Bridge CIS Limited v Body Corporate no. 191561

[2016] NZHC 1376

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-005130 [2016] NZHC 1376

UNDER

Section 290 of the Companies Act 1993,

the Judicature Act 1908, and the High
Court Rules

AND

IN THE MATTER

of an application to set aside a statutory demand

BETWEEN

BRIDGE C.I.S. LIMITED Applicant

AND

BODY CORPORATE NO. 191561

Respondent

Hearing:	(On the papers)
Judgment:	23 June 2016

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 23 June 2016  at 2.15 pm, pursuant to Rule 11.5 of the High

Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           G Bogiatto, Auckland

James Keat, Auckland

Copy to:            B Rooney, Auckland

BRIDGE C.I.S. LIMITED v BODY CORPORATE NO. 191561 [2016] NZHC 1376 [23 June 2016]

[1]      The respondent Body Corporate issued a statutory demand against Bridge C.I.S. Limited (Bridge) for $22,505.08.  Bridge applied to set the statutory demand aside.  A fixture was allocated.  Prior to the hearing the parties agreed to resolve the application on the basis Bridge paid the full amount demanded plus accrued interest under protest and reserving all rights to dispute liability.  All issues of costs were reserved for further consideration if necessary.

[2]      Bridge then filed proceedings in the Tenancy Tribunal to resolve the dispute between the parties.  As part of the parties’ agreement, Bridge withdrew its existing proceedings in the District Court.  The Tenancy Tribunal ruled in favour of Bridge. The respondent Body Corporate took the matter on appeal.   The District Court dismissed the appeal and awarded costs in favour of Bridge.

[3]      Bridge now seeks costs on its application to set aside the statutory demand.

[4]      The respondent Body Corporate opposes the application for costs.  It says it should be entitled to costs, either to scale or in accordance with the provisions of the Unit Titles Act 2010.

[5]      There is a somewhat complicated background to the issues between Bridge and the respondent Body Corporate.  In short the respondent Body Corporate is the Body Corporate for an apartment building known as Argent House.  Bridge owned a unit in the apartment building.  The apartment building was a leaky building.  The Body  Corporate  took  proceedings  on  behalf  of  owners  and  Body  Corporate members.   Bridge did not join the proceedings in relation to its unit as it was not damaged, but it had an interest in the claim pursued in relation to common areas. The proceedings were settled.  The Body Corporate levied Bridge for its contribution towards the costs of repairs but excluded it from its share of the settlement.  It did so on the basis that Bridge had failed to co-operate with the proceedings, in particular in relation to discovery.

[6]      Bridge took the view the Body Corporate was not entitled to exclude it from the settlement and issued proceedings in the District Court.   The Body Corporate

then issued a statutory demand for the amount levied of $21,773.56 plus costs of

$731.52.   Bridge applied to set aside the statutory demand.   The fixture of that application was vacated on the basis noted above.

[7]      The proceedings Bridge had taken in the District Court were withdrawn.  As noted the matter proceeded to a Tenancy Tribunal hearing.  The Tribunal found in favour of Bridge and directed the respondent Body Corporate to pay Bridge the full settlement amount.  It also directed it to repay the additional costs it had claimed for the enforcement action, the costs that the Body Corporate had deducted, and directed the Body Corporate to pay the Tenancy Tribunal filing fee.

[8]      The respondent Body Corporate appealed to the District Court.  The District Court dismissed the appeal although it reduced the amount payable by the Body Corporate to Bridge by $8,273.95, after taking account of the common property levy.

[9]      Bridge seeks costs on a 2B basis, together with disbursements, amounting to

$7,058.   The respondent  Body Corporate submits  that  rather than Bridge being entitled to costs it should be entitled to costs.  Costs on a 2B basis for the steps it took are $4,378.  In the alternative, however, it suggests it should be entitled to full solicitor/client costs of $12,274 under the provisions of the Unit Titles Act 2010.

[10]     Costs  are  the  discretion  of  the  Court.    Generally  costs  will  follow  the outcome of the proceeding or application.  In the present case the application was not determined by the Court.   There have been subsequent proceedings between the parties which have resolved the substantive issues between them.   Costs have followed the outcome of those particular proceedings in the usual way.

[11]     The strongest point for the respondent Body Corporate is that as subsequent events have disclosed, a sum of at least $8,273.95 was due by Bridge to the respondent Body Corporate at the time it issued the statutory demand.

[12]     However, against that, it is apparent from the background to the proceedings that at the time the statutory demand was issued there was a substantial dispute between the parties as to whether Bridge had a counterclaim or set-off relating to its

share of the settlement.  On the information before the Court Bridge had solicitors involved and had taken proceedings in the District Court to have that issue resolved. The Body Corporate was aware the claim was disputed.  In the circumstances it was not appropriate for the respondent Body Corporate to have pursued this matter by way of statutory demand.

[13]     It is not for this Court on this application to determine the merits of the issues between the parties.   The merits have been determined by the Tribunal and the District Court.   However, given the background to the matter and the issue of the proceedings in the District Court it is likely that the statutory demand would have been set aside.

[14]     At best from the Body Corporate’s point of view, it may have been possible during the course of the hearing for the $8,273.95 amount to have been isolated as due and payable in any event.   But that sum was not expressly identified in Mr Wilson’s affidavit in opposition as an alternative claim.

[15]     I put to one side the general expression of opinion in Mr Wilson’s affidavit that Bridge was insolvent because it had previously been late in paying levies.  Delay in making payment does not prove insolvency.  Bridge owned an apartment in the complex so it had at least that asset.   The Court would not have rejected the application to set aside on the basis Bridge was insolvent.

[16]     I  find  that  Bridge  was  likely to  have  succeeded  in  having  the  statutory demand set aside.   The demand should not have been issued given the dispute. Bridge is entitled to the costs of the application.  I agree, however, with counsel for the respondent Body Corporate’s submission that there should be no allowance for preparation of a bundle of documents for hearing as the matter was resolved before the bundle was due to be filed and no bundle was filed.  The bundle was not required to be filed until five days after the agreed settlement.  I allow the memorandum that was prepared for the Court.  While it may not have strictly been provided for it falls into the category of those cases that some allowance should be made:  r 14.5(1).

Result

[17]     Bridge is to have costs against the respondent Body Corporate in the sum of

$5,174 and disbursements of $690, in total $5,864.

Venning J