Horton v Cowley

[2014] NZHC 968

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-5022 [2014] NZHC 968

BETWEEN

CHRISTOPHER HORTON

Applicant

AND

BRIAN PATRICK COWLEY and GARTH WILLIAM COWLEY First Respondents

CALVIN BLAKLEY WEST Second Respondent

BRIAN PATRICK COWLEY Third Respondent

BRIAN COWLEY SURVEYING LIMITED

Fourth Respondent

On thepapers:	9 May 2014
Appearances:	K T Glover for the Liquidator R S Pidgeon for Second Respondent, C B West E J Werry for First, Third and Fourth Respondents
Judgment:	9 May 2014

COSTS JUDGMENT OF ASSOCIATE JUDGE BELL

This judgment was delivered by me on 9 May 2014 at 4:30pm

pursuant to Rule 11.5 of the High Court Rules.

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

Registrar/Deputy Registrar

Solicitors:

Dukesons Business Law (Steven Dukeson), Auckland, for Liquidator
Simpson Dowsett Mackie, Auckland, for First, Third and Fourth Respondents

Pidgeon Law, Auckland, for Second Respondent

Counsel:

R S Pidgeon, Auckland, for C B West, Second Respondent

E J Werry, Auckland, for Cowley interests – First, Third and Fourth Respondents

K T Glover, Auckland, for Liquidator

HORTON v COWLEY and WEST [2014] NZHC 968 [9 May 2014]

[1]      Following my decision of 31 January 2014, the liquidator and the Cowleys have filed submissions as to costs.   In my decision I fixed the liquidator’s remuneration  and  expenses  and  ordered  the  Cowley interests  to  make  a  top-up payment.  I also gave directions for Mr Horton to pay Mr West for his claim in the liquidation.   I made no orders for costs for or against Mr West.   I held that the Cowley interests were entitled to costs against Mr Horton, but did not fix costs.

[2]      The  Cowley  interests  have  separately  sought  an  order  for  costs  against Mr West.   They say that my decision that no order should be made for or against Mr West  applies  only  in  respect  of  the  contest  between  the  Cowleys  and  the liquidator,  but  does  not  apply  to  other  issues  in  contention  between  them  and Mr West. This decision does not deal with that matter.

[3]      The Cowleys calculate total costs of $39,969.00 under category 2.  They have provided separate calculations for the scales in force before and after 13 June 2012. They also claim increased costs under r 14.6 by way of an uplift of 50 per cent. Their disbursements come to $6,968.50.

[4]      In reply, Mr Horton first submits that there should be no order for costs but that costs should lie where they fall.  He also takes issue with some parts of the costs claimed by the Cowleys and with one of the disbursements.

[5]      As to there being no order for costs, that submission invites me to revisit my decision that the Cowleys should have costs against the liquidator.  I held that as the Cowleys had succeeded, they were entitled to costs under r 14.2(a).1   Mr Horton has not raised any sound basis for reconsidering that finding.  In particular, no grounds for recall have been made out.  My decision that the Cowleys should have costs still

applies.

1      High Court Rules r 14.2(a).

[6]      Whereas the Cowleys claim 9.4 days, I allow them 5.4 days.  I disallow the appearances on 5 October 2011 and 15 February 2012 for the reasons given in Mr Glover’s submission.  I allow only 2.0 days rather than 6.0 for step 38, filing the notice of opposition and the evidence in opposition to the liquidator’s application. While I accept that the Cowleys may have taken more than 2 days to file evidence in opposition, I bear in mind that there would be an overlap with the work carried out to prepare the initial application filed in August 2011.  Some of the evidence was also directed at matters raised by Mr West.  Other evidence was filed in October 2012, for which another scale applies.  The Cowleys will have 4 days for evidence, 2 in this period and 2 under the next scale.

[7]      For the 5.4 days up to 13 June 2012 at $1,880.00 per day, I fix costs at

$10,152.00.

Costs from 14 June 2012

[8]      The Cowleys claim $22,297 for 9.9 days.  I disallow the memorandum of 18

June 2012 and the preparation of submissions at that time (steps 11 and 40), because those matters are covered by the costs award made in my minute of 26 June 2012. The $1,800.00 I awarded then was intended to catch preparation for the hearing.  I disallow the costs for preparing a bundle (step 41) for the hearing in October 2012 because that is covered by the preparation of written submissions.  I accept the claim for 2 days for further evidence (step 38).   Following the adjournment of 26 June

2012, the Cowleys filed more evidence.   It is not unusual for parties to be put to extra preparation when a case is adjourned part heard.  I do not allow anything for the memorandum as to costs. The rules do not provide for costs on costs.  Mr Glover points out that there was no consultation on costs before the Cowleys filed their memorandum.

[9]      I fix costs after 14 June 2012 at $13,930.00 for 7 days.

[10]     Costs under category 2 for the entire proceeding come to $24,082.00.

[11]     I reject the application for increased costs under r 14.6.  This litigation was unfortunate.  It arose out of mistakes made at the outset.  In particular, Mr Horton ought to have established who the creditors in the liquidation were, and how much their claims were for.  Failure to attend to that was however no more than an error of judgment.  An unsuccessful applicant ought not to be ordered to pay increased costs, simply for error of judgment in starting a proceeding.  Something grosser is required for costs to be increased.

[12]     There is no basis for awarding increased costs against Mr Horton on account of the way that the litigation was conducted.   On many issues, Mr Horton was successful.

[13]     There is an element of chance in the outcome of this proceeding.  I was not able to give a final decision in my judgment of 23 November 2012 because at that time it was not certain who were the creditors of the company.  If other creditors had validly  claimed  in  the  liquidation  -  for  example,  the  Commissioner  of  Inland Revenue – the outcome would have been entirely different.   The Cowleys would have had to repay all the sums that they had retained for interest, so that they could be  applied  under  Schedule  7,  s  312  and  s  313  of  the  Companies  Act.    That distribution would be required to ensure that other creditors received their due share in the liquidation.   Mr Horton would have had much more of his claim for remuneration  upheld.     That  remained  a  real  possibility  after  my  decision  of December 2012.  Because it did not come to pass, the Cowleys have had something of a lucky escape.  That does not provide any basis for them to be awarded increased costs.

Disbursements

[14]     The liquidator disputes only one disbursement - $174.75 for the respondents’ bundle in June 2012.  That is said to be unnecessary because the Cowleys were late with their evidence.  If the Cowleys had given their evidence on time, it would have been included in the bundle prepared by the liquidator.   In other words, the cost

would fall on the liquidator in any event.  I allow the claim.  Disbursements awarded are $6,968.50.

Result

[15]     For the above reasons, I award the Cowleys costs against Mr Horton in the sum of $24,082.00 plus disbursements of $6,968.50, a total of $31,050.50.

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Associate Judge R M Bell