Contact Energy Limited v Great Western Land Limited HC Auckland CIV-2010-404-5808

[2011] NZHC 10

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-5808

IN THE MATTER OF     the Companies Act 1993

BETWEEN  CONTACT ENERGY LIMITED Plaintiff

ANDGREAT WESTERN LAND LIMITED Defendant

Hearing:         By memoranda

Appearances: Ms N K King for plaintiff

Mr J Nguy for defendant

Judgment:      6 January 2011 at 3 pm

JUDGMENT OF LANG J [on costs]

This judgment was delivered by me on 6 January 2011 at 3 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:

Buddle Findlay, Auckland

Jesse & Associates, Auckland

CONTACT ENERGY LTD V GREAT WESTERN LAND LTD HC AK CIV-2010-404-5808  6 January 2011

[1]      On 18 November 2010 I dismissed an application by Contact Energy Limited (“Contact”)  for  an  order  placing  Great  Western  Land  Limited  (“Great  Western Land”) in liquidation.  I reserved leave to both counsel to file submissions in relation to the issue of costs in the event that they could not reach agreement regarding that issue.   The parties  have been unable to reach  agreement  and  I am  accordingly required to determine that issue on the basis of memoranda that counsel have filed.

[2]      Contact maintains that it has incurred actual and reasonable costs totalling

$11,319.59 exclusive of GST, together with disbursements totalling $896.25.  That claim is supported by invoices that its solicitors have rendered to it.  Great Western Land says that no award of costs should be made, although it has offered to pay the sum of $4000 in full settlement of Contact’s claim for costs.

[3]      Great Western Land contends, firstly, that Contact should not be awarded costs because it has abused the Court’s process by instituting liquidation proceedings when it knew that Great Western Land was not insolvent.  I reject this submission. The liquidation proceeding followed the service of a statutory demand requiring Great Western Land to pay outstanding electricity charges that it owed to Contact. Great Western Land did not pay the amount claimed in the statutory demand, and it did not challenge the basis upon which Contact had issued the demand.  Contact was therefore entitled to proceed upon the basis that Great Western Land was insolvent and unable to pay its debts.  Any doubt regarding that issue is dispelled by the fact that a cheque that Great Western Land tendered to Contact on or about 13 October

2010 was later dishonoured.  In my view Contact was entitled to proceed throughout upon the basis that Great Western Land was unable to pay the outstanding electricity charges, and that it was appropriate for it to be placed in liquidation.  The liquidation proceeding was not an abuse of the Court’s process.

[4]      As I noted in my earlier judgment at [19], Contact has a contractual right under the supply agreement with Great Western Land to recover any actual and reasonable costs that it incurred in recovering monies owing under the agreement. Great Western  Land’s next argument is that the liquidation proceeding is not a proceeding for the recovery of outstanding monies.   Rather, it is a proceeding in which the plaintiff seeks to place the defendant in liquidation.  I accept that that is

the case, but I also accept that Contact issued the proceeding because of the outstanding monies.   There can be no doubt, either, that Great Western Land ultimately paid those monies because it knew that it would be placed in liquidation if it did not do so.   For that reason I accept that the costs of the present proceeding come  within  the  category  of  proceedings  in  respect  of  which  Contact  has  a contractual right to recover its actual and reasonable costs.

[5]      I do not accept, however, that attendances by Contact’s solicitors after I dismissed the proceeding on 18 November 2010 are recoverable in terms of the supply agreement.  Those charges relate to Contact’s assertion that the electricity has been unlawfully reconnected to Great Western Land’s premises.  That is something that occurred after the present proceeding was dismissed, and it also falls outside the ambit of the supply agreement.  It should not form part of any award of costs in this proceeding.

[6]      In all other respects  I am satisfied that the costs and disbursements that Contact  has  incurred  are  reasonable.    I leave  it  to  counsel  to  reach  agreement regarding the amount by which Contact’s claim must be reduced to remove the attendances since 18 November 2010.   This should be a simple matter based on records held by Contact’s solicitors.  In the unlikely event that counsel cannot reach agreement, I reserve leave to the parties to ask the Court to determine that issue also.

Lang J