Gracewood Timber Products Ltd v Kite

[2018] NZHC 1030

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2018-435-3

[2018] NZHC 1030

BETWEEN

GRACEWOOD TIMBER PRODUCTS LTD

Applicant

AND

MERVYN JOHN KITE, MARGARET ANNE KITE and ANDREW PHILIP VALLANCE

Respondents

Appearances:

M Bale for applicant

D Bleier for respondents

Judgment:

11 May 2018

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON ON COSTS

[On the papers]

[1]                   On 15 January 2018 the respondents (Warwick) served a statutory demand on the applicant (Gracewood). On 29 January 2018 Gracewood commenced this proceeding pursuant to s 290 of the Companies Act 1993 for an order setting aside the demand. The first call of the proceeding was on 6 March 2018. At the conclusion of that hearing I issued a minute in which, after dealing with certain procedural matters, I set it down for hearing and issued directions for the disposal of pre-hearing matters. By memorandum dated 5 April 2018, Mr Bale, counsel for Gracewood, informed the Court that the company had paid the amount of the demand and that the only remaining issue was costs. I then directed the parties to file sequential memoranda as to costs, and indicated that I would deal with costs on the papers.

[2]I now have:

GRACEWOOD TIMBER PRODUCTS LTD v KITE, [2018] NZHC 1030 [11 May 2018]

(a)a memorandum from Mr Bleier, counsel for Warwick, dated 24 April 2018 setting out the basis upon which Warwick seeks costs;

(b)a reply from Mr Bale dated 9 May 2018;

(c)a reply from Mr Bleier dated 10 May 2018.

[3]                   It is common ground that, in the generality of cases, an award of scale costs will follow the event, so that the successful party will recover its costs.

[4]                   However, the Rules provide that costs are a matter for the Court’s discretion, and include provision for reduced and increased costs awards.

[5]                   In this case, Mr Bleier submits that Warwick should have costs on an indemnity or “solicitor-and-client” basis, that is to say, its actual and reasonable costs, as opposed to scale costs.

[6]                   He does so in reliance on r 14.6 (4)(e) which provides that the Court may award a party indemnity costs if “… the party claiming costs is entitled to indemnity costs under a contract or deed …”.

[7]                   Mr Bleier points to the deed of lease between the parties which was the basis for Warwick’s original claim against Gracewood, cl 6.1 of which provides:

… the tenant alone shall pay the Landlord’s legal costs (as between solicitor and client) of and incidental to the enforcement or attempted enforcement of the Landlord’s rights, remedies and powers under this clause.

[8]                   On Gracewood’s behalf Mr Bale does not dispute that Warwick’s costs in this litigation fall within that provision.

[9]                   But, as he submits, the Court has a residual responsibility to ensure, before awarding indemnity costs, that those costs were properly incurred and reasonable.

[10]               In this regard, he has helpfully referred me to the Court of Appeal’s decision in Watson and Son Ltd v Active Manuka Honey Association1 where the Court of Appeal said:

Assessing whether the indemnity costs claimed under a contract are reasonable involves the court making an objective assessment of whether the tasks undertaken were reasonably necessary and were covered by the contract, whether the charge (rate)(s) was reasonable, and whether any other general contract law principles should deny the claimant its prima facie right to judgment.²

[11]               On Gracewood’s behalf, Mr Bale contends that Warwick has put insufficient material before the Court to enable me to assess the reasonableness of those costs. In particular he complains that Warwick did not identify the time involved in carrying out the various tasks associated with the litigation.

[12]               However, in his memorandum in reply Mr Bleier rectifies the position by providing a schedule of the time involved at each stage in the process, and the rate charged.

[13]               I do not think it is open to Gracewood to complain that this information was not contained in Mr Bleier’s original memorandum. In my assessment, it would be unduly nit picking for the Court not to take that material into account, and I propose to do so.

[14]               I have reviewed the various steps in respect of which Warwick claims costs and I am satisfied — just as Gracewood appears to have been — that they are all within the four corners of cl 6.1 of the deed of lease. I have considered the amount of time which it is said was expended at each of those stages and in my assessment it is reasonable. I have considered the rate charged of $300 per hour, having regard to the nature of the work involved, I am satisfied that that too is reasonable. The arithmetic involved in arriving at the claim is accurate.

1      Watson and Son Ltd v Active Manuka Honey Association [2009] NZCA 595.

2 At [20].

[15]               In those circumstances, in my judgment, the proper course is to award Warwick costs as claimed, that is to say the sum of $15,750 together with disbursements to be fixed by the Registrar, and I so order.

Associate Judge Johnston

Solicitors:

WCM Legal, Wellington for applicant

Gawith Burridge, Masterton for respondents