Comptroller of Customs v World's Best Little Wine Company Limited

[2017] NZHC 886

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2016-441-000142 [2017] NZHC 886

IN THE MATTER

of the Companies Act 1993

BETWEEN

COMPTROLLER OF CUSTOMS Plaintiff

AND

WORLDʼS BEST LITTLE WINE COMPANY LIMITED

Defendant

Hearing:	4 May 2017 (Determined on the papers)
Counsel:	J V Angelson for Plaintiff J M von Dadelszen for Defendant
Judgment:	4 May 2017

COSTS JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1]      In this proceeding the Comptroller of Customs sought the liquidation of the defendant company as it had not met a statutory demand for payment of excise duty levies and additional duty imposed as a result of non-payment.

[2]      The application was first called on 2 February 2017.  On that date the Court was advised that a proposal for settlement had been accepted.   The case was adjourned to 9 March for payment to be completed.

[3]      On 9 March the proceeding was withdrawn, but in a Minute of that date the Court recorded that there remained an issue as to costs, despite the substantive claim having been settled.   Directions were made for the filing of memoranda.   Those

memoranda have now been filed.

COMPTROLLER OF CUSTOMS v WORLDʼS BEST LITTLE WINE COMPANY LTD Costs Judgment [2017]

NZHC 886 [4 May 2017]

[4]      It is common ground that the sum paid to the Comptroller of Customs by the defendant company, $191,719.23, comprised only the sum claimed by the Comptroller, and no sum by way of costs.

[5]      The Comptroller says that an award of costs should be made notwithstanding that  the  proceeding  was  withdrawn  by  leave  because  it  successfully  achieved payment of the full amount of the company’s indebtedness.  The Comptroller says that neither in conversations over settlement, nor in emails, was there any mention that the payment being made was to be inclusive of costs.  The defendant says that if the plaintiff was to seek costs, that should have been made clear when the amount to settle the debt was notified and arrangements were made to pay it.  Neither officers from the Comptroller’s department, nor the Comptroller’s counsel, alerted the defendant to there being a claim that costs should be paid in addition to the principal amount of the debt.

[6]      Counsel agree that the principle to be applied is summarised in Greys Avenue Investments Ltd v New Zealand Mint Ltd.  When discussing the issue of incidence of costs in relation to statutory demands, Associate Judge Bell also referred to the position when a creditor withdraws a bankruptcy or liquidation application:1

Success is determined according to whether the outcome shows that the person who issued the statutory demand has been upheld as a creditor for the debt stated in the demand.

...

If the outcome is that the creditor is paid or arrangements are made for payment, the creditor will be vindicated.  If the creditor agrees to withdraw the demand as part of those arrangements, that does not make the creditor the loser.   There is no reason to require the creditor to pay costs.   The situation is little different from those of creditors who withdraw bankruptcy or liquidation applications on being paid or accepting arrangements for payment. They are invariably entitled to costs.

[7]      I have reviewed the correspondence which has been annexed to memoranda. This is one of those cases, unusual in my experience, where neither side referred to costs  when  negotiating  to  have  the  proceeding  withdrawn.    The  Comptroller’s

position was that the full debt was required before leave to withdraw would be

1      Greys Avenue Investments Ltd v New Zealand Mint Ltd [2015] NZHC 2633 at [21] and [33].

sought.  The company’s position was that it had to pay the full debt, and it did so.  It is unfortunate that neither side specifically referred to costs.   Nonetheless, the solicitors for the defendant would have known that costs are invariably claimed by creditors applying for appointment of liquidators, and in any event costs are sought in the prayer for relief in the statement of claim, in accordance with usual practice.

[8]      After considering the submissions from both parties I am satisfied that there is no reason to depart from the general proposition enunciated by Associate Judge Bell.  It is appropriate that the defendant company pay costs to the Comptroller.

[9]      In  this  event  counsel  for  the  defendant  company  takes  issue  with  two elements of the sum claimed.   I agree that given the outcome of the proceeding, withdrawal of the application with leave, there was no call to seal an order and costs for this item, $446, are disallowed, as is the disbursement of $50.

[10]     Secondly, counsel notes that different fees are claimed for the appearances on

2 February and 9 March, the latter being double the sum claimed in respect of the former date.  Item 12 in Schedule 3 of the High Court Rules provides that 0.2 of a day may be claimed where costs are awarded on a 2B basis, as here.   I therefore disallow the claim for an additional 0.2 of a day in respect of the appearance on

9 March.

[11]     As a consequence the sum claimed for costs is reduced by $892, and the sum claimed for disbursements is reduced by $50.  The defendant company is ordered to

pay costs and disbursements accordingly.

J G Matthews

Associate Judge

Solicitors:

Meredith Connell, Auckland
Bannister & von Dadelszen, Hastings