General Finance Limited v Serepisos - [2017] NZHC 2823

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE

CIV-2016-485-835 [2017] NZHC 2823

BETWEEN
GENERAL FINANCE LIMITED

Plaintiff

AND

ALLIKI SEREPISOS Defendant

on the papers

Counsel:

S O McAnally for the Plaintiff
K R Smith for the Defendant

Judgment:

17 November 2017

JUDGMENT OF ASSOCIATE JUDGE SMITH - COSTS

[1] On 28 September 2017 I dismissed an application for particular discovery by the defendant (Mrs Serepisos) against the plaintiff (General Finance). In my judgment, I indicated that “costs will be at least on a 2B basis, but it may be that General Finance is entitled to assert a claim for indemnity costs under cl 7(f) of the relevant term loan agreement”.1 I invited counsel to confer over costs, and if they were unable to agree, General Finance was to file and serve a memorandum on costs within 10 working days.

[2] The parties have been unable to agree on costs, and General Finance now seeks indemnity costs of $9,660.00 (including GST) and disbursements of $1,010.47
(including GST). General Finance notes that, being a finance company, it is unable to

1 General Finance Ltd v Serepisos [2017] NZHC 2367 at [48].

GENERAL FINANCE LIMITED v SEREPISOS [2017] NZHC 2823 [17 November 2017]

recover GST by way of input credit due to s 14(1)(a) of the Goods and Services Tax

Act 1985.

[3] General Finance also asks for an additional award of costs in the sum of

$2,012.50 (including GST), for producing its counsel’s memorandum on costs. Counsel refers to Mrs Serepisos’ “apparent unwillingness to engage on this particular question in a timely fashion”.

Legal principles applicable to indemnity costs

[4] Pursuant to r 14.6(4)(e) of the High Court Rules 2016 (HCR), the court may order a party to pay indemnity costs if the party claiming costs is entitled to indemnity costs under a contract or deed.

[5] In Black v ASB Bank, the Court of Appeal discussed the proper approach to an application such as the present:2

[80] Assessing whether the indemnity costs claimed under a contract are reasonable involves the Court making an objective assessment of these matters:

(a) what tasks attract a costs indemnity on a proper construction of the contract;

(b) whether the tasks undertaken were those contemplated in the contract;

(c) whether the steps undertaken were reasonably necessary in pursuance of those tasks;

(d) whether the rate at which the steps were charged was reasonable having regard to the principles normally applicable to solicitor/client costs; and

(e) whether any other principles drawn from the general law of contract would in whole or in part deny the claimant its prima facie right to judgment.

[6] In Frater Williams, the Court observed that there is “room for robust judgment as to the costs considered reasonable in all the circumstances”.3

2 Black v ASB Bank Ltd [2012] NZCA 384 at [80].
3 Frater Williams & Co Ltd v Australian Guarantee Corp (NZ) Ltd (1994) 2 NZ ConvC 191,873 (CA)…

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: [2017] NZHC 2823
Decision Date: 17 November 2017

CaseChat Overview and Summary

In General Finance Limited v Serepisos, the court addressed an application for indemnity costs by General Finance Limited against Alliki Serepisos. General Finance sought indemnity costs of $9,660.00 (including GST) and disbursements of $1,010.47 (including GST) incurred during a discovery application, as well as additional costs of $2,012.50 (including GST) for producing a memorandum on costs. The court examined the reasonableness of these costs in light of the contractual terms and legal principles governing indemnity costs.

The relevant contractual terms stipulated that all costs of default, including legal costs, were payable by Serepisos to General Finance. The court applied the principles established in Black v ASB Bank, assessing whether the costs claimed were reasonable based on the tasks undertaken, the necessity of the steps taken, and the reasonableness of the rates charged. The court also considered whether the steps taken were reasonably necessary and whether the costs on costs claim was justified.

The court found that the costs claimed were reasonable and necessary in enforcing General Finance's rights under the loan contract. The travel expenses incurred were deemed reasonable, and the court accepted that the costs on costs claim was justified but reduced the amount to $1,500.00 (including GST) given the circumstances.

Ultimately, the court ordered Serepisos to pay General Finance costs totalling $12,170.47, comprising the costs of the unsuccessful discovery application, disbursements, and the costs on costs. This decision highlights the importance of contractual terms and the need for a balanced approach in awarding indemnity costs.

Orders