrawn was almost entirely returned. The Company has succeeded in the proceeding. The proceedings were necessary because Ms Compton failed to respond to a demand for their return prior to the issue of these proceedings. As the Company has succeeded costs should follow the event. There is no reason to depart from that general rule.

[9]        While I do not consider Ms Compton’s actions, given her relationship with the Company and the prompt return of the funds, to fall into the category of behaviour such as that sanctioned by the Court in Bradbury v Westpac,1 I nevertheless consider her actions to support an uplift from scale costs. Ms Compton believed she had a right to the funds, albeit that the belief was mistaken. Further, it is relevant that Ms Compton repaid the money taken and did not put the parties to the expense of a fixture. Against that, Ms Compton acted in clear breach of her duty as a director of the company and failed to repay it when demand was made and she had no defence. The Company should not have been put to the cost of issuing the proceedings. An uplift of 50 per cent is warranted.

[10]      Ms Compton is to pay costs to the Company calculated on a 2B basis together with a 50 per cent uplift.

[11]      On my calculation, in the absence of assistance from counsel, I fix costs in the sum of $22,227.00 on the basis of:

1      Bradbury v Westpac Banking Corporation [2009] NZCA 234.

Commencement of proceeding	3.0 days	$7,170.00
Memorandum in support	0.4	$956.00
Appearances and/or preparation for mentions hearings or callovers	0.6	$1,434.00
Consent memorandum	0.4	$956.00
Interlocutory applications (x2)	1.2	$2,868.00
Sealing orders of the Court (x3)	0.6	$1,434.00
Total:	6.2	$14,818.00
Uplifted by 50 per cent	$22,227.00

[12]      Ms Compton is to pay the Company costs of $22,227.00, together with disbursements as fixed by the Registrar.

Venning J