Herbert Construction Company Limited v Viking Group Limited HC Napier Civ-2011-441-206

[2011] NZHC 1139

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2011-441-206

BETWEEN  HERBERT CONSTRUCTION COMPANY LIMITED

Applicant

ANDVIKING GROUP LIMITED Respondent

Judgment:      19 September 2011 at 3:30 PM

RE-ISSUED JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment is delivered by Associate Judge Gendall on 19 September 2011 at 3.30 pm under r 11.5 of the High Court Rules.

Solicitors:           Lunn & Associates, Solicitors, PO Box 846, Napier 4140

Kevin McDonald & Associates, Solicitors, PO Box 331 065, Takapuna

HERBERT CONSTRUCTION COMPANY LIMITED V VIKING GROUP LIMITED HC NAP CIV-2011-441-

206 19 September 2011

[1]      On 31 March 2011 the applicant filed an application to set-aside a statutory demand issued against it by the respondent claiming the sum of $27,696.36.

[2]      That application was opposed by the respondent in a Notice of Opposition dated 17 May 2011.

[3]      The opposed application was set down for a 2 hour hearing to take place on

15 September 2011.

[4]      Subsequently,  on  9 August  2011  counsel  advised  the  Court  that  matters between the parties had been settled and an order was made unopposed that the statutory demand in issue in this proceeding was set-aside.

[5]      In a Minute I issued on 9 August 2011 setting-aside the statutory demand I awarded costs to the applicant on this application together with disbursements as fixed by the Registrar.  The Minute indicated that costs were to be on a Category 2B basis unless counsel for the applicant advised that costs above this level were sought.

[6]      Counsel  for the applicant  has  now  advised,  in a Memorandum  dated 19

August 2011, that an increased costs award is sought.

[7]      Counsel for the respondent opposes any application for an increased costs award and contends that category 2B costs are appropriate here.

[8]      In support of its application for an order for increased costs, the applicant says that the statutory demand related to a disputed debt and the defendant was well aware that the matter was disputed.   In addition, the applicant complains that the demand was issued by a debt collection agency and not by a solicitor.

[9]      As I understand the position, the statutory demand related to the supply of roofing membrane for a resort in Fiji, this material being provided by the respondent.

[10]     The  applicant’s  case  is  that  the  respondent  provided  the  wrong  roofing

membrane and that the respondent was aware that there was a substantial dispute on

the basis that the wrong goods were supplied in a series of emails which passed between the parties between January 2011 and March 2011.

[11]     It seems, however, that the respondent may have requested the applicant to return the goods for credit before the statutory demand, in fact, was issued.

[12]     The statutory demand in this case was issued and signed by MFL Services a debt collection agency on behalf of the respondent.   A fee for this service was charged by MFL Services and this was included in the statutory demand itself.

[13]     Counsel for the applicant contends that a statutory demand ought to be issued by a solicitor and not a debt collection agency, Rembrandt Custodians Limited v Pro- Drill (Auckland) Limited, Master Lang, Auckland Registry, 16 June 2003, M337- IM03.

[14]     Turning now to the issue of costs, category 2B scale costs in this matter according to the applicant would appear to total some $3,572.00.  The actual costs the applicant indicates it has incurred and seeks however, total $7,833.80.

[15]     Counsel for the respondent as I have noted contends that category 2B costs only are appropriate here.   It is argued, as I understand it, that the respondent’s agreement to withdraw the statutory demand was simply on the basis that 2B costs would be paid.  Counsel for the respondent has indicated that on several occasions he has sought bank account details for these 2B costs and disbursements (which he calculates at $3,980.89) so he can tender them, but this has not been forthcoming.

[16]     It would seem from the Memorandum filed 29 August 2011 by counsel for the respondent that there are a range of factual disputes between the parties concerning this whole matter.

[17]     Notwithstanding this, as McGechan on Procedure notes at para HR14.6.02 (2)(a)(i):

Increased costs, sometimes significantly increased, are routinely awarded against parties  who  proceed  with  an  inappropriate statutory demand,  in  the  face  of  a warning by the applicant company, Jones O’Dell Motor Bodies Limited v Hardcore

Limited  (2005)  17  PRNZ  809,  Summer  Construction  Limited  v  Bakker,  HC, Wellington, CIV-2006-485-1499, 10 November 2006 at [29].

[18]     Although counsel for the respondent notes that a cheque for the $3,980.89 representing costs and disbursements the respondent calculates (payable on a 2B basis) is available to the applicant, under the circumstances prevailing in this case, I am satisfied that this was an inappropriate case for the issue of a statutory demand and increased costs are appropriate.   As I have noted the applicant seeks actual indemnity costs totalling $7,833.80.

[19]     The authorities indicate that it is an increase in costs rather than indemnity costs which are appropriate where a statutory demand is issued in circumstances where this should not have happened.

[20]     In my view, given the assessment of 2B scale costs by both the applicant and the respondent at $3,572.00, a significant uplift of 50% is appropriate here making a total order for costs of $5,358.00 due from the respondent.  Disbursements to include a filing fee of $408.89 are also properly payable here.

[21]     An order is now made therefore that the respondent is to pay the applicant increased costs on the present application totalling $5,358.00 together with disbursements as approved by the Registrar which will include the $408.89 filing

fee.

Associate Judge D.I. Gendall