Caffe Coffee (NZ) Limited v Farrimond

[2016] NZHC 2154

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-2663 [2016] NZHC 2154

BETWEEN

CAFFE COFFEE (NZ) LIMITED

Applicant

AND

SUNE FARRIMOND Respondent

Hearing:	9 September 2016
Appearances:	Ms Fletcher for applicant Mr E Grove for respondent
Judgment:	9 September 2016

ORAL JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

CAFFE COFFEE (NZ) LIMITED v FARRIMOND [2016] NZHC 2154 [9 September 2016]

[1]      The respondent obtained a judgment against the applicant in the Employment Relations Authority in 2015 subsequently, it sought to have costs fixed and they were fixed by the authority in 20 October 2015.

[2]      Sometime prior to the costs order being made, the applicant filed a challenge against the substantive conclusions of the ERA with the Employment Court.

[3]      On  28  October  2015  (approximately)  the  respondent  served  a  statutory demand on the applicant seeking to enforce the costs order that had been made some nine days previously.

[4]      On 4 November 2015 the applicant sought a stay of execution of the costs judgment of the ERA and an order was made to that effect on 10 December 2015.

[5]     On 6 November 2015 the applicant filed the present application (“the application”) to set aside the statutory demand.

[6]      The application was called in this Court on or about 15 February 2016. Subsequent to these developments, the challenge to the determination of the ERA decision, which is a type of appeal I understand, was heard in the Employment Court which reversed the result in the ERA.  The costs orders in the ERA were set aside as a result.

[7]      The respondent now accepts that the application to set aside the statutory demand is to be set aside by consent. There remains the issue of costs.

[8]      The applicant contends that it is entitled to costs.  Amongst other things it complains about the rapidity with which the statutory demand was served following of the making of the order of costs in the ERA.  As it happens I do not consider that that matter bears upon the discretion to order costs.   What is of considerable importance, though, is the principle contained in HCR 14.2(a) that the party who fails with respect to a proceeding should pay costs to the party who succeeds.  The applicant has succeeded and is entitled to costs.

[9]      Mr Grove though says that even if that position is arrived at there remains to be considered the scope or quantum of the costs.  Mr Grove reminds me that when this proceeding was called on or about 12 February 2016 the applicant resolved to have an order made in its favour notwithstanding the opposition of the respondent. The position which the applicant took is recorded in the minute that I issued subsequent to that hearing date of 15 February 2016.     Essentially the applicant seemed to be of the view that because an order staying execution had been made in the Employment jurisdiction, that was the end of the statutory demand.   I did not agree  with  that  conclusion  and  agreed  with  the  position  that  was  taken  by the respondent.  I concluded that because there was still no certainty as to whether the final position would be that the costs order would be set aside, there was no finality about the question of whether the respondent had a debt to support his statutory demand.   I was left in no doubt that commonsense required that if ultimately the Employment Court set aside the costs order then that would be the end of the application  and  that  the  respondent  would  not  persist  with  it.    Conversely,  I considered there was no real argument that if the challenge failed and the original costs  orders  survived  then  the  applicant  would  be  entitled  to  continue  with liquidation proceedings in reliance upon the expired statutory demand.

[10]     However the real issue about the hearing on 12 February in the context of this judgment is that the applicant’s counsel had prepared for a substantive battle even though at that time no fixture had been allocated.  Counsel wanted to have the matter determined then and there in the list Court, a position which the respondent opposed. The respondent was correct in my view in taking that approach.

[11]     The  application  has  been  dormant  in  this  jurisdiction  while  the  parties awaited the outcome of the Employment Court decision.  This has come to hand in the last week or two.  The applicant was indeed successful so that the original debt upon which the statutory demand was based was found not to be owing.   Thereafter, consistently with what I describe as being the stance of the respondent at the earlier stages in this proceeding, the respondent accepted that the statutory demand could not be proceeded with.

[12]     This leads me to the submission that Mr Grove made which was that that part of the costs which the applicant seeks relating to the preparation of submissions and a bundle in anticipation of a defended hearing taking place on or about 12 February

2016 should not be allowed.  That was, Mr Grove submitted, because the applicant behaved unreasonably in incurring that expense while matters were still in a state of flux.

[13]     I am of the view that the approach that the applicant took was not consistent with usual practice.  It would be unusual for a substantive hearing on the matter to take place in circumstances which I have just described but more to the point, it was always possible that matters would change when the substantive issue was finally reviewed by the Employment Court.  It would be inefficient and a waste of money and everyone’s time if the Court embarked upon hearing the application to set aside the  statutory  demand  only  to  find  later  that  because  of  the  outcome  of  the employment proceedings, the respondent did have a debt all along which he was entitled to enforce.

[14]     I do not consider either that it was logically correct to assume that because a stay order had been made in the interim in the employment jurisdiction that that would be decisive of the question of whether or not the application to set aside the statutory demand should therefore be granted.  For all of these reasons I side with Mr Grove on the question of the reasonableness of the costs incurred with regard to the February 2016 hearing.

[15]     The outcome will be that there will be an order for costs on the application in favour of the applicant on a 2B basis together with disbursements to be fixed by the Registrar.   The costs, though, are not to include any costs for preparation of submissions or the bundle in anticipation of the hearing in February 2016.

[16]     Mr Grove has addressed me further concerning the succession of consent memoranda that have been necessary for the purposes of adjourning this proceeding from list day to list day pending the outcome of the Employment Court decision. Mr Grove is concerned that his client not have imposed upon him a large part-day costs allowance for preparation of each of the consent memoranda.

[17]     I consider that position is not unreasonable and Ms Fletcher does not oppose it.   What I suggest is that the parties discuss coming to an arrangement about a modest allowance being made in regard to the consent memoranda.   If the parties can’t agree I reserve leave to them to have this matter called again at the conclusion

of a company’s list and I will give consequent directions.

J.P. Doogue

Associate Judge