Hawridge Developments Limited v McArthur

[2012] NZHC 1163

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-404-001374 [2012] NZHC 1163

BETWEEN  HAWRIDGE DEVELOPMENTS LIMITED

Applicant

ANDMADELYNNE MCARTHUR Respondent

Hearing:         30 March 2012

Counsel:         C T Patterson for applicant

M Heard for respondent

Judgment:      3 May 2012

JUDGMENT OF ASSOCIATE JUDGE ABBOTT

This judgment was delivered by me on 3 May 2012 at 4pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:

B Whale, Jones Young, PO Box 189, Shortland Street, Auckland

M Heard/D Salmon, Lee Salmon Long, PO Box 2026, Shortland Street, Auckland

Counsel:

C T Patterson, PO Box 2886, Auckland

HAWRIDGE DEVELOPMENTS LIMITED V MADELYNNE MCARTHUR HC AK CIV 2012-404-001374 [3

May 2012]

[1]      This judgment concerns a dispute over the costs of an application to set aside a statutory demand.

[2]      The applicant engaged the respondent in 2011 to provide consulting services, which included a role as acting manager of a retail shopping mall between March and October 2011.   After the managerial role ended the respondent continued to provide assistance to the applicant’s director, Mr Clarke, with domestic issues.   It appears that she was paid for what the applicant has termed “house works” from November 2011 until mid-January 2012. The respondent contends that all of this work was to be paid for by the applicant under the monthly retainer agreed in relation to her work for the applicant.

[3]      The respondent made a statutory demand on the applicant in March 2012 for the sum of $29,160, simply described as being “an amount due and owing by you, full particulars of which have already been delivered to you”.  The respondent says that this sum is the difference between what  Mr Clarke had agreed to pay her ($10,000 per month) and what she had received.

[4]      The applicant applied within the statutory time limit to set aside the demand. The application was supported by an affidavit sworn by another consultant engaged by the  applicant,  who  had  knowledge  of the  respondent’s  engagement  with  the applicant and access to the applicant’s files.  He contends that the respondent was paid all amounts to which she was entitled, and identified the invoices rendered and deductions  of $6,767  (GST inclusive) made for absences.   The respondent  was advised  of  those  deductions  at  the time.   The  consultant  also  identified  further payments over the period November 2011 to mid-January 2012 made (presumably on Mr Clarke’s behalf) for her assistance with Mr Clarke’s domestic matters. Although she does not say so explicitly, I infer that the respondent contends that the monthly retainer set up at the start of the engagement was to extend to this personal assistance role.   There is no evidence before the Court of any agreement to this effect.

[5]      The respondent did not oppose the application to set aside, but did not inform the applicant of this until shortly before the application was to be heard.  When the matter came before the Court for first call on  30 March 2012,  counsel for the respondent advised that she had agreed not to act on her statutory demand.   The application was withdrawn with costs to be determined.  The parties have each filed memoranda as to costs.

[6]      The applicant says that its costs should be paid on a 2B basis, together with disbursements,   because   the   demand   was   issued   inappropriately:   it   was   for unspecified amounts, details of which had not been provided in advance, and the respondent  ought  to  have  known  that  there  was  a  dispute  as  to  any  further entitlement.  The applicant also took issue with the late withdrawal of the demand, which it said caused it to incur further costs in relation to the hearing.

[7]      The respondent says that costs should lie where they fall.  She contends that the applicant at no time raised issues with her as to her performance, or disputed liability for her unpaid remuneration. She contends that she has a valid claim notwithstanding the matters raised in the application, but accepts that the dispute cannot be resolved in the context of an application to set aside the demand.  In the alternative she contends that any costs should be awarded only on a scale 1A basis. She also takes issue with two of the items of cost claimed by the applicant: firstly, for filing a memorandum for a mentions hearing and, secondly, for sealing an order.

[8]      I consider that the applicant is entitled to costs.  The respondent should have appreciated that there was a dispute over her entitlement in respect of her services for the applicant’s business, by reason of the deductions made to invoices at the time. Further, as already mentioned, there is no evidence before the Court to support her contention that the applicant agreed to continue to pay her at the same rate when undertaking services for Mr Clarke on his domestic issues (and there must be a real issue in any event as to whether those amounts are properly claimable from the applicant).   The arrangements were relatively informal.   In the circumstances, the reasonable course would have been for the respondent to write to the applicant, setting out what she contended was still due to her.   This would have elicited the

same response that she received in the form of the application to set aside, but without putting the applicant to the cost of making that formal application.

[9]      I  do  not  see  any  reason  to  treat  this  matter  differently  from  a  normal proceeding of this nature.  I consider that scale 2B costs are appropriate.  However, I accept that the applicant is not entitled to costs for preparation of a memorandum for the mention hearing as no such memorandum has been filed.  I will allow it the costs for sealing an order, but only if that becomes necessary.

[10]     I make an order that the respondent pay the applicant costs on a scale 2B basis in respect of items 25 and 4.17 of Schedule 3 to the High Court Rules, being the total sum of $3,380, together with disbursements of $531.70, all as set out in the applicant’s memorandum.   If this sum ($3,911.70) is not paid within 10 working days of issue of this judgment, the applicant will also be entitled to further costs in respect of item 4.18 of the Schedule (sealing an order), again on a 2B basis, being

the amount of $376.

Associate Judge Abbott