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 withdrew. The shifting nature of FCL’s case is said to have caused Ingram to incur wasted costs. Ingram further alleges that the original hearing had to be adjourned due to FCL filing its evidence late.

[8]        It is not clear to me that FCL is solely responsible for the original hearing date being vacated. Associate Judge Smith observed in his minute adjourning the hearing that there were faults on both sides, and that procedural directions had gone awry. The adjournment was by consent.

[9]        It is correct, however, that the nature of FCL’s defence and counterclaim has evolved over time. The affidavits filed by FCL, and its submissions, lacked clarity. Amongst other things, they appeared to conflate the issue of whether the debt is disputed with the issue of whether there was a counterclaim that exceeded the amount of the claim. It was only in oral submissions that counsel confirmed that the debt is not disputed. Rather, FCL’s argument was simply that it had an arguable counterclaim that exceeded the quantum of Ingram’s claim. Hence, the argument advanced by FCL (when stripped of irrelevant matters) was a relatively straightforward one.

[10]      Rather than reduce the costs claim to reflect the unnecessary complexity and inclusion or irrelevant material, the preferable approach in my view is to allocate a band (band A) for preparation of submissions that reflects the relative simplicity of the arguments actually advanced at the hearing. Further, preparation of the bundle, which contains only seven documents, cannot have been an onerous task relative to most

1      Lawrence v Glynbrook 2001 Ltd [2015] NZHC 1005.

originating applications. Band A is also therefore appropriate for preparation of the bundle. I allow Band B for the other steps. The total time allocation for costs purposes is accordingly 3.35 days. At a daily rate of $2,390 (the category 2 daily rate) this equates to $8,006.50.

Result

[11]      FCL are awarded costs in the sum of $8,006.50, together with disbursements of $729.75, for a total costs award of $8,736.25.

Katz J