Dennehy v Avoca Holdings Limited HC Auckland CIV-2009-418-61

[2011] NZHC 1435

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-418-61

UNDER  the Companies Act 1993

BETWEEN  DENNIS PATRICK DENNEHY Plaintiff

ANDAVOCA HOLDINGS LIMITED First Defendant

ANDGERARD THOMAS DENNEHY Second Defendant

Hearing:         On the papers

Counsel:         A J Steele for the Plaintiff

N Moffatt for the Defendants

Judgment:      2 September 2011

COSTS JUDGMENT OF ELLIS J

This judgment was delivered by me on 2 September 2011 at 3.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:      Bell Gully, PO Box 4199, Auckland 1140

Martelli McKegg Wells & Cormack, PO Box 5745, Auckland 1141

DENNEHY V AVOCA HOLDINGS LIMITED HC AK CIV-2009-418-61 2 September 2011

[1]      I have already conveyed to counsel my regret that I have overlooked the outstanding costs issues in relation to these proceedings for so long.

[2]      My minute of 31 August 2010 and the memoranda of counsel dated 10 June,

11 June and 10 September 2010 refer.

CIV 2008-418-167

[3]      In relation to the s 174 proceedings the parties are largely in agreement as to the 2B costs payable.  The point of difference between them in that respect relates to the need to allow for preparation time when the hearing did not ultimately take place. In that respect I agree with counsel for the defendants that a further allowance of

$800 should be made because the proceeding was withdrawn less than a week before the scheduled hearing date. That would yield a total 2B costs award of $6,720.

[4]      Then there remains the issue of increased costs sought by the defendants and left live by me last year.  I have considered both sets of submissions.  Because the proceedings were discontinued prior to any hearing of the matter it is very difficult to make a fair assessment of the respective merits of the competing contentions.

[5]      To the extent those competing contentions are factual in nature I simply cannot resolve them by reference either to the submissions or to the evidence filed. In that regard it is relevant that the need for cross-examination of witnesses was agreed by the parties to be necessary, had the matter gone to a hearing.

[6]      The legal merits are similarly difficult to determine.  And while I accept that there may be an inference to be drawn that is adverse to the plaintiff on the basis of the last minute withdrawal of the proceedings, any such inference cannot be taken too far; it is not all together uncommon for litigation to be discontinued just prior to trial.

[7]      In my view, however, it is also fair to say that the conduct of the proceedings by the plaintiff more generally left something to be desired.   Having initiated liquidation proceedings against his brother’s company, the plaintiff failed to respond

at all to certain letters from the defendant’s solicitors or to engage substantively on the issues raised by the litigation in the year before the scheduled hearing.  There were also issues with the particularisation of the claim (the basis for the alleged unpaid debt being less than clear).

[8]      Had closer attention been paid to those matters it seems to me that sensible decisions about the future of the litigation would more likely have been made, and cost to the defendant avoided.   Coupled with the last minute withdrawal of the proceedings, therefore, there is, I think, a basis for a somewhat increased award of costs here.  And even though in my minute of 31 August 2010 I declined to make an order of increased costs in the 2009 proceedings I take account of the fact that those proceedings appear to have been conducted by the plaintiffs in a similar manner, at least until the instruction of Mr Steele.   In my view a modest increase on scale is warranted in all the circumstances of the case.

[9]      Accordingly, in relation to CIV 2008-418-167 I order that the plaintiff is to pay the defendant’s costs in the sum of $8,500.

CIV 2009-418-61

[10]     In relation to the 2009 proceedings the defendants have submitted that the costs of those steps that took place after 24 May 2010 should be ascertained on the basis of the (then) new applicable daily recovery rate of $1880.  I agree.

[11]     Once that point is reached the only outstanding issue is whether account should be taken of the fact that the costs payable for the defendants’ preparation time should be based on the one and a half day hearing that was scheduled or the half day hearing that eventuated.

[12]     While I accept that the defendants did in fact prepare for a substantive one and a half day hearing, its submission nonetheless needs to be seen in light of the fact that the hearing time allocated by the court and the preparation time required of the defendants might well have been shorter had the defendants in fact filed an application to have the proceeding struck out (a possibility that had plainly been in

their mind for some considerable time).  I am therefore prepared to make an award of costs that includes preparation time of one day.

[13]     On the basis I have set out above the 2B costs payable by the plaintiffs to the defendants in relation to the CIV 2009-418-61 proceedings is $6304 and I make an

order accordingly.

Rebecca Ellis J