Heavyweight Hire Limited v Forest Management Limited
[2018] NZHC 2332
•5 September 2018
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2016-409-000543
[2018] NZHC 2332
BETWEEN HEAVYWEIGHT HIRE LIMITED
Plaintiff
AND
FOREST MANAGEMENT LIMITED
Defendant
Hearing: 23 – 24 July 2018 Appearances:
L A Andersen for Plaintiff
HDP van Schreven for Defendant
Judgment:
5 September 2018
INTERIM JUDGMENT OF GENDALL J
Introduction
[1] The plaintiff, Heavyweight Hire Limited (Heavyweight), and the defendant, Forest Management Limited (FML), entered into a joint venture in 2013 (the JV). The terms of this were set out in an agreement signed by the parties (the JV Agreement). The JV Agreement related to the harvesting, logging, marketing, and sale of logs/timber from forests and related forestry works.1
[2] The JV Agreement, amongst other things, provided for the parties to undertake stumpage deals within the forestry industry and thereafter to calculate profit and loss on each deal apportioning this between them on agreed percentages.
1 Joint Venture Agreement, cl 1.
HEAVYWEIGHT HIRE LTD v FOREST MANAGEMENT LTD [2018] NZHC 2332 [5 September 2018]
[3] Also, under the JV Agreement, the parties agreed to share in the development cost of certain earthworks and bookends2 at Bluff Port (the Bluff Structures). A levy was to be applied to logs using the Bluff Structures in order to repay the parties this development cost.
[4] In 2015, and outside the JV agreement, Heavyweight purchased a hauler from FML under a separate sale and time payment financing agreement. However, soon after the agreement was signed, Heavyweight was unable to make the required payments so FML repossessed and resold the hauler.
[5]Heavyweight brings three causes of action against FML. It alleges that:
(a)FML breached its duties under the JV Agreement by failing to properly account to Heavyweight for its proper share of the profits;
(b)FML converted Heavyweight’s interest in the Bluff Structures following the cessation of the JV without any payment to Heavyweight; and
(c)FML failed to properly account to Heavyweight for the surplus it made on the resale of the hauler.
[6] For reasons I will discuss below, I have been unable to determine the second cause of action. Inadequate information was before the Court to properly address this issue. More evidence, therefore, needs to be filed by the parties. My explanation as to these matters and directions regarding this will follow. Therefore, this is only an interim judgment. I am, however, able to decide the other two causes of action before the Court, and my findings on these are outlined below.
2 “Bookends” are large prefabricated metal stays which are designed to hold in place stacks of logs on wharves and other areas.
First Cause of Action - Underpayment
[7] The parties entered into the JV Agreement in June 2013. It provided that they would share equal responsibility for the JV and contribute equally to it.3 The JV was to run until 31 December 2014 unless the parties decided to renew it.4
[8] Under the JV Agreement, FML’s duties related to the marketing and sale of logs, and the preparation and submission of bids and proposals. Heavyweight’s duties included setting up the logging gear, managing the port contract work at Bluff Harbour and carting the logs.5
[9] The JV Agreement provided that any profit or loss would be apportioned between the parties on the following basis:
(a)On jobs where Heavyweight is the agreed logger, 75 per cent to Heavyweight and 25 per cent to FML; and
(b)On jobs where Heavyweight is not the logger, 50 per cent to each party.
Heavyweight’s claim
[10] Heavyweight claims that FML has breached its duties under the JV Agreement by failing to properly account to Heavyweight for its share of the profits from log sales dockets dated between 2 and 12 March 2015 (the disputed dockets). It claims that it is owed $24,737.45 (GST inclusive). The disputed dockets relate to monies paid to FML by Rayonier New Zealand Ltd (Rayonier) in respect of logs transported and sold by the JV to Rayonier.
[11] Heavyweight further claims that this shortfall was only able to be identified because of documents it obtained on a third party discovery exercise it undertook with Rayonier. It therefore also seeks $11,909 (GST exclusive) for the costs payable to Rayonier for that discovery.
3 Joint Venture Agreement, cls 2 and 7.
4 Joint Venture Agreement, cls 5 and 6.
5 Joint Venture Agreement, cl 8.
FML’s defence
[12] FML denies, first, that it failed to account to Heavyweight for the relevant profits and, secondly, that it failed to provide information to Heavyweight to substantiate its workings.
[13] FML maintains that the process of accounting for costs and expenses operated on a wash-up basis. The parties were initially allocated income on an estimated sale process basis. This was then either topped up or, as in this case, deducted based on the actual price paid for the logs by the ultimate purchasers. The log price fluctuated in accordance with market conditions so the price expected when the logs were loaded onto the ships ex-New Zealand ports was not always the same as that when the logs were ultimately sold at their destination.
[14] FML maintains that the sum of $58,320.81 was deducted by Rayonier in its final calculation of what was actually paid for the logs covered by the disputed dockets. The initial stipulated return evident in the first sheets prepared by Rayonier (which were discovered by Heavyweight in the third-party discovery exercise) were subsequently altered in the wash-up exercise. Therefore, FML submits that the actual profits have been properly accounted to Heavyweight.
[15] FML argues, too, that it was not necessary for Heavyweight to undertake third- party discovery here. FML maintains that all the information supplied by Rayonier was contained in the discovery documents it had provided to Heavyweight. Therefore, FML submits that it should not be liable for that cost.
Analysis
[16] I accept FML’s explanation as to why the amount paid to Heavyweight differed from the original sheets prepared by Rayonier. The JV operated on a basis where an initial price for the logs was quoted and paid to the parties, and then the final actual price paid later or an adjustment for overpayment made, when the logs were sold. I accept that, due to the market forces in operation, the actual price for the logs at issue here paid to FML, on behalf of the JV, was lower than that originally quoted by Rayonier. This necessitated in the particular circumstances prevailing here, a
reduction in the price paid from FML to Heavyweight for its half share. This explanation of events accords, too, with other records provided (where the reverse situation applied in different batch situations of other log sales where the details outlined showed that an initial payment was later topped up due to a better sale price than that first quoted). I find that a reasonable argument exists here that FML properly accounted to Heavyweight for its share of the profits in relation to the disputed dockets.
[17] Heavyweight has not proved, on the balance of probabilities, that it has been underpaid by FML with respect to the disputed dockets. This aspect of its claim therefore fails.
[18] However, in all the circumstances here, I find that it was acceptable for Heavyweight to engage in third party discovery against Rayonier. In cross- examination, David Samuel Janett (Mr Janett), a director and shareholder of FML, largely accepted that the documentation FML provided to Heavyweight in discovery was insufficient for Heavyweight to be able to determine how FML made the wash up calculations. FML was not able to show that it had provided the report it held for the relevant cargo ship/s which transported the logs in question and listed the individually numbered dockets. Without this, it would be extremely difficult for Heavyweight to ascertain what had been paid for those logs. FML also neglected to provide to Heavyweight either the documentation or the calculations it had carried out to fully ascertain what the appropriate wash up would be.
[19] In the absence of this information down to the docket level being disclosed by FML, I consider it was reasonable for Heavyweight to seek third party discovery from Rayonier. This was necessary to help it determine what had happened in relation to the logs in question. While ultimately the documentation discovered from Rayonier may not have provided those dockets, it was a reasonable step to take. I find that, in the general interests of justice here, FML should bear the cost of Heavyweight’s decision to undertake discovery against Rayonier, given its failure to disclose what was material documentation. An order to this effect is to follow.
Second Cause of Action – Bluff Structures
[20] A key aspect of the JV Agreement was the parties’ interest in the Bluff Structures. The Bluff Structures involved the development of land leased at the Bluff Port (the site) and the construction of bookends on the site. This allowed for the stacking of large amounts of logs on the site. The cost of this was noted in the JV Agreement as $124,000, which initially each party was to equally contribute to. This was to be repaid (it was assumed over a two-year period) by means of a levy on the wood stored on the site, shared equally between the parties.
[21] The JV Agreement stated that the JV would end on 31 December 2014 subject to a right to renew it. The JV, it seems, ran on by agreement beyond that date for a few months. Finally, it appears the JV was terminated sometime in about mid-2015.
Heavyweight’s claim
[22] Heavyweight claims that FML has continued to use the Bluff Structures without any payment to Heavyweight for the period since the date of termination of the JV. Heavyweight denies agreeing to sell its interest in these assets to FML and argues that there is no evidence to indicate specifically what a payment of $15,600 in June 2015 (said by FML to be a JV termination payment) was for. Heavyweight notes that an email at the time refers to “refund at Bluff Port for development and bookends”, whereas Mr Janett claimed in evidence that the “sale” was for the bookends only. Furthermore, Heavyweight argues that no payments had been made to it either then or later for the use of the bookends. FML, it is said, only paid Heavyweight its half share of the levy for the month in question.
[23] Heavyweight submits that lack of confirmation in the 12 February 2015 email and the delay in giving the claimed credit until June 2015 is evidence that there was no agreement to sell the Bluff Structures.
[24] Heavyweight has provided expert evidence from Mr William Apps, a chartered accountant and director of Staples Rodway Corporate Finance Limited. Mr Apps has assessed the value of Heavyweight’s interest in the Bluff Structures at 31 December 2014 as $179,370. However, as this is more than the $134,422 pleaded in
Heavyweight’s second cause of action, Heavyweight acknowledges its claim is limited to the $134,422 claimed.
[25] Heavyweight contends that there is nothing in the JV Agreement that limits the levy to a simple repayment of the capital costs. It argues that the phrase “at least until they are repaid by way of the levy” acknowledges that the levy does not automatically cease on repayment of the costs. Heavyweight submits that its expectation of an ongoing income stream for the JV from the Bluff Structures was a reasonable one and, therefore, the value of this asset as part of the capital of the JV was always significant.
FML’s defence
[26] FML denies any conversion of Heavyweight’s interest in the Bluff Structures and maintains the agreed termination of the JV brought an end to the operation of the levy. Further, FML claims that the parties agreed that in June 2015 Heavyweight would transfer its share in the Bluff Structures to FML for a payment of $15,600. FML says it, therefore, owned the Bluff Structures fully from that date. As this payment reimbursed Heavyweight, FML maintains that it is not open to Heavyweight to claim the levy beyond that point or, indeed, to maintain any continuing claim to the capital asset itself.
[27] As I have noted, Heavyweight provided certain evidence from the accountant, Mr Apps, said to assess the value of its interest in the Bluff Structures at 31 December 2014. No quantum evidence was provided by FML, however, to counter Mr Apps’s assessment. However, FML submits that, in any event, the method Mr Apps uses, a calculation of a weighted average cost of capital model, is inappropriate because Heavyweight’s only interest in the Bluff Structures was to be a reimbursement payment for the agreed cost of developing them, and that has occurred.
[28] According to FML, it has also not charged any levy on the Bluff Structures since February 2015. FML argues that the levy was only intended to recoup the cost of creating the Bluff Structures and it was not intended as a profit-making venture.
[29] FML submits that Heavyweight’s contention that cl 15 of the JV Agreement meant a levy would continue to apply beyond the date when the assumed development
cost had been wholly paid, is to import an interpretation contrary to its terms and conditions. Clause 15 makes reference to a two-year period, consistent with the term of the JV Agreement itself. FML argues that if cl 15 was intended to deal with matters beyond the period of time that the assumed development cost was returned to the parties and beyond the period of the JV, this should have been clearly and expressly stated.
Analysis
[30]The following clauses of the JV Agreement are relevant to this issue:
Port Development Costs – Bluff
15.Notwithstanding any other term in this Agreement, the parties are agreed on fixing an assumed development cost for work undertaken by HWH at Bluff being $89,000 for earthworks and $35,000 for bookends. This cost will be reduced at $1/jasm3 (“the levy”) based on a forecast to the port of a 60,000 tonne volume per annum. It has been assumed that this cost will be wholly paid over a two year period or sooner, if volumes in relation to the port increase. It is agreed the levy will apply to all wood purchased by FML.
Capital Cost Contribution
16.In addition to the port development cost referred to in clause 15 hereof, FML and HWH acknowledge that the successful securing of a forest block might require payment by either party of bond deposits or other capital costs similar to the port development cost incurred by HWH at Bluff. FML and HWH agree that these costs are to be kept separate and will not be taken into account in the calculation of any reconciliation or block by block wash-up. Without limitation these capital costs shall include and take into account bonds paid by FML to Rayonier New Zealand of $200,000 and to Wenita of $100,000 and the Bluff Port development costs (at least until they are paid by way of the levy) at $90,000 or the port and $35,000 for the bookends. The intention between the parties is that they will each share equally in such capital costs and will also share equally in any share of capital resulting from (for example) repayment of bonds.
…
Books of account
26.Separate books of account shall be kept in respect of the joint venture to record the receipts and expenses of the joint venture and any assets allocated to the joint venture by the parties in accordance with this Agreement, or any assets otherwise acquired by the joint venture, and the liabilities of the joint venture. To the extent costs are incurred on an annual basis, it is agreed these costs will be apportioned equally between the parties.
27.Each party shall be entitled to obtain half yearly financial statements in respect of the joint venture within 30 days after the end of each half year, and financial statements for each financial year within 60 days of the end of such financial year.
28.Financial statements are to be prepared on a job by job basis and shall include a balance sheet and profit and loss account, and shall be prepared in accordance with generally accepted accounting principles consistently applied.
[31] The evidence before me clearly indicated the parties’ agreement that, because FML controlled the finances, it carried the responsibility for preparing and keeping the accounts. However, those requirements laid out in the JV Agreement concerning the keeping books of accounts have not been met. Clause 26 requires separate books of account to be kept recording the receipts, expenses, liabilities and assets of the JV. Financial statements were to be kept on a job by job basis.
[32] Mr Janett, for FML, acknowledged in evidence that separate books of accounts were not kept. FML submits that the manner in which the accounts were instead kept was agreed by discussion. It argues that there is no evidence that position was not accepted by Heavyweight during the course of the JV. However, no evidence on this was before the Court other than FML’s assertion that such an alteration to the JV Agreement was made. Heavyweight denies that such an agreement occurred. Significantly, the JV Agreement also provides that any variation to it is not binding on the parties unless it is in writing and signed. No such written and signed variation appears to exist. Therefore, the obligations on the parties in cls 26 – 28 of the JV Agreement are still binding.
[33] The financial documents placed in evidence before this Court are not balance sheets. They are not sufficient to meet the obligations on the parties (and particularly the obligation on FML which had the task of having financial statements prepared) to have a balance sheet and profit and loss accounts completed and available within 60 days of the end of each financial year.6
[34] The bookends and development earthworks making up the Bluff Structures are acknowledged at para 16 of the JV Agreement to be a capital cost of the JV, in which
6 As paras 27 and 28 of the JV Agreement provided.
each party would “share equally”. At the termination of the JV, in the normal course of events, the assets and all liabilities of the JV would have been split equally between the parties. An accurate balance sheet would have enabled that to happen. Unfortunately, the failure to produce financial statements and a balance sheet for the JV means it is impossible for the Court to currently assess whether a proper wash-up of the JV took place and, specifically to this cause of action, the extent to which Heavyweight was paid for its half share in the capital assets, including the Bluff Structures.
[35] Because of the lack of evidence, I cannot be sure that Heavyweight was not appropriately compensated for its share of the Bluff Structures. Equally, I cannot be sure that it was. Therefore, to properly be in a position to consider this issue, I direct the parties to carry out the task of preparing proper financial accounts, including a balance sheet for the JV, as they were required to do. This will then need to be supplied to the Court for consideration, along with any further submissions the parties may wish to provide on the second cause of action here. Directions to this effect are to follow, but in the meantime, a decision on this second cause of action must of necessity continue to be reserved.
Third Cause of Action – Hauler Purchase Debt
[36] This claim relates to the purchase of a hauler from FML by Heavyweight. The purchase was governed by a written agreement dated 24 February 2015 (the Agreement). The purchase price was $550,000 (GST exclusive). A deposit of $1,000 was required and was paid by Heavyweight on 1 March 2015. The Agreement required a further sum of $10,000 be paid on 20 April 2015 with the balance paid over a period of approximately one year. However, Heavyweight failed to pay this further
$10,000 payment. FML repossessed the hauler in terms of the Agreement on 19 May 2015. FML then resold it for $570,000 (GST exclusive), some $20,000 more than the price Heavyweight was to pay. Final settlement of this on-sale of the hauler, and clearance of the remaining debt owing between FML and Heavyweight, occurred on 2 June 2015.
[37] The parties disagree on how penalty interest of 15 per cent imposed by FML on Heavyweight’s debt is to be applied under the Agreement, and Heavyweight accordingly claims a refund is due to it for what it says is an interest over-payment it has made here of $18,890.73.
[38]On this aspect, the Agreement relevantly provides:
Penalty Interest and Call-Up of Purchase Price
7.The non-payment by the Purchaser of any payment instalment due under this Agreement on the due date for payment (time in respect to such payments being strictly of the essence) shall entitle the Vendor to charge penalty interest on the amount unpaid at the rate of 15% per annum from the due date for such payment until payment in full is made.
8.In the event of default by the Purchaser in the payment of any instalment due hereunder, then and in such case, and notwithstanding that the date or dates of payment may not by then have arrived, the whole of the balance of the purchase price payable by the Purchaser shall immediately become due and payable and the Vendor may, in addition to any other rights it might have, immediately exercise all its rights and remedies under its security interest including, without limitation, the right to seize and take possession of the Hauler under the security. This Agreement for Sale and Purchase is deemed to incorporate all the general terms of contract relating to a security interest, contained in the Memorandum registered pursuant to Section 155A of the Land Transfer Act 1952 under No: 2011/4301.
[39] Heavyweight also gave FML a security over the hauler. The terms of the Purchase Security Agreement recording this were adopted into the Agreement by cl 8. In addition, the Purchase Security Agreement relevantly provided:
21. Accelerating Payment of Secured Moneys on Default
If default occurs, the secured moneys will become due and payable by the party granting the security in accordance with the provisions in any agreement relating to their payment or, to the extent any notice is required by law to be given before the secured moneys become payable, immediately on expiry of the relevant notice period, without the need for any further notice or demand together with interest calculated at the prescribed interest rate for a period of one month in addition to interest to the date of repayment of the secured moneys.
Heavyweight’s claim
[40] Heavyweight submits that cl 7 of the Agreement means that FML’s ability to claim penalty interest is limited to interest on overdue instalments. Heavyweight further argues that it is entitled to the surplus $21,000 obtained by FML on the resale of the hauler. After deductions are made for FML’s costs on sale and the penalty interest on the sums of $10,000 owing on both 20 April 2015 and 20 May 2015, Heavyweight claims it is entitled to a refund of $18,890.73.
[41] Heavyweight claims, too, that initially FML failed to disclose to Heavyweight the surplus it made on the resale of the hauler, in breach of its obligation to do so.
FML’s defence and counterclaim
[42] In response, FML contends that cl 8 of the Agreement is an automatic acceleration clause. This means that, upon Heavyweight’s non-payment, the entire purchase price outstanding became due. Therefore, the penalty interest applies to the balance of the principal sum, $549,000.
[43] FML accepts that, under s 117 Personal Property Security Act 1999 (PPSA), it has an obligation to distribute to Heavyweight any surplus received by it on the resale of the hauler. However, FML maintains that, after deducting from the proceeds of sale the outstanding principal sum, penalty interest on that principal sum from 1 March 2015 to 2 June 2015 and its costs on sale, Heavyweight still owes FML $2,049.47. It seeks that sum from Heavyweight by way of its counterclaim here.
Analysis
[44] It is accepted that Heavyweight failed to make its $10,000 payment under the Agreement due on 20 April 2015. Thus, on this date it defaulted on its obligations under the Agreement. Clause 8 of the Agreement provides that, in the event of default, “the whole of the balance of the purchase price payable by the Purchaser shall immediately become due and payable”. This occurs “notwithstanding that the date or dates of payment may not by then have arrived”. Clause 8 then allowed FML to repossess the hauler, which it did.
[45] I find that cl 8 means that the due date for payment of the entire remaining debt is accelerated to be due on the date that default occurred. That is the plain reading of the contract. Clause 8 does not require any notice to be given by FML that it is accelerating the debt. This silence indicates the acceleration happens automatically. Clause 21 of the Purchase Security Agreement also supports this interpretation. This clause provides:
21.ACCELERATING PAYMENT OF SECURED MONEYS ON DEFAULT
If default occurs, the secured moneys will become due and payable by the party granting the security in accordance with the provisions in any agreement relating to their payment or, to the extent any notice is required by law to be given before the secured moneys become payable, immediately on expiry of the relevant notice period, without the need for any further notice or demand together with interest calculated at the prescribed interest rate for a period of one month in addition to interest to the date of reparation of the secured moneys.
[46] Clause 7 of the Agreement entitles FML to “charge penalty interest on the amount unpaid at the rate of 15% per annum from the due date for such payment until payment in full is made”. In light of the acceleration of payment brought about by cl 8, the due date for payment of the entire sum outstanding, $549,000, is the date of default, 20 April 2015. Penalty interest is therefore able to be charged on that entire sum from 20 April 2015 until 2 June 2015 when the amount was repaid, a period of 43 days. This totals $9,701.51.
[47] FML claimed that the penalty interest should be calculated from 1 March 2015, when the initial $1000 deposit was paid. It has not justified why it chose to calculate interest from this date when actual default did not occur until 20 April 2015.
[48] The addition of penalty interest of $9,701.51 and the costs of reselling the hauler ($1,879,13) to the principal sum means that, after subtracting the proceeds of the resale, FML has received a surplus of $9,419.36.
[49] In cl 6 of the Agreement, Heavyweight agreed to waive its rights as a debtor under various provisions of the Personal Property Securities Act 1999 (the PPSA), including s 116. Section 116 requires a secured party to provide the debtor with a statement of account in writing showing details of the sale. Because of this waiver,
there was no obligation on FML to provide a written account to Heavyweight of the surplus it achieved on its re-sale of the hauler. Nonetheless, this does not negate the fact that, under s 117 of the PPSA, FML has to pay to Heavyweight any surplus it made from the resale, after repaying the debt and costs.7 FML has failed to pay Heavyweight the surplus of $9,419.36, in breach of its obligation under s 117 of the PPSA. An order to remedy this is to follow.
Conclusion
[50] As to the Heavyweight’s first underpayment cause of action noted at [7] to [19] above, I have found that, on the balance of probabilities, it is likely here that FML has properly accounted to Heavyweight for its share of the profits for this 2 – 12 March 2015 period in question, and, in any event, Heavyweight has not proved to this standard that it was underpaid by FML with respect to the disputed dockets. However, as I note at [19] above, I find that, due to FML’s failure to provide full disclosure of relevant material, FML should bear the cost to Heavyweight of engaging in third party discovery against Rayonier.
[51] I now order that FML pay to Heavyweight $11,909 (GST exclusive) as reimbursement of this third party discovery cost.
[52]As to Heavyweight’s second Bluff Structures cause of action, noted at [20] to
[35] above, I find that due to the failure of the parties to keep proper financial accounts including a balance sheet of the JV’s assets and liabilities, I am currently unable to determine this cause of action.
[53]I direct, therefore, that:
(a)Given that FML had the responsibility under the JV to have proper financial accounts prepared, with all reasonable speed FML is to arrange for such financial accounts, including a balance sheet, to be prepared for the JV and, in particular, to show its true financial position at the date of termination of the JV.
7 Heavyweight did not waive its rights under s 117.
(b)Those financial accounts and the balance sheet for the JV (the accounts) once prepared are to be approved by the parties and made available to the Court forthwith thereafter (the date they are received by the Court being called hereafter the disclosure date).
(c)Within 20 working days of the disclosure date, counsel for Heavyweight is to file and serve any further submissions he may wish relating to the accounts and Heavyweight’s second cause of action in this proceeding.
(d)Within a further 15 working days of the date specified in (c) above, counsel for FML is to file and serve any further and reply submissions he may wish relating to the accounts and Heavyweight’s second cause of action in this proceeding.
(e)Within a further 10 working days of the date specified in (d) above, counsel for Heavyweight is to file and serve any submissions strictly in reply to those submissions from counsel for FML specified in (d) above.
(f)All those submissions, once filed, are to be made available to me and, in the absence of either party indicating they wish to be heard further on this issue relating to Heavyweight’s second cause of action in this proceeding, I will give my decision on that matter on the basis of all material which is before the Court including evidence given at the original hearing of this matter and the memoranda filed.
[54] As to Heavyweight’s third hauler purchase debt cause of action noted at [36] to [49] above, I find that the Agreement provided that penalty interest applied only from the date of Heavyweight’s default, being 20 April 2015, and from that date the interest accrued on the entire accelerated debt. That said, after penalty interest totalling some $9,701.51 and the costs of reselling the hauler of $1,879.13 are applied, FML received a net surplus of $9,419.36 from the resale to which it was not entitled.
[55]Accordingly, I order that FML pay Heavyweight this net surplus amount of
$9,419.36 FML has wrongly retained.
Costs
[56] Costs are reserved. Before me, counsel indicated that they wished to have an opportunity to make further submissions on costs. Mr van Schreven, counsel for the defendant, did suggest in passing that this is a matter which could have gone to the District Court and that any award of costs therefore should take into account the appropriate District Court scale rate.
[57] I am mindful too that, for the reasons I have outlined above, this judgment is an interim judgment and questions concerning Heavyweight’s second cause of action remain outstanding.
[58] In due course, if costs remain an issue here, and counsel are unable to resolve this question between themselves, then they may file (sequentially) memoranda on costs (a maximum of five pages each) which are to be referred to me and I will decide the question of costs based upon the memoranda filed and the material then before the Court.
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Gendall J
Solicitors:
Leonard Andersen, Barrister, Dunedin Clark Boyce, Christchurch
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