Cooney Trustees Limited v Pirawai Excavation Limited

[2014] NZHC 2435

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2014-419-000205 [2014] NZHC 2435

BETWEEN

COONEY TRUSTEES LIMITED

Plaintiff

AND

PIRAWAI EXCAVATION LIMITED Defendant

Hearing:	1 October 2014
Appearances:	D M O'Neill for the Applicant M Fisher for the Respondent
Judgment:	3 October 2014

RECORDOF ORDERS AND COSTS JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 3 October 2014 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors / Counsel: Cooney Law, Cambridge

Jones Howden, Matamata

Case officer:     Fleur Davies

COONEY TRUSTEES LIMITED v PIRAWAI EXCAVATION LIMITED [2014] NZHC 2435 [3 October 2014]

[1]      Cooney Trustees Limited’s application for an order setting aside the statutory

demand   served   on   it   by   the   respondent,   Pirawai   Excavation   Limited,   on

8 May 2014, is before me for a defended hearing today.  I have heard submissions from counsel for both sides.

[2]      After  discussion  with  counsel  about  the  matters  in  issue,  and  at  my suggestion, counsel have taken instructions during the morning adjournment.  The result is that the parties have agreed upon orders that dispose of the application, leaving only the issue of costs for determination.

[3]      Therefore I make orders by consent as follows:

(a)       The  amount  of  the  statutory  demand  is  reduced  to  $24,797.26.

The demand is set aside for the balance claimed over and above the reduced sum.

(b)That reduced sum ($24,797.26) is to be paid by the applicant to the respondent within 10 working days of today.  In default of payment, the respondent may make application to put the applicant company into liquidation.

[4]      Additionally, at the request of both counsel I record the parties’ agreement

that:

(a)      The balance that was claimed in the statutory demand is the subject of a genuine dispute, and the parties have agreed to resolve that dispute in the Disputes Tribunal if it is not otherwise resolved by agreement.

(b)An additional sum (for sand) which was not part of the sum claimed in the statutory demand, being $5,191.04, is also to be paid as a debt due by the applicant to the respondent within 10 working days.  If not paid, the party entitled to payment will be entitled to serve a statutory demand on the trustees of the Soul-O Trust for that sum.

[5]      I turn then to the issue of costs on the application to set aside the statutory demand. The parties have left that issue to the Court to decide.

[6]      Having heard argument from counsel for both sides on the issue of costs, my decision is that costs should lie where they fall, for the following brief reasons.

[7]      The principal reason is that both sides have enjoyed a measure of success and failure at today’s hearing.   I am satisfied that it is an appropriate exercise of the Court’s discretion under r 14.1 to adopt an approach to costs that reflects the fact that both sides have enjoyed a measure of success.

[8]      In the case of the respondent, it has succeeded in demonstrating that the demand should stand in part, but it concedes quite properly that a significant part of the amount claimed in the demand is the subject of a genuine and substantial dispute. The demand therefore cannot stand in the entire amount claimed.

[9]      Though the applicant has been successful to the extent of the respondent’s proper concession, it has failed in its pursuit of a wholly untenable argument.  That argument is that the entire amount of the demand is the subject of a genuine dispute. This is based on the contention that in its capacity as one of two trustees of the Soul-O Trust, the applicant never ratified the contract, and cannot therefore be liable for the contract works that the demand claims payment for.  The argument is wholly untenable, given that the solicitors acting for the two trustees sent several letters to the respondent’s solicitors in terms that plainly accept that the work was carried out for the Trust.  The letters also accept that the trustees are liable for the cost of the work, subject only to the proviso that their liability is for the reasonable cost.

[10]     The evidence contains not the slightest suggestion that the solicitors were not acting on the instructions of the trustees.   The letters are determinative of the applicant’s liability to the extent of the reasonable cost of the work. At the hearing counsel for the applicant recognised that the reasonable cost of the work is at least

$24,797.26 (though he expressly does not concede it could be more).

[11]     Secondly, I do not accept the submission of counsel for the applicant that there are countervailing factors that support an award to the applicant.   Though he accepts   that   each   side   has   enjoyed   partial   success,   he   submits   that   on

2 May 2014 the trustees offered to pay the amount of $24,979, on the basis that the dispute about the balance should be resolved other than in the Companies Court, and that  this  was  emphatically  rejected  by  the  respondent.    Mr  Fisher  points  out, however, that a similar criticism can be made of the applicant’s conduct earlier in the parties’ negotiations, when it insisted on $24,000 in full and final settlement, and rejected the possibility that the balance be litigated.

[12]     I  think  both  sides  had  been  guilty  of  adopting  entrenched  positions  at different times in their negotiations. Both must bear a measure of responsibility for the costs that they have been incurred in this litigation.

[13]     Balancing all of these factors, I think it is appropriate that costs lie where they fall.  I order accordingly.

Associate Judge Sargisson