Grant v Hyde Park Farms Limited

[2013] NZHC 1952

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2013-454-000013 [2013] NZHC 1952

BETWEEN

DAMIEN GRANT AND STEVEN KHOV AS LIQUIDATORS OF JOHN HAINSWORTH (MARTON) LIMITED (IN LIQUIDATION)

Plaintiffs

AND

HYDE PARK FARMS LIMITED Defendant

Hearing:	Dealt with on the papers
Judgment:	5 August 2013

JUDGMENT OF D GENDALL J

[1]      On 17 January 2013 the plaintiffs filed an application in this Court seeking an order to place the defendant company into liquidation.  The grounds advanced in support of the application were the failure by the defendant company to comply with a statutory demand issued against the defendant on 15 November 2012 and served on

21 November 2012.  That demand claimed payment from the defendant of the sum

of $86,419.02 for “construction work”.

[2]      That  liquidation  application  was  served  on  the  defendant  company  on

25 January 2013.

[3]      On 13 February 2013 the defendant filed a statement of defence to the liquidation application which essentially denied that it was indebted to the plaintiff for the claimed $86,419.02.

[4]      This  amount  had  apparently  arisen  from  a  payment  claim  made  on  the defendant under the Construction Contracts Act 2002 in March 2008.  The defence,

DAMIEN GRANT AND STEVEN KHOV AS LIQUIDATORS OF JOHN HAINSWORTH (MARTON) LIMITED (IN LIQUIDATION) v HYDE PARK FARMS LIMITED [2013] NZHC 1952 [5 August 2013]

as I understand it, essentially was that this amount was the subject of a credit given by the plaintiff to the defendant of $60,000 for invoices to 31 July 2007 and that further amounts represented re-claimed sums that had been sought in an earlier payment claim.  In addition, the defendant contended that there were further issues with the plaintiffs’ payment claim under the Construction Contracts Act 2002.

[5]      That statement of defence was met by a reply which was filed by the plaintiff on 26 February 2013.

[6]      In  the  meantime  the  liquidation  application  had  been  advertised  in  the

New Zealand  Herald  on  8  February  2013  and  in  the  New  Zealand  Gazette  on

14 February 2013.

[7]      Subsequently the opposed application was set down for hearing on 16 May

2013 for one half day.  Prior to that hearing a notice of discontinuance was filed by the plaintiffs on 16 April 2013.

[8]      The parties, however, were unable to agree on the issue of costs with respect to the discontinuance.

[9]      Detailed and lengthy memoranda have now been filed by counsel for the plaintiff and counsel for the defendant with respect to this issue of costs.  Those memoranda have been referred to me and I now give this decision on the question of costs.

[10]     This dispute between the parties has some history.  The plaintiffs’ complaint here is that numerous requests for payment of what it claims was a valid outstanding debt were not responded to in any meaningful way by the defendant. As a result, the statutory demand was issued and met with no response.  The plaintiffs say they then properly brought the present liquidation proceedings and it was only when these were served on the defendant that a response was forthcoming.

[11]    The plaintiffs note that when the defendant was served with the statutory demand the defendant did not apply to set it aside but simply did nothing.   This

meant that a presumption of insolvency arose and the liquidation proceedings necessarily followed.

[12]    The plaintiffs contend the defendant has acted unreasonably towards the plaintiffs throughout this whole matter.  In this regard the plaintiffs argue:

(a)       The  defendant  refused  or  neglected  to  comply  with  two  notices pursuant to s 261 of the Act.

(b)The defendant refused or neglected to answer a demand letter for payment of the debt in question.

(c)       The defendant failed to contest the statutory demand.

(d)      The defendant filed its statement of defence in this matter late.

(e)       The defendant failed to provide supporting documents to its statement of defence in breach of r 8.4 of the High Court Rules.

(f)       The defendant adduced evidence by way of memorandum at the last minute on the day of the call of this matter in Court.

[13]     Accordingly, counsel for the plaintiffs contends that costs should be awarded in favour of the plaintiffs on a category 2B basis or, alternatively, costs should simply lie where they fall.   The category 2B costs sought by the plaintiffs would amount to some $4378.

[14]     In response, counsel for the defendant seeks either increased or indemnity costs (or, alternatively, category 2B scale costs against the plaintiff totalling $6169) and  maintains  that  the presumption  in  r 15.23 of the High  Court  Rules  that, a plaintiff who discontinues a proceeding against a defendant is required to pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance, should apply here.

[15]     What is clear in this case is that the plaintiffs discontinued their liquidation proceeding against the defendant although, as I understand it, the amount claimed in the proceeding was not paid.  The discontinuance, I am told, is because finally the defendants had provided information which the plaintiffs say satisfied them that the debt claimed was properly disputed here.

[16]     In the memoranda provided by counsel for the parties much of the history of this matter has been intensively debated.

[17]     I am satisfied, however, in this case, that it is a proper matter where costs should simply lie where they fall.  It is clear that the plaintiff has discontinued the proceeding and, in terms of rule 15.23, would be presumed to be required to pay the defendant’s costs on the discontinuance.

[18]     The  reason  for  the  discontinuance,  however,  seems  to  me  to  be  simply because issues over calculation of the claimed debt took some time to resolve, but finally that this occurred between the parties.  This also is notwithstanding that the defendant here it seems chose to take little action when the statutory demand was served  upon  it  and,  therefore,  the  decision  by  the  plaintiffs  to  push  on  with liquidation proceedings, given the presumption of insolvency, might well be seen to be appropriate.

[19]     I repeat that in my view the proper result here is for costs to lie where they fall. There is to be no order made as to costs.

...................................................

D Gendall J

Solicitors:

Waterstone Insolvency, Auckland

Cooper Rapley, Palmerston North