Food Brands Group Limited v YK Food Service Limited

[2025] NZHC 1016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-000512

[2025] NZHC 1016

BETWEEN

FOOD BRANDS GROUP LIMITED

Plaintiff

AND

YK FOOD SERVICE LIMITED

Defendant

Hearing:

On the papers

Appearances:

U A Kuddus for the Plaintiff

G Holm-Hansen / R Jagose-Dickens for the Defendant

Judgment:

1 May 2025

COSTS JUDGMENT OF ASSOCIATE JUDGE COGSWELL

This judgment was delivered by me on 1 May 2025 at 11.30 a.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Hesketh Henry, Auckland Phoenix Law Ltd, Wellington

FOOD BRANDS GROUP LTD v YK FOOD SERVICE LTD [2025] NZHC 1016 [1 May 2025]

[1]                 On 19 February 2025 the Court dismissed the plaintiff’s application for liquidation of the defendant and ordered that the defendant company was entitled to costs.

[2]                 The parties have not agreed costs and the defendant has filed a memorandum seeking costs. The plaintiff has not filed a memorandum.

[3]                 The defendant seeks costs on a 2B basis together with disbursements, or increased costs on a 2B basis with an uplift of 50 per cent.

[4]                 The starting point on costs is that generally in relation to the determination of costs:

(a)the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds;

(b)an award of costs should reflect the complexity and significance of the proceeding;

(c)costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required, in relation to the proceeding or interlocutory application;

(d)an award of costs should not exceed the costs incurred by the party claiming the costs, and

(e)so far as possible, the determination of costs should be predictable and expeditious.

[5]                 At the end of the day, the determination of costs is an exercise of the Court’s discretion. That said, the discretion is not unfettered and has to be exercised judicially.

[6]The grounds on which the defendant seeks increased costs include:

(a)an allegation that the use of the statutory demand procedure was an abuse of process, as the amounts the subject of the statutory demands were clearly in dispute and were the subject of other litigation between the parties;

(b)that service of the statutory demands was ineffective because they were served at the defendant’s registered office, which had been vacated and was by then in the control of the plaintiff;

(c)that the plaintiff repeatedly failed to comply with Court deadlines, including a failure to file reply evidence but later seeking leave to file evidence late, a failure to file submissions in accordance with the timetable (albeit that they were filed shortly before the hearing) and a failure to prepare and file the common bundle of documents; and

(d)a failure to accept the defendant’s offer to withdraw the liquidation proceedings due to the statutory demands being an abuse of process.

[7]                 The judgment held that service of the statutory demands was technically compliant with the requirements of the Companies Act 1993. The Court went on to find that it would be a miscarriage of justice to allow the plaintiff to proceed on the basis of statutory demands which the evidence demonstrated the defendant company never saw or was made aware of.

[8]                 This was sufficient to dispose of the application, albeit that it required consideration of relevant points of law and the evidence as to the circumstances surrounding service.

[9]                 By way of completeness, the Court also considered whether, if service could stand, whether the Court would nonetheless exercise its discretion not to liquidate the defendant. In the circumstances of the background to the extant dispute between the parties, the Court would not have made an order liquidating the defendant, relying on its discretion not to do so.

[10]             The issue before the Court on costs is whether the plaintiff’s conduct was so unreasonable in terms of the enquiry required under High Court Rules 14.6(3) or (4) as to justify increased or indemnity costs. That is to say, did the plaintiff act vexatiously, improperly or unnecessarily in continuing the liquidation proceedings, or did it act unreasonably in continuing the liquidation proceedings?

[11]             Standing back, I find that the conduct of the plaintiff was not so unreasonable as to attract an increased or indemnity costs award. The service point was an arguable one, even though it was resolved in favour of the defendant.

[12]             It was resolved on the basis of the Court finding that technical service had occurred, but that it would be a miscarriage of justice to allow the liquidation proceeding to continue. This exercise of the Court’s discretion in the defendant’s favour does not mean that the plaintiff’s position in advocating for service having been effected was unreasonable.

[13]             The defendant is entitled to costs on a scale of 2B. The defendant is entitled to recover each of the items claimed in the appendix attached to its memorandum of   14 March 2025, giving a total scale costs amount of $17,566.50.

[14]             In relation to disbursements, the defendant is entitled to recovery of the filing fee for its statement of defence in the amount of $143. The other amounts are disallowed.

Associate Judge Cogswell