Cannon Point Development Limited v Wellington Developments Limited - [2024] NZHC 1939

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2024-485-63

[2024] NZHC 1939

IN THE MATTER of an application to set aside a statutory demand under the Companies Act 1993

BETWEEN

CANNON POINT DEVELOPMENT

LIMITED, a duly incorporated company having its registered office at 101 Endeavour Drive, Whitby, Porirua
Applicant

AND

WELLINGTON DEVELOPMENTS

LIMITED, a duly incorporated company having its registered office at

68 Woburn Road, Woburn, Lower Hutt Respondent

On the papers

Counsel:

D Abricossow and H Dempsey for Applicant F Collins for Respondent

Judgment:

15 July 2024

JUDGMENT OF ASSOCIATE JUDGE SKELTON [COSTS]

[1] The applicant applied to set aside a statutory demand issued by the respondent for $475,345.36 (incl GST). Prior to the first call of the setting aside application, the respondent withdrew the statutory demand.

CANNON POINT DEVELOPMENT LTD v WELLINGTON DEVELOPMENTS LTD [2024] NZHC 1939 [15 July 2024]

[2] Regrettably, the parties have been unable to agree on costs. The applicant seeks indemnity costs or increased costs or scale costs. The respondent accepts that scale costs are appropriate but opposes indemnity costs or increased costs.

Legal principles - costs

[3] Costs are ultimately a matter of the court’s discretion, the overall objective being to achieve an outcome that best meets the interests of justice.1 However, that discretion is qualified by the applicable costs rules, contained in pt 14 of the High Court Rules 2016. The primary principle applying to the determination of costs is that costs follow the event – meaning that a party who is unsuccessful pays costs to a party who is successful.2 Costs are usually to be assessed on the basis of the schedule by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application.3

[4] The Court may order a party to pay increased costs where that party has contributed unnecessarily to the time or expense of the proceeding or a step in it.4 Increased costs may be awarded where there is a failure by the paying party to act reasonably.5 An example is failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under r 14.10 or some other offer to settle or dispose of the proceeding.6

[5] The Court may also award the actual costs reasonably incurred by a party (indemnity costs).7 Indemnity costs may be awarded where a party has behaved either badly or very unreasonably.8 For example, indemnity costs may be ordered if the party

1      High Court Rules 2016, r 14.1; Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7] and [16]; Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [21]–[24] and [28]; and Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt Ltd) (2002) 16 PRNZ 662 (CA) at [27].
2      Rule 14.2(1)(a).
3      Rule 14.2(1).
4      Rule 14.6(3)(b).
5      See Bradbury v…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NZHC 1939
Decision Date: 15 July 2024

CaseChat Overview and Summary

In the High Court of New Zealand, Napier Registry, Cannon Point Development Limited sought to set aside a statutory demand issued by Wellington Developments Limited for $475,345.36 (incl GST). The statutory demand was withdrawn by the respondent before the first call of the setting aside application. The court had to determine the appropriate costs to be awarded in this case. The applicant sought indemnity costs or increased costs or scale costs, while the respondent accepted that scale costs were appropriate but opposed indemnity costs or increased costs.

The court found that the statutory demand was withdrawn before the first call of the setting aside application, and before the respondent had filed any evidence in opposition. The merits of the application to set aside the statutory demand had not been determined, in particular the issue of whether there was a substantial dispute with regard to the amount which was the subject of the statutory demand. The court did not consider it appropriate to make substantive findings on the merits at this stage. The court found that the respondent's conduct did not meet the high threshold for an award of indemnity costs. However, the court considered that the respondent should have withdrawn the statutory demand earlier. Therefore, the court considered that there was justification to award the applicant increased costs, but considered that an uplift of 50% was appropriate.

The court ordered that the respondent, Wellington Developments Limited, pay the applicant, Cannon Point Development Limited, costs in the sum of $8,604 and disbursements in the sum of $540. The court found that the statutory demand was withdrawn before the first call of the setting aside application, and before the respondent had filed any evidence in opposition. The merits of the application to set aside the statutory demand had not been determined, in particular the issue of whether there was a substantial dispute with regard to the amount which was the subject of the statutory demand. The court did not consider it appropriate to make substantive findings on the merits at this stage. The court found that the respondent's conduct did not meet the high threshold for an award of indemnity costs. However, the court considered that the respondent should have withdrawn the statutory demand earlier. Therefore, the court considered that there was justification to award the applicant increased costs, but considered that an uplift of 50% was appropriate.

Orders