Body Corporate 392418 v HWD NZ Investment Co Ltd
[2024] NZHC 1311
•23 May 2024
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2023-409-046
[2024] NZHC 1311
UNDER the Companies Act 1993 BETWEEN
BODY CORPORATE 392418
Plaintiff
AND
HWD NZ INVESTMENT CO LTD
Defendant
Hearing: On the papers Counsel:
T J G Allan for Plaintiff
J D Haig and D P MacKenzie for Defendant
Judgment:
23 May 2024
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
(Costs)
This judgment was delivered by me on 23 May 2024 at 4.15 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:
BODY CORPORATE 392418 v HWD NZ INVESTMENT CO LTD [2024] NZHC 1311 [23 May 2024]
[1] The plaintiff brought this proceeding for the liquidation of the defendant company. It was progressively adjourned pending a decision on an appeal by the defendant from a judgment of Associate Judge Brittain declining to set aside one of two statutory demands issued by the plaintiff to the defendant upon which the plaintiff’s application for liquidation relied.1
[2] The Court of Appeal dismissed the defendant’s appeal,2 and the defendant paid the amounts of the statutory demands along with interest and a sum on account of the plaintiff’s indemnity costs. However, the plaintiff claimed further legal and other costs totalling $35,111.43. The defendant disagreed but paid that sum into court.
[3]This decision resolves the outstanding costs issues.
[4] The plaintiff’s present position has been modified and it now says it is entitled to:3
(a)what are referred to as Boutique Body Corporate Ltd (BBCL) on-charges in the amount of $6,610.17 (revised down from $8,735.37); and
(b)legal costs totalling $28,223.74.
[5] The defendant accepts it is liable for the plaintiff’s legal costs, but says work performed was not necessary and amounts claimed are unreasonable. In respect to the BBCL on-charges, the defendant denies both liability and quantum.
[6] The defendant also says it made a without prejudice except as to costs offer to settle the dispute over costs which the plaintiff refused. It says that its costs for attendances since that offer was made should be offset against any entitlement the
1 HWD NZ Investment Co Ltd v Body Corporate 392418 [2022] NZHC 3472. The parties agreed that the Court of Appeal’s decision would equally apply to a decision of Associate Judge Brittain declining to set aside the second statutory demand in HWD NZ Investment Co Ltd v Body Corporate 392148 [2023] NZHC 526.
2 HWD NZ Investment Co Ltd v Body Corporate 392418 [2024] NZCA 33.
3 A further issue concerning overpayment to the plaintiff in respect to costs incurred in the Court of Appeal has now been resolved.
plaintiff has, with the result there is nothing further for it to pay. It seeks the return of the money paid into court.
Background
[7] The plaintiff issued two statutory demands to the defendant in respect of unpaid building levies for remedial works to 132 Stancombe Road, Flat Bush, Auckland.
[8] The first statutory demand, dated 27 June 2022, was for $706,614.58, in respect of which the defendant made a payment of $210,000.00 on 19 July 2022.
[9] The second statutory demand, dated 5 September 2022, was for $1,408,626.47, in respect of which the defendant made payments totalling $392,839.14 during August and September 2022.
[10] In respect to the balances under the statutory demands, the defendant says the levies have been met through its share of settlement funds the plaintiff was paid by the Auckland City Council to settle a building defects claim.
[11] The defendant has filed proceedings against the plaintiff seeking damages for misapplication of the settlement funds. That claim is scheduled to be heard in the Auckland High Court commencing 24 June 2024.
[12] The defendant applied to set aside the statutory demands but was unsuccessful.4 It appealed to the Court of Appeal and deposited $530,000.00 into its solicitors’ trust account pending hearing of the appeal.
[13] On 9 February 2023 the plaintiff commenced this proceeding for an order putting the defendant into liquidation, relying on non-compliance with the statutory demands. The plaintiff filed an amended statement of claim dated 29 March 2023, which was served on the defendant approximately six weeks before the hearing of the defendant’s appeal to the Court of Appeal.
4 HWD NZ Investment Co Ltd v Body Corporate 392418, above n 1.
[14] The defendant filed a statement of defence to the claim on the basis that its liability to pay the balance amounts owing under the statutory demands was subject to appeal.
[15] The appeal was heard on 3 May 2023, but it was not until 27 February 2024 that judgment was issued.5 The Court of Appeal dismissed the appeal. The Court agreed with the Associate Judge that a “pay now argue later” scheme applied, and it should not exercise its discretion to set aside the statutory demand.
[16] Pending the issue of the Court of Appeal’s judgment, this case was adjourned several times by consent. It is apparent, particularly from joint memoranda dated 3 November 2023 and 4 December 2023, that it was understood the defendant’s defence was reliant upon a successful outcome of the appeal.
[17] The case was due to be called in the Associate Judge’s list on 29 February 2024, just two days after the Court of Appeal’s judgment was issued. On 28 February 2024 the defendant’s counsel wrote to the plaintiff’s solicitors, noting the Court of Appeal’s decision and advising that counsel expected to be in a position to put a proposal for payment to the plaintiff. It was suggested the case be adjourned again so the proposal could be put and considered, and the defendant asked that the plaintiff not advertise the liquidation application.
[18] In response, the plaintiff’s solicitors advised the plaintiff did not agree to withhold advertising and that the defendant was indebted to it in the sum of “not less than, $3,317,237.72 (owing as of 28 February 2024 with interest continuing to accrue until payment is actually made)”. A statement of the alleged indebtedness was attached.
[19] The defendant’s counsel filed a memorandum later on 28 February 2024, explaining that the $530,000.00 deposited into the solicitors’ trust account would be released to the plaintiff immediately. The defendant sought a two-week adjournment to put a payment proposal to the plaintiff and an interim restraint on advertising.
5 HWD NZ Investment Co Ltd v Body Corporate 392418, above n 2.
[20] The plaintiff’s solicitors filed their own memorandum quickly thereafter, seeking a two-week adjournment until 14 March 2024. They noted also that an undertaking had been given by the plaintiff not to take any steps in the proceeding until the expiry of five working days after delivery of the Court of Appeal’s judgment, that is before 5 March 2024.
[21] The case came before Associate Judge Lester on 29 February 2024, and he granted an adjournment to 14 March 2024. He also directed that any application to restrain advertising should be filed by 5 March 2024.
[22] On 4 March 2024 the defendant made a payment proposal, and by the close of business that day there was agreement for payment by the defendant in stages, with the full debt being satisfied by 12 March 2024. The plaintiff’s counsel took the position that the undertaking not to take any further step in the proceeding (i.e. to advertise) would not be extended unless each staged milestone was strictly complied with.
[23] The defendant paid a further $1 million to the plaintiff on 5 March (having already paid $530,000.00).
[24] On 6 March 2024 the plaintiff’s solicitors provided a recalculated amount outstanding, which was less than the amount previously said to have been owing.6 Included in this amount was $70,694.18 of legal fees and $8,735.37 of BBCL “on-charges”. The defendant agreed to meet $55,410.84 of legal fees in respect to the High Court statutory demand proceedings (including interest), $12,000.00 for costs in the Court of Appeal and a further $6,943.60 for costs of this proceeding up to 3 November 2023.
[25] On 6 March 2024 counsel filed a joint memorandum informing the Court the plaintiff agreed to extend its undertaking not to take any steps in the proceeding in consideration of the staged milestones to be performed by the defendant. In reliance
6 Counsel for the defendant advises that the plaintiff’s original calculation of the amount owing as of 28 February 2024 was ultimately found to be overstated by more than $330,000.
upon that commitment the defendant had not filed an application to restrain advertising.
[26] The defendant paid the full balance owing to the plaintiff, apart from the disputed amounts in relation to legal costs and BBCL on-charges (which have been paid into court), on 7 March 2024.
[27] Also on 7 March 2024, the plaintiff received the security for costs paid by the defendant and held by the Court of Appeal amounting to $7,273.20. What this meant was that in satisfaction of an agreed $12,000.00 costs award the plaintiff had received
$19,273.20.7
[28] On 8 March 2024 the defendant’s solicitors made a without prejudice except as to costs offer in respect to the disputed costs in these terms:
Standing back, and in the interests of now reaching a final resolution to this matter, [the defendant] is prepared to pay $10,000 towards the unresolved amount of $32,395.188 in full and final settlement of the costs claim. With both invoice 96283 and the BBCL on-charges in large part seemingly not payable by [the defendant], this figure represents a significant contribution towards the (inflated) costs incurred for attendances from 27 February 2024.
[29]The defendant’s offer was not accepted.
[30] On 12 March 2024 counsel filed a joint memorandum for the list call on 14 March 2024. This noted that the defendant had paid a total of $2,961,118.66 to discharge the principal sum the plaintiff claimed was owing, along with interest at 10 per cent per annum and part of the indemnity costs claimed. It was noted the parties were not able to agree on the balance claimed by the plaintiff as legal costs and the BBCL on-charges. The parties sought directions for the filing of submissions with the issues on costs to be resolved by the Court on the papers, and directions were made accordingly.
7 The overpayment has only recently been refunded to the defendant after submissions were filed.
8 This was the amount the defendant’s solicitor considered was still in dispute when the offer was made on 8 March 2024.
Relevant law
[31] All matters of costs are discretionary, but the court must exercise its discretion having regard to the principles in the High Court Rules 2016.9
[32] Rule 14.6(4)(e) provides the court may order a party to pay indemnity costs if “the party claiming costs is entitled to indemnity costs under a contract or deed”.
[33] The principles that apply to awarding indemnity costs under r 14.6(4)(e), and to which I have had regard in arriving at my conclusions below, were summarised in Black v ASB Bank Ltd, where the Court of Appeal said:10
[79] Thus, where the entitlement to indemnity costs is contractual and the Court is exercising its power under r 14.6(4)(e), the position is distinctly different from orders under either of r 14.6(4)(a) or (b). Bradbury v Westpac Banking Corp demonstrates the different approach required where an order is made under r 14.6(4)(a).
[80] Assessing whether the indemnity costs claimed under a contract are reasonable involves the Court making an objective assessment of these matters:
(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.
9 High Court Rules 2016, r 14.1(1).
10 Black v ASB Bank Ltd [2012] NZCA 384 (footnotes omitted).
BBCL on-charges
[34] The plaintiff relies on s 124 of the Unit Titles Act 2010 and its debt collection policies which it says are binding on the defendant. Section 124 relevantly provides:11
124 Recovery of levy
(1)A body corporate must fix the date on or before which payments of levies are due.
(2)The amount of any unpaid levy, together with any reasonable costs incurred in collecting the levy, is recoverable as a debt due to the body corporate by the person who was the unit owner at the time the levy became payable or by the person who is the unit owner at the time the proceedings are instituted.
...
[35] As far as the plaintiff’s debt collection policies are concerned, the plaintiff refers to resolutions adopted at its general meeting on 12 August 2013 ratifying the debt collection policies and procedures agreed upon at an earlier informal owners’ meeting of 5 August 2013, which included the following:
10.0 DEBT COLLECTION
RESOLVED:
i)“The Body Corporate adopt Boutique Body Corporate Limited’s (“Boutique”) standard debt collection procedure, a copy of which has been supplied to the Annual General Meeting.”
ii)“That Boutique and its associated collection company, Body Corporate Legal Services Limited (“BCLS”), be authorised to act as agent for the Body Corporate in terms of recovery of debtor arrears, including the preparation and filing of any proceedings and attendance at any Tenancy Tribunal hearing.”
ii) [sic] “That all costs associated with debt recovery, together with penalty interest at 10% per annum from due date until payment is received be on-charged to the proprietor in default, including all costs of Boutique and BCLS in accordance with sections 124(2) and 128 of the Unit Titles Act 2010.”
11 Section 124(3) was inserted on 9 May 2024 but postdates the matters in issue between these parties.
[36] The plaintiff says a service agreement between it and BBCL allowed BBCL to manage the debt collection policy and to recover any costs associated with doing so from unit owners.
[37]The $6,610.17 sought by the plaintiff is said to be made up as follows:
(a)$69.00 for BBCL processing fees of invoices rendered by Grove Darlow & Partners (Grove Darlow);
(b)$55.25 for courier charges;
(c)$3,189.53 for administration costs;
(d)$3,146.89 for “other costs”, which it says included reporting to the plaintiff’s committee, preparing and issuing its final demand, the preparation and service of statutory demands, and costs incurred in swearing affidavits; and
(e)$149.50 for breach of the plaintiff’s operational rules.
[38] The plaintiff submits the Court should take a “broad-brush approach” to determining whether the claimed charges are reasonable. It says the charges are in line with BBCL’s on-charges since it became the plaintiff’s manager in 2016 and they are “relatively speaking” not a significant amount. The plaintiff says it would be unreasonable to require a “surgically precise demarcation of the sums” claimed and that is not what the law requires.
[39] There are several difficulties with this claim. First, while counsel refers to a service agreement between the plaintiff and BBCL, the service agreement provided is dated to take effect from 18 March 2024, postdating the costs claimed.
[40] Second, there is little detail of what specifically BBCL’s charges are for, when the services were provided, how the services relate to this proceeding, and how the individual amounts claimed are calculated. While the claim is supported by invoices apparently rendered by BBCL to the defendant, they provide little by way of detail in
respect to the administration and other costs which make up the bulk of the claim. For instance, invoice 420558 for $1,323.08 (but credited as paid) provides no detail beyond “Attendances in relation to additional admin to 31 December 22”. Similarly, invoice 421556 for $1,659.45 (also credited as paid) has the uninformative narration “Attendances in relation to additional admin to 31 March 2023”.
[41] Third, there is no explanation for the plaintiff’s revised position as to the amount claimed which the defendant says calls into question the balance claimed. I have had to work through the invoices to make my best assessment of what charges have been excluded from the claim. While the figures do not exactly reconcile, the amounts of invoices rendered by Grove Darlow appear to have been removed and are no longer sought as charges of BBCL.
[42] Fourth, most of the invoices have, on their face, apparently been paid. They show payments and nil balances. There are three invoices totalling $731.86 that appear to be outstanding. There is no explanation offered for this. This is important because the defendant’s position in correspondence between solicitors has been that the charges relate to the statutory demand process and have already been paid by the defendant and cannot be claimed again.
[43] Fifth, there are invoices for sums that it appears do not relate to this proceeding. For instance, there is an invoice for $989.00 (credited as paid) but issued 7 March 2024 for “Preparation of statutory demand”. The statutory demand that was prepared is not identified but I do not see how it can possibly relate to this proceeding. There is an invoice for $392.61 (which appears to be outstanding) for “Document service” in September 2022. The document served is not identified, but it cannot relate to this proceeding which was not commenced until 13 February 2023. There is an invoice for $149.50 (also outstanding) with only the narration “Breach of operational rules”. Again, I cannot see how that invoice can relate to this proceeding.
[44] Sixth, there are charges claimed for reviewing and swearing affidavits and courier charges, but there is nothing to link those charges to steps taken in this proceeding rather than in the several other proceedings between these parties.
[45] Leaving aside for one moment all these issues, I have difficulty with the claim to recover BBCL on-charges as a matter of principle. BBCL provided what appears to be purely administrative services, including such things as liaising with lawyers who were acting for the plaintiff, receiving correspondence, reporting to the plaintiff, and receiving and paying legal costs. Had the plaintiff undertaken this work itself it could not have expected to recover costs of doing so from the defendant. Such costs are normally absorbed by litigants and are not regarded as necessary and specific to the litigation. I see no reason why the position should be different here.
[46] However, I do not need to decide this claim on that basis because the plaintiff has failed to satisfy me that any of the charges claimed are reasonable costs incurred in collecting levies from the defendant for the purposes of s 124 of the Unit Titles Act or its debt collection policies. While I accept the court is justified in some circumstances to take a broad-brush approach to the assessment of costs, the evidence presented to justify this claim is so deficient that I am not satisfied that the amounts claimed relate to this proceeding, are reasonable or have not previously been paid by the defendant.
The plaintiff’s legal costs
[47] As noted, the defendant has already paid the plaintiff’s legal costs up to 3 November 2023 on an indemnity basis amounting to $6,943.60. What remains in issue are the plaintiff’s legal costs post 3 November 2023.
[48] The legal costs in issue relate to three invoices rendered by Grove Darlow to the plaintiff as follows:
(a)invoice 96283 dated 1 December 2023 for $6,052.83, which relates to attendances for the period 3 November 2023 to 21 November 2023;
(b)invoice 96435 dated 4 March 2024 for $9,189.23, which relates to the period 1 December 2023 to 4 March 2024; and
(c)invoice 96468 dated 6 March 2024 for $12,981.68, which relates to the period 4 March 2024 to 18 March 2024.
[49] The plaintiff has provided a breakdown of the attendances, identifying the work that was undertaken and time involved in respect to the work. I do not understand any issue is taken by the defendant with the hourly charge out rates in any of the invoices.
[50]I will deal with each invoice in turn.
Invoice 96283
[51] In respect of this invoice there are 13.6 hours of attendances at an average charge out rate of $382.90.
[52] I accept the one hour claimed for drafting a consent memorandum seeking an adjournment of a list call mention on 9 November 2023.
[53] I do not consider the same can be said for the other work to which this invoice is said to relate. The further work includes:
(a)8.6 hours of enquiries that the plaintiff says were undertaken into the defendant’s continuing business activities, including site visits, LINZ and PPSR searches, and obtaining and reviewing council property files “to enable it to prove and if needs be plead an alternate insolvency limb”, and
(b)four hours spent preparing and briefing the plaintiff’s Body Corporate Committee at its general meeting about those matters.
[54] The plaintiff says all these attendances relate directly to this proceeding, and that prior to 28 February 2024 the plaintiff’s solicitors continued to work under the assumption that the case would go to trial, recording time and attendances as normal. It submits that to stand still until judgment was delivered in the Court of Appeal would have been imprudent and that any prudent litigation solicitor would continue to prepare, including to perform research on the defendant’s solvency. Furthermore, it is said that prior to 28 February 2024 there was no indication the plaintiff would settle.
[55] The plaintiff’s position overlooks the relevant context. The parties had agreed to successive adjournments and taken no other steps to advance the case to await the Court of Appeal’s judgment. It was likely the Court of Appeal’s decision would be determinative of the proceeding (as it turned out to be). The plaintiff’s solicitors must have known that it was unlikely there would be a trial. The plaintiff also had the comfort of knowing the defendant was holding $530,000.00 aside in trust pending the Court of Appeal’s judgment and that its defence to the proceeding was based entirely on obtaining a successful result on appeal.
[56] The enquiries that the plaintiff made were not reasonably necessary in the furtherance of this proceeding. Quite to the contrary, they appear to have been made in a search for an alternative basis of claim. However, as things stood, the liquidation of the defendant was being sought on the basis of its non-compliance with the statutory demands and there was no need for an alternative pleading. Furthermore, the results of those enquiries were not relied upon in the proceeding. I agree with the defendant that if the plaintiff wanted to engage in investigating the defendant’s ongoing commercial activities it could do so, but at its own cost. It is not reasonable that such costs be passed on to the defendant.
[57] I do not award the plaintiff any costs on this invoice except in respect to drafting a consent memorandum seeking an adjournment of a list call mention on 9 November 2023, which at the hourly charge out rate that applies to this invoice is
$382.90.
[58]I see no basis to allow any of the disbursements on this invoice.
Invoice 96435
[59] In respect of this invoice there are 18.2 hours of attendances at an average charge out rate of $381.60. The plaintiff relies upon the same arguments as it did in respect to invoice 96283, that is that all attendances related to the proceeding and were reasonable and necessary.
[60] The defendant accepts that 2.5 hours of the work can be legitimately claimed. Broadly this work related to seeking an adjournment of the list call on 29 February
2024, providing advice to the plaintiff about the status of the proceeding and corresponding with the defendant’s solicitors. I agree.
[61] There is 1.5 hours liaising with The New Zealand Gazette and The Press newspapers regarding advertising the liquidation proceeding and rescheduling advertising three times. It is not clear to me when these attendances are said to have occurred. The schedule of attendances provided in relation to this invoice contains a reference to “Attendance Liquidation notice” on 28 February 2024 but there is no reference to liaising with The New Zealand Gazette or The Press on any dates during this billing period and no explanation why that would occur on three occasions.
[62] Further, it was not reasonable, in my view, for the plaintiff to arrange advertising in light of its undertaking not to take steps until 5 March 2024, by which time it had received a proposal from the defendant on 4 March 2024 that the entire debt would be paid by 12 March 2024 (and was paid by 7 March). Immediate advertising of the application was not necessary and would not advance the plaintiff’s position, as regardless the Court was not going to be in a position to make an order for liquidation when the proceeding next came before the Court on 14 March 2024 even if the defendant failed to pay.
[63] There is 7.7 hours said to have been spent on drafting a second amended statement of claim following investigations into the defendant’s affairs and before the Court of Appeal’s judgment. There is no reference to drafting an amended statement of claim in the schedule of attendances that is appendix E to the plaintiff’s submissions. I consider that such work was unnecessary in circumstances where the defendant’s defence was reliant upon being successful in the Court of Appeal and where immediately the judgment was released the defendant indicated its intention to pay (and had made a very substantial payment).
[64] There was 6.5 hours spent in preparing for the list call hearing of 29 February in anticipation of opposing the defendant’s oral application for a stay of proceedings. It appears that in response to the defendant’s counsel indicating the defendant was requesting a short stay on advertising for two weeks the plaintiff’s solicitors prepared detailed submissions opposing a stay. It is difficult to see why the plaintiff would incur
these costs when it had earlier undertaken not to take any step in the proceeding until 5 March 2024. In light of that undertaking, and in the face of the defendant’s obvious intention to pay the debt in full in a very short timeframe, the plaintiff could not hope to gain from the position it adopted. These costs were unnecessarily incurred.
[65]I do not award the plaintiff any costs on this invoice except in respect to
2.5 hours of attendances, which at the hourly charge out rate that applies is $954.00. I also allow the plaintiff’s agent’s fee of $1,150, although I consider it to be very high for a short appearance in a list court.
Invoice 96468
[66] Invoice 96468 covers the period 4 March to 18 March 2024. Despite the parties having agreed on 4 March 2024 to a staged payment arrangement, and with full payment (other than the disputed costs) being made on 7 March 2024, an amount of
$12,981.68 is claimed for 38 hours of attendances at an average charge out rate of
$341.62.
[67] In respect of these attendances there is a further seven hours claimed for drafting a second amended statement of claim and a supporting affidavit. Along with the 7.7 hours claimed in the previous invoice, that means almost 15 hours (around two days’ work) was spent drafting these unnecessary documents. I disallow this claim.
[68] It is surprising that with payment imminent, the plaintiff’s solicitors spent what appears to be:
(a)9 hours calculating the amount the defendant owed to it;
(b)1.6 hours checking the defendant’s recalculations;
(c)10.4 hours negotiating settlement of the debt; and
(d)9.2 hours drafting its costs memorandum, despite the general rule that costs should not be payable for cost submissions.
[69] I can see no justification for costs of this magnitude to have been incurred. The defendant’s counsel submits that the plaintiff needed to act reasonably and to pause and “take a breath”, which would have avoided incurring these costs. The defendant further submits, and I agree, that the reasonable thing for the defendant to have done was to have waited the short period to 14 March 2024 to see whether the debt was paid, which would have come at no cost or risk to the plaintiff.
[70] From 28 February 2024 the defendant’s position was unequivocal. It would pay what was owed and would do so within a period of days, and it did so. All that had to be done was to calculate the amount owed and for payment to be made to the plaintiff. Certainly, there was disagreement about the amount owing, but the information before me shows the plaintiff claimed a greater amount than it was entitled to and by a large sum. The plaintiff’s breakdown of attendances confirms this by the reference to “miscommunication between the [plaintiff’s] solicitor and its secretary”, “the [plaintiff’s] solicitor’s calculation of the defendant’s total arrears was at first incorrect as it had twice accounted for penalty interest …”, “[l]iasing and meeting with the Body Corporate’s secretary to correct the error in its calculations”, and “recalculating interest figures on amounts owed by the defendant”. The defendant should not pay for the errors of the plaintiff and its advisors/agents.
[71] There is a curious reference in the plaintiff’s breakdown of attendances to “over the 10-day negotiation period”. The basis upon which the parties were going to settle was agreed as from 4 March 2024, the first day of this billing period.
[72] The plaintiff refers to negotiating “under the pressure of time”. However, it appears to me there was no time pressure except that which the plaintiff chose to impose. It is understandable the plaintiff wanted payment without delay, and it was entitled to that, but the proceeding had effectively been in abeyance for almost a year by this stage and there is no evidence of other pressures upon the plaintiff.
[73] I accept there are some attendances included in this last invoice for which the plaintiff is entitled to claim costs, including some allowance for negotiation of the settlement amount, liaising with its solicitors, concluding the settlement, and correspondence between counsel to prepare and file the joint memorandum of
12 March 2024 to have the case removed from the list on 14 March 2024 and timetabling orders made for the filing of costs submissions. I consider a generous allowance for these necessary and reasonable attendances is 10 hours or $3,416.20 at the charge out rate that applies to this invoice.
[74] The plaintiff also claims 9.2 hours for drafting submissions on costs. However, the work was undertaken between 14 and 18 March 2024, after the plaintiff had rejected the offer of settlement made by the defendant on 8 March 2024 to pay
$10,000.00 to meet the plaintiff’s costs. It will be apparent from what I have set out above that the offer should have been accepted as the amount offered exceeded what the plaintiff was entitled to. The plaintiff would have saved both parties further unnecessary costs had it done so. The making of that offer and its rejection are matters that I can, in the exercise of my discretion, take into account on the question of costs.12 Contrary to the position taken by the plaintiff, I consider that it is the defendant who is entitled to an allowance for preparing submissions on costs.
Summary of the position
[75] The plaintiff has established an entitlement to further costs of $6,075.60. I consider the defendant is entitled to an allowance in respect to the preparation of submissions on costs. I consider an award of 2B scale costs appropriate, which is
$3,585.00.13 The end result is that the plaintiff is entitled to further costs of $2,490.60.
Result
[76]The plaintiff is entitled to cost of $2,490.60.
[77] I direct the Registrar to forthwith make payment to the parties’ solicitors for the credit of their clients from the money paid into court by the defendant of:
12 High Court Rules, r 14.11(1).
13 High Court Rules, sch 3 item 24.
(a)the sum of $2,490.60 in satisfaction of the plaintiff’s entitlement to costs; and
(b)the balance to the defendant.
O G Paulsen Associate Judge
Solicitors:
Grove Darlow & Partners, Auckland Davidson Legal, Christchurch
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