FM Custodians Limited v Keast
[2017] NZHC 2829
•17 November 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-001252 [2017] NZHC 2829
BETWEEN FM CUSTODIANS LIMITED (AS
CUSTODIAL COMPANY OF TRUSTEES EXECUTORS LIMITED, THE TRUSTEE OF THE FIRST MORTGAGE TRUST GROUP INVESTMENT FUND)
First Plaintiff
FIRST MORTGAGE MANAGERS LIMITED (AS MANAGER OF THE FIRST MORTGAGE TRUST GROUP INVESTMENT FUND)
Second Plaintiff
AND
NICHOLA JANE KEAST AND CARMEL MONICA RIORDAN (AS TRUSTEES OF THE SOHO TRUST) First Defendants
NICHOLA JANE KEAST Second Defendant
Hearing: (On the papers) Counsel:
D Fraundorfer and T Carlisle for Plaintiffs
T J Herbert for DefendantsJudgment:
17 November 2017
COSTS JUDGMENT OF VENNING J
Solicitors: Holland Beckett, Tauranga
Quay Law, Auckland
Copy to: T J Herbert, Auckland
FM CUSTODIANS LIMITED v KEAST [2017] NZHC 2829 [17 November 2017]
[1] On 30 October 2017 the Court entered judgment for the plaintiffs against the first and second defendants. Costs were to be dealt with by an exchange of memoranda. Counsel have now exchanged memoranda.
[2] The plaintiffs seek costs on an indemnity basis in the sum of $47,257.63.
[3] The defendants accept that costs are payable on an indemnity basis under HCR
14.6(4)(e) as indemnity costs are provided for under the relevant term loan agreements and guarantee.
[4] However the defendants raise a number of issues:
(a) The plaintiffs should not recover the GST component as they are GST
registered.
(b)Costs were awarded on a 2B basis for certain steps at an earlier stage in the proceeding.
(c) There has been no credit given for an invoice of $1,300.
(d)A number of the invoices relate to pre-action conduct (either in whole or in part).
(e) Some of the costs claimed appear to relate to steps which the plaintiffs accept were not valid (i.e. the first defective property law act notices issued).
(f) The defendants say certain of the disbursements claimed are unexplained.
[5] In New Zealand Venue and Event Management Ltd v Worldwide NZ LLC the Court of Appeal confirmed that an award of indemnity costs would include GST if the successful party is not able to recover the GST component but conversely, it will not include GST if the successful party is able to recover the GST component.1 The
plaintiffs’ solicitor has confirmed the plaintiffs are not registered for GST purposes.
1 New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282.
The plaintiffs are entitled to recover the GST component of the invoices and disbursements.
[6] However, I accept the force of counsel for the defendants’ point that costs that have been awarded on a 2B basis cannot now be recovered on an indemnity basis. There must be an adjustment for that.
[7] Although Mr Herbert has suggested that there should be a reduction from scale as the actual costs incurred were less than the scale costs, that is balanced by the disbursements incurred as an agency appearance was required. If necessary I would have been prepared to allow the balance of the agency appearance as a reasonable disbursement.
[8] The defendants are also under a misapprehension in relation to the $1,300 credit. Although the plaintiffs’ solicitors raised an invoice for that sum, it does not form part of the plaintiffs’ claim for costs. It can be put to one side, but as between the plaintiffs and defendants no further credit is required. The defendants have not been charged with it.
[9] On the issue of disbursements I have reviewed the accounts and am satisfied the disbursements were properly incurred in the course of proceedings such as these. That includes the disbursements for travel for one counsel from Tauranga to Auckland. The plaintiffs do not seek to recover costs or disbursements for second counsel.
[10] The principal issue is whether the Court at this stage can and should fix costs for the defendants’ general default under the loans and the advice and steps taken by the plaintiffs’ solicitors in relation to that default as opposed to the costs attributable directly to the application for summary judgment and possession order proceedings. From the narrative to the various invoices there is somewhat of an overlap between the two but for present purposes I accept the distinction made in the schedule to the plaintiffs’ memorandum. The plaintiffs distinguish between “Soho Trust default” and the “Summary Judgment and Possession Order Proceedings”. They seek to recover both in the context of these proceedings.
[11] The scope of the order in these proceedings must be confined to the relief sought in the proceedings. The indemnity costs sought in the prayer for relief were
for:
The First and Second Plaintiffs’ solicitor/client costs relating to this proceeding pursuant to the Term Loan Agreement dated 17 December 2015, the Loan Offer 17 December 2015 and the All Obligations Guarantee and Indemnity dated 17 December 2015.
[12] The claims for costs relating to the Soho Trust Default generally were not directly claimed in the prayer for relief. The plaintiffs would be entitled to recover them as a matter of contract against the defendants but at present they are not recoverable as part of the costs award in these proceedings.
Result
[13] The plaintiffs are to have costs and disbursements against the defendants jointly and severally in the sum of $28,840.32 calculated as follows:
Invoice Fee (GST inclusive)
95177 $4,725.12
95704 $2,144.06
96868 $1,210.72
97777 $3,964.97
98604 $11,826.60
98817 $2,825.90
Subtotal
$26,697.37
Less adjustment re actual costs to 2B issue
Less $1,977.00
Adding back costs on a 2B
basis
$1,784.00 (193.00)
$26,504.37
Total disbursements GST
inclusive2
$2,335.95
TOTAL
$28,840.32
2 As the $820 fee for the agency appearance has been claimed in the earlier 2B costs award it has not been included as a claimable disbursement.
[14] As noted, this order only deals with costs in relation to the proceeding. The plaintiffs’ right to pursue the defendants in relation to costs arising from the Soho Trust
default generally is maintained, but it must be outside these proceedings.
Venning J
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