Centro Pilgrim Limited v Matthew Barr Motor Group Limited

[2023] NZHC 2002

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2023-409-20

[2023] NZHC 2002

UNDER

Section 290 of the Companies Act 1993

IN THE MATTER

of an application to set aside a statutory demand

BETWEEN

CENTRO PILGRIM LIMITED

Applicant

AND

MATHEW BARR MOTOR GROUP LIMITED

Respondent

CIV-2023-409-34

BETWEEN

MATHEW BARR MOTOR GROUP LIMITED
Applicant

AND

CENTRO PILGRIM LIMITED

Respondent

Hearing:	On the papers
Counsel:	A Gilchrist for Centro Pilgrim Ltd J E Bayley for Mathew Barr Motor
Judgment:	28 July 2023

COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 28 July 2023 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

CENTRO PILGRIM LTD v MATHEW BARR MOTOR GROUP LTD (Costs) [2023] NZHC 2002 [28 July 2023]

[1]In my judgment dated 19 June 2023 I:1

(a)dismissed an application in CIV-2023-409-20 by Centro Pilgrim Ltd (Centro) to set aside a statutory demand issued to it by Mathew Barr Motor Group Ltd (Barr) dated 16 January 2023; and

(b)granted an application in CIV-2023-409-34 by Barr to set aside a statutory demand issued to it by Centro dated 25 January 2023.

[2]          I also held that Barr was entitled to costs on both applications. Counsel were to confer and if they could not agree on costs, to file memoranda. 2 There are some issues in relation to costs upon which counsel do not agree.

[3]        Barr is seeking costs on a 2B basis in each proceeding, but with a 50 per cent uplift in respect of its application to set aside Centro’s statutory demand.

[4]        Centro accepts that the appropriate starting point is that Barr is entitled to costs on a 2B basis but says adjustments must be made to reflect the fact that both proceedings were heard together. Centro also does not accept that Barr is entitled to an uplift on scale costs and says that if any uplift is awarded it should be limited to no more than 25 per cent. There is also an issue whether Barr should be awarded costs for preparing and filing memoranda on costs.

[5]The issues that arise are whether:

(a)Allowances in respect of certain steps in the proceeding should be made on a 2A or 2B basis; 3

(b)Barr is entitled to two allowances for sealing the Court’s orders;

(c)Barr is entitled to an uplift on costs in CIV-2023-409-34 and, if so, what uplift is appropriate; and

1      Centro Pilgrim Ltd v Mathew Barr Motor Group Ltd [2023] NZHC 1522.

2 At [68].

3      High Court Rules 2016, Schedule 3.

(d)Barr is entitled to an allowance (split over the two proceedings) for preparing and filing its memoranda on costs;

Allowances for steps on 2A or 2B basis

[6]        The kernel of Centro’s argument is that the two proceedings were run together and involved essentially the same issues, so the time required for Barr to prepare and file pleadings and submissions would be much reduced. On that basis, it submits the allowances for certain steps in at least one proceeding should be awarded on a 2A basis. These steps are the filing of Barr’s notice of application/notice of opposition and submissions.

[7]        Barr argues it is not correct the proceedings ran together. It says it filed separate notices of application and opposition and four affidavits containing detailed factual narratives and an extensive exhibit bundle. It also submits that two tranches of submissions were prepared at different times and the applications raised distinct issues.

[8]        In my view, there is force in Centro’s submission. While all issues arising on each application were not identical, the primary issues, both factual and legal, were the same. I also note that when filing its notice of opposition to Centro’s application in CIV-2023-409-20, Barr relied upon the affidavits it had previously filed in CIV- 2023-409-34.

[9]        In assessing what time is considered reasonable for steps taken in the proceedings,4 the close relation between them must be taken into account. I also consider a comparatively small amount of time would have been required for the preparation of Barr’s notice of opposition in CIV-2023-409-20 and its legal submissions overall for this reason. I consider the proper manner to deal with this is to make a total allowance for steps 37/38 of three days and step 40 of two days, and split these equally between the two proceedings.

4      High Court Rules, r 14.5(2).

Allowances for sealing the Court’s orders

[10]      The same reasoning does not apply to sealing the Court’s orders. There are two proceedings and two orders should be sealed. There will be no significant time savings due to the related nature of the proceedings.

[11]      I do not therefore accept Centro’s challenge to Barr’s claim for allowances for sealing two judgments and two sealing fees as disbursements.5

Uplift on costs

[12]      Barr is seeking a 50 per cent uplift only in respect of its application in CIV- 2023-409-34. Rule 14.6(3)(b)(ii) and (iii) of the High Court Rules provides the Court may order a party to pay increased costs if the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or a step in it by:

(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument …

[13]      Barr relies upon paragraph [64] of my judgment where I found Centro issued its statutory demand as a tit-for-tat measure in circumstances where Centro’s solicitors were of the view the likely outcome would be that both statutory demands would be set aside by the Court. Barr also relies upon my rejection of the evidence of Centro’s director and principal witness, Andrew O’Neil, which it argues amounts to failing without reasonable justification to accept facts or evidence. 6

[14]      Centro argues there is no justification for an uplift on scale costs. It says it did not act frivolously, improperly or unnecessarily and it does not accept Mr O’Neil gave inaccurate evidence. It says, while the Court found against it on the main issue (whether a side agreement was varied), that in itself did not mean it acted inappropriately. It says that even if the Court does not accept that submission, any uplift should be limited to no more than 25 per cent.

5      There was no challenge to any other disbursements claimed by Barr.

6 At [39].

[15]      I consider an uplift on scale costs is justified. Centro made inappropriate use of the statutory demand procedure which caused all parties to incur unnecessary costs. The basis for my view is a letter of 19 January 2023 sent by Centro’s lawyers to Barr’s lawyer’s following the issue of Barr’s statutory demand. Centro’s lawyers wrote:

[Barr] has served a s289 Notice with the knowledge that a dispute exists. This appears to be a tactical move to draw [Centro] into unnecessary litigation (where the appropriate steps ought to be pursuant to the PLA – regardless, [Centro] is not deterred and will deploy similar tactics to ensure that it is not bullied. The parties could then litigate both demands with the likely outcome that a Judge directs the dispute must be commenced by proceedings in the usual manner).

[16]      In this correspondence, Centro’s lawyers assert the existence of a dispute as to whether the side agreement was varied and that by issuing a statutory demand Barr was drawing Centro into “unnecessary litigation”. They also state that Centro would issue its own demand to ensure it was not bullied. It must follow Centro understood the debt it claimed was owed was subject to a genuine and substantial dispute, and that any statutory demand it issued in respect of it was likely to be set aside. I consider Centro’s use of the statutory demand procedure was improper.

[17]      Barr’s counsel referred me to my decision in Wimpex Ltd v Open Country Dairy Ltd where I ordered the respondent to an application to set aside a statutory demand to pay 2B scale costs with a 50 per cent uplift.7 There, the statutory demand was incorrectly issued for what were unliquidated damages and not a debt that was owing or due. Also, upon the statutory demand being challenged, the respondent had not agreed to withdraw it but sought to leverage some advantage from it. I considered the respondent overreached, but I did not find that it had acted frivolously or vexatiously or knowing the issue of the statutory demand to be an abuse of process. Here, there is at least equal justification for an uplift on scale costs because the issue of the statutory demand by Centro was so plainly inappropriate.

[18]      Centro has not referred me to any authorities that support its contention that any uplift be no more than 25 per cent of scale costs. Barr referred me to Wimpex Ltd v Open Country Dairy Ltd, and to other authorities that suggest indemnity costs could

7      Wimpex Ltd v Open Country Dairy Ltd [2023] NZHC 1476.

have been sought. I consider a 50 per cent uplift is appropriate in respect of the one proceeding.

[19]      For completeness, Centro’s counsel referred me to r 14.2(1)(f) of the High Court Rules which states as a principle that an award of costs should not exceed the costs actually incurred by the party claiming them. Counsel also made the submission that if an uplift on scale costs was awarded, Barr would be obtaining costs equivalent to some 45 hours work at a rate of $500 per hour. It was submitted that if that was indeed the amount of time spent, it would be appropriate for the matter to be referred for costs revision. I do not see anything in these submissions.

[20]      Barr’s counsel has confirmed that Barr’s actual legal costs exceed the amount that is claimed. As to the issue of the time spent, I do not see that the time allowances are excessive.

Costs on costs

[21]      Centro’s counsel accepts there is no presumption there will be no award of costs on costs, but argues this is a routine application for costs on a routine procedure and, in those circumstances, there should be no additional allowance for memoranda as to costs.

[22]      Barr argues that Centro did not agree to an orthodox calculation of costs putting it to the expense of having to make submissions, and it should therefore be awarded costs for preparing its memoranda on costs.

[23]      Overall Barr has been successful in relation to the calculation of costs, and most importantly in relation to its entitlement to an uplift on scale costs. It was necessary for it to make further submissions to obtain its entitlement. I consider it is appropriate that some allowance is made for the filing of memoranda on costs, which shall be split between the two proceedings. Barr has sought a 0.4 day allocation for filing its memoranda. I consider that appropriate.

My calculation of costs

[24]      Attached as Schedule A and Schedule B to this judgment are my costs and disbursements calculations in respect of the two proceedings.

Result

[25]      In respect of proceeding CIV-2023-409-20, Barr is awarded costs and disbursements against Centro in the amount of $8,702.71 in accordance with Schedule A attached hereto.

[26]      In respect of proceeding CIV-2023-409-34, Barr is awarded costs and disbursements against Centro in the sum of $13,845.52 in accordance with Schedule B attached hereto.

O G Paulsen Associate Judge

Solicitors:

Dyer Whitechurch, Auckland Rhodes & Co, Christchurch

SCHEDULE A

Mathew Barr Motor Group Limited

2B Costs and Disbursements Calculation

CIV-2023-409-20

Costs No	Item	Allocation (days)
38	Filing notice of opposition and supporting affidavits 03.02.23 (3 days split equally with CIV 2023-409-34)	1.5
39/11	Filing memorandum for first or subsequent case management conference or mentions hearing 23.02.23 (split equally with CIV-2023-409-34)	0.2
40	Preparation of written submissions 09.05.23 (2 days split equally with CIV-2023-409-34)	1.0
41	Preparation by applicant of bundle for hearing (split equally with CIV-2023-409-34)	0.3
42	Appearance at hearing for sole or principal counsel 16.05.23 (split equally with CIV-2023-409- 34)	0.125
Filing memoranda as to costs (0.4 day allowance split equally with CIV-2023-409-34)	0.2
29	Sealing order or judgment	0.2
Total allocation	3.525
Total costs at $2,390 per day	$8,424.75
Disbursements (excl GST)	Notice of opposition filing fee	$95.65
Sealing order fee	$43.48
Courier (split equally with CIV-2023-409-34)	$3.23
Photocopying/printing 678 pages at 20 cents per page (split equally with CIV-2023-409-34)	$135.60
Total disbursements	$277.96
Total costs and disbursements	$8,702.71

SCHEDULE B

CIV-2023-409-34

Costs No	Item	Allocation (days)
37	Filing application and supporting affidavits 01.02.23 3 days split equally with CIV-2023-409-20)	1.5
39/11	Filing memorandum for first or subsequent case management conference or mentions hearing 23.02.23 (split equally with CIV-2023-409-20)	0.2
40	Preparation of written submissions 02.05.23	1.5
41	Preparation by applicant of bundle for hearing (split equally with CIV-2023-409-20)	0.3
42	Appearance at hearing for sole or principal counsel 16.05.23 (split equally with CIV-2023- 409-20)	0.125
Filing memoranda as to costs (0.4 day allowance split equally with CIV-20230409-20)	0.2
29	Sealing order or judgment	0.2
Total allocation	3.525
Total costs at $2,390 per day	$8,424.75
Uplift (50%)	$4,212.37
Disbursements (excl GST)	Application filing fee	$469.57
Scheduling fee	$556.52
Sealing order fee	$43.48
Courier (split equally with CIV-2023-409-20)	$3.23
Photocopying/printing 678 pages at 20 cents per page (split equally with CIV-2023- 409-20)	$135.60
Total disbursements	$1,208.40
Total costs and disbursements	$13,845.52