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…

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: [2018] NZHC 1030
Decision Date: 11 May 2018

CaseChat Overview and Summary

In Gracewood Timber Products Ltd v Kite, the applicant, Gracewood, sought an order setting aside a statutory demand served by the respondents, Warwick, under section 290 of the Companies Act 1993. Gracewood paid the amount of the demand before the hearing, leaving the only remaining issue to be the question of costs. Warwick sought indemnity costs under a deed of lease between the parties, which provided that the tenant should pay the landlord's legal costs on a solicitor-and-client basis. Gracewood argued that Warwick had not provided sufficient information to enable the court to assess the reasonableness of the claimed costs.

The court considered the issue of whether Warwick was entitled to indemnity costs under the deed of lease and whether those costs were properly incurred and reasonable. Warwick provided a schedule of the time involved in carrying out the various tasks associated with the litigation and the rate charged, which the court accepted as sufficient information to assess the reasonableness of the costs. The court found that the costs claimed were within the four corners of the deed of lease, and the amount of time expended and the rate charged were reasonable. Therefore, the court awarded Warwick the costs as claimed, being the sum of $15,750 together with disbursements to be fixed by the Registrar.

Orders