Coronation Gardens Limited v Small (2005) Limited

[2017] NZHC 1924

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2017-404-1490 [2017] NZHC 1924

IN THE MATTER

of section 176 of the Property Law Act

2007

BETWEEN

CORONATION GARDENS LIMITED Applicant

AND

SMALL (2005) LIMITED Respondent

Hearing:	18 July 2017
Appearances:	A Glenie and H Bao for the Applicant D Chisholm QC and M Lenihan for the Respondent
Judgment:	15 August 2017

JUDGMENT OF GORDON J [As to indemnity costs]

This judgment was delivered by me

on 15 August 2017 at 9.30 am, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors:           Anderson Creagh Lai Limited, Auckland

Brown Partners, Auckland

Counsel:            D Chisholm QC, Auckland

CORONATION GARDENS LTD v SMALL (2005) LTD [2017] NZHC 1924 [15 August 2017]

[1]      By oral judgment dated 18 July 2017, I refused Coronation Garden Ltd’s application for interim relief seeking to prevent Small (2005) Ltd from using the words “mortgagee sale” or “forced sale” in its advertising or signage in relation to the sale of a property of which Coronation is the registered proprietor and Small the registered mortgagee.

[2]      I awarded indemnity costs to Small (2005) Ltd in accordance with cl 22.2 of the BNZ facility agreement, Small having taken an assignment of the BNZ’s securities over the property.

[3]      Small has now filed a memorandum setting out its costs and disbursements in relation to the proceeding, which total $20,129.85.   This sum is comprised of the following amounts:

(a)       $11,925.00 for the services of Mr Chisholm QC (15.90 hours at $750 per hour);1

(b)$8,109.20 for the services of Mr Lenihan (21.34 hours at $380 per hour);

(c)       $95.65 in disbursements.

[4]      Coronation objects to an award of costs being made for this sum.  It argues that the rates at which steps in relation to the proceeding were charged are not reasonable2 and, specifically, that the application did not warrant the employment of Queen’s Counsel by Small.

[5]      Coronation further argues that the steps undertaken by Messrs Chisholm and Lenihan were not reasonably necessary and that Mr Chisholm’s fees, in particular, could  have  been  reduced  by  delegating  these  tasks  to  a  junior  barrister  or  to

Mr Lenihan.  Coronation submits that the unreasonable nature of the costs sought by

1      Small is GST registered and is therefore entitled to claim a GST input credit.  Accordingly, it only seeks to recover the GST exclusive component of the costs incurred on the application.

2      In reliance on the approach as set out in Black v ASB Bank Ltd [2012] NZCA 384 at [77]-[80].

Small can be demonstrated by comparison to scale costs under the High Court Rules

2016, which in this case would amount to only $6,578.50.

[6]      There is no merit in these submissions.   The number of hours charged in relation to this proceeding is not unreasonable, nor is there any basis for a complaint of over-charging. Small is entitled to representation by counsel of its choice.  In that regard, and by way of background, I note that Coronation had alleged that Small planned to market the property as a “mortgagee sale” for a collateral purpose.  The director  of  Coronation,  Ms  Saren  Loo,  deposed  that  the  director  of  Small, Mr Timothy  Edney,  and  another  of  his  companies  were  presently  engaged  in litigation with her partner, Mr Neville Mahon.  She expressed concern that Mr Edney was causing Small to market the property as a “mortgagee sale” to exert pressure on Mr Mahon in relation to those other matters.

[7]      In that regard and in its submissions on costs, Small notes that:

(a)       It is surprising that Coronation now questions Mr Chisholm acting.

The ongoing litigation between Mr Mahon’s interests and Mr Edney’s interests  started  in  January  this  year  when  Mr  Mahon  applied  to sustain  a caveat  over  certain  properties in  Queenstown  owned  by Mr Edney’s interests.  Mr Stephen Mills QC was initially retained by Mr Mahon.  The caveat hearing was then argued by Mr David Bigio QC.

(b)Mr Chisholm has acted for Mr Edney’s interests at all stages of the disputes with Mr Mahon this year.   He has a familiarity with this matter and the general issues between the parties.  It would have been more expensive for Small to engage another barrister who would need to get up to speed with the issues between the parties and appear at the hearing.   It would have been plainly unreasonable to have required that of Small (assuming that Coronation had in fact raised the issue beforehand).  Further, the urgency under which Coronation sought its relief  means  that  practically  it  would  have  been  impossible  for

alternative counsel to have been engaged in the very limited time available.

[8]      I accept those submissions.   It is not for Coronation to dictate how Small should conduct its proceedings.

[9]      Coronation further makes the bare submission that cl 22.2 of the BNZ facility agreement may potentially be oppressive under s 120(a) of the Credit Contracts and Consumer Finance Act 2003.  Clause 22.2 reads:

22.2     Enforcement expenses: The Borrower shall from time to time on demand reimburse the Lender for all costs and expenses (including legal fees) and fees charged by other advisers to the Lender and any taxes thereon incurred in or in connection with the preservation and/or enforcement of any of the Lender’s rights under the Transaction Documents.

[10]     No authority is provided in support of this submission, which in my view is similarly unmeritorious.  Rule 14(4)(e) of the High Court Rules expressly recognises that a party claiming costs may be entitled to indemnity costs under a contract or deed.  Clauses of this nature are routinely included in facility agreements and have been enforced by the courts on numerous occasions.

[11]     I order Coronation to pay costs of $20,129.85 to Small.

Gordon J