FCL 178 Limited v Ingram Architecture Limited - [2020] NZHC 3044

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2697

[2020] NZHC 3044

BETWEEN
FCL 178 LIMITED

Applicant

AND

INGRAM ARCHITECTURE LIMITED

Respondent

Hearing: On the papers

Counsel:

P F Dalkie for applicant

J R Duckworth for respondent

Judgment:

18 November 2020

JUDGMENT OF KATZ J

[Costs]

This judgment was delivered by me on 18 November 2020 at 4:00 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors: Foley & Hughes, Auckland
Jennifer G Connell & Associates, Auckland

Counsel: P F Dalkie, Barrister, Auckland
J R Duckworth, Auckland

FCL 178 LIMITED v INGRAM ARCHITECTURE LIMITED [2020] NZHC 3044 [18 November 2020]

Introduction

[1]FCL 178 Ltd applied successfully to set aside a statutory demand for

$27,720.02 served on it by Ingram Architecture Ltd. It now seeks costs in respect of that application.

Background

[2] FCL carries on business as a property developer. Ingram was employed by FCL to provide architectural services in relation to a 12 unit project in Te Atatū, Auckland. FCL failed to pay Ingram for work it undertook on the project. Ingram issued a statutory demand.

[3] FCL applied pursuant to s 290(4)(b) of the Companies Act 1993 to set aside the statutory demand on the basis that the debt was disputed and, further, that it has a counterclaim that significantly exceeds the quantum of the claim. The counterclaim alleges, in effect, that Ingram’s work was inadequate or defective.

[4] I granted FCL’s application and set aside the statutory demand on the basis that the proposed counterclaim raised factual disputes that could not be resolved in the context of the statutory demand procedure.

FCL’s costs claim

[5]FCL seeks an award of costs on a 2B scale basis, as follows:

Step Step Number Days Total

Application and affidavits 37 2 $4,780

Memorandum in March 11 0.1* $239

Preparation of written submissions 40 1.5 $3,585

Preparation of bundle 41 0.6 $1,434

Appearance before Smith AJ 13 0.1* $239

Appearance before Katz J 42 0.25 $598

Costs total 4.55 $10,874.50

Filing Fee $540

Process Server $189.75

Disbursements total $729.75

FINAL TOTAL $11,604.75

* FCL has reduced the claim for these steps to 0.1 days to more closely reflect the actual amount of time spent, which is below the scale amounts of 0.4 and 0.3 days respectively.

What is the appropriate quantum of costs?

[6] The starting point is that the unsuccessful party should be liable for costs to the successful party. An assessment of which party was successful requires both a consideration of which party won the principal contests of law and of fact, and a realistic appraisal of the end result, rather than focusing on who initiated what step and the extent to which that step succeeded or failed.1

[7] The parties agree that category 2 costs are appropriate. Ingram submitted, however, that costs should be reduced on the basis that FCL did not initially particularise their counterclaim and also made allegations in its supporting affidavits that it later…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] NZHC 3044
Decision Date: 18 November 2020

CaseChat Overview and Summary

In the High Court of New Zealand Auckland Registry, FCL 178 Limited sought to set aside a statutory demand issued by Ingram Architecture Limited. The dispute arose from an alleged debt of $27,720.02 related to architectural services provided by Ingram to FCL for a property development project in Te Atatū, Auckland. After successfully setting aside the statutory demand, FCL now sought costs associated with that application.

The central legal issue was whether FCL was entitled to costs on a category 2 basis and, if so, the appropriate quantum. FCL argued for costs on a 2B scale, while Ingram contended for a reduction due to the evolving nature of FCL's defence and counterclaim, which Ingram claimed caused wasted costs. Katz J considered whether the shifting defence and counterclaim led to unnecessary complexity and irrelevant material, ultimately determining that the core arguments presented were relatively straightforward. The judge allocated a lower band for the preparation of submissions and the bundle, while allowing a higher band for other steps, resulting in a total time allocation of 3.35 days.

Katz J concluded that FCL was entitled to costs on a category 2 basis, awarding $8,006.50 for the preparation of submissions and other steps, plus disbursements of $729.75, for a total costs award of $8,736.25. The judge found that while FCL's case evolved, the actual arguments presented were straightforward, and thus a reduction in costs was not warranted. The court emphasised that the unsuccessful party should bear the costs of the successful party, considering both the principal contests of law and fact, and the realistic appraisal of the end result.

Orders