HWD NZ Investment Co Limited v Body Corporate 392418

[2023] NZHC 1102

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-809

[2023] NZHC 1102

BETWEEN

HWD NZ INVESTMENT CO LIMITED

Plaintiff

AND

BODY CORPORATE 392418

Defendant

CIV-2022-404-1155

UNDER

the Companies Act 1993

IN THE MATTER OF

an application under section 290 of the Act

BETWEEN

HWD NZ INVESTMENT CO LIMITED

Applicant

AND

BODY CORPORATE 392418

Respondent  Cont. over

Hearing:	On the papers
Appearances:	J D Haig and D P MacKenzie for Plaintiff T J G Allan for Defendant
Judgment:	1 May 2023

COSTS JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 10 May 2023 at 3.00 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors/Counsel

Davidson Legal, Christchurch for Plaintiff

Grove Darlow & Partners, Auckland for Defendant

HWD NZ INVESTMENT CO LIMITED v BODY CORPORATE 392418 [2023] NZHC 1102 [1 May 2023]

CIV-2022-404-1791

UNDER  the Companies Act 1993

IN THE MATTER OF      an application under section 290 of the Act BETWEEN  HWD INVESTMENT CO LIMITED

Applicant

AND  BODY CORPORATE 392418

[1] CIV-2022-404-809, CIV-2022-404-1155 and CIV-2022-404-1791 all relate to

a dispute between Body Corporate 392418 (the Body Corporate) and HWD NZ Investment Co Limited (HWD), regarding HWD’s liability for levies pursuant to a scheme under s 74 of the Unit Titles Act 2010.

[2]        This judgment deals with the outstanding questions of costs in respect of the following applications:

(a)in CIV-2022-404-809, the Body Corporate’s protest to jurisdiction;

(b)in CIV-2022-404-1155, HWD’s application to set aside a statutory demand issued by the Body Corporate (the first statutory demand); and

(c)in CIV-2022-404-1791, HWD’s application to set aside a statutory demand issued by the Body Corporate (the second statutory demand).

[3]        The applications in CIV-2022-404-809 and CIV-2022-404-1155 were heard together on 1 December 2022, and costs in respect of those applications must be considered together.

[4]        The application in CIV-2022-404-1791 was heard on 28 February 2023, and costs in respect of that application is dealt with separately in this judgment.

CIV-2022-404-809 and CIV-2022-404-1155

[5]        As a preliminary point, I note that the submissions on costs were not filed on time as directed. Leave is granted for all memoranda regarding costs to be filed out of time.

[6]        By my judgment dated 16 December 2022, the Body Corporate’s protest to jurisdiction was set aside, and the first statutory demand was upheld.1

1      HWD NZ Investment Co Ltd v Body Corporate 392418 [2022] NZHC 3472.

[7]        The s 74 scheme includes a clause which provides that the Body Corporate can recover “any costs and charges incurred by the Body Corporate as a result of any Owner failing to make full payment of any levy when due”.

[8]        Any order for indemnity costs requires a consideration of whether the costs have been reasonably incurred and are at a reasonable level.

[9]        HWD accepts that the Body Corporate is entitled to reasonable indemnity costs in respect of HWD’s unsuccessful attempt to set aside the first statutory demand. The Body Corporate and HWD agree that HWD is entitled to costs on a 2B basis in respect of the Body Corporate’s unsuccessful protest to jurisdiction. There is a dispute regarding the correct calculation of costs on that basis.

[10]      The memorandum of counsel for the Body Corporate seeks indemnity costs in respect of the application to set aside the first statutory demand of $27,252.75 including disbursements, and includes copies of the supporting invoices from Grove Darlow, the Body Corporate’s solicitors.

[11]      Grove Darlow dealt with the protest to jurisdiction and the first statutory demand at the same time. It is evident from the narrations in the invoices that there is no clear allocation of time between the two different matters. I accept that there would have been overlap between these two applications as the two separate proceedings progressed.

[12]      A pragmatic approach is required. Counsel for the Body Corporate submitted that of the total of the fees incurred by the Body Corporate during the relevant period, which relate to both applications, 50 percent should be allocated to the unsuccessful application to set aside the first statutory demand. I consider that approach to be reasonable, having considered the work required in respect of the two applications and the narrations in the invoices.

[13]      Regarding the invoices that form the basis of the Body Corporate’s claim for costs, the following invoices relate to the two applications:

(a)       invoice 94986, $248.00; (b)     invoice 95013, $9,942.80; (c)    invoice 95098, $9,229.70; (d)    invoice 95170, $110.00; (e)           invoice 95212, $4,127.60; (f)    invoice 95279, $622.90; (g)      invoice 95359, $1,780.20;

(h)       invoice 95430, $25,519.30; and

(i)        invoice 95476, $1,175.00.2

[14]      The subtotal of these invoices is $52,755.50. On that basis, the 50 percent share to be allocated to HWD’s unsuccessful application to set aside the first statutory demand is $26,377.75.

[15]      Regarding the costs for HWD in respect of the Body Corporate’s unsuccessful protest to jurisdiction, I accept the calculation of 2B costs made by counsel for HWD, being $13,079.81 including travel and accommodation of $2,063.81. I accept the submission on behalf of HWD that it was reasonable for HWD to retain Wellington counsel to appear in Auckland, given counsel’s familiarity with the long running dispute.

[16]      On that basis, in respect of the protest to jurisdiction in CIV-2022-404-809 and the application to set aside the first statutory demand in CIV-2022-404-1155, HWD must pay costs and disbursements to the Body Corporate of $13,297.94.

2      I have disallowed invoice 94751 because it relates to general advice before the applications were filed.

CIV-2022-404-1791

[17]      By my judgment dated 17 March 2023, HWD’s application to set aside the second statutory demand was dismissed.3 The Body Corporate seeks an award of indemnity costs of $21,520.70. The memorandum filed in support includes the relevant invoices from Grove Darlow. All of the work covered by the invoices relates to the one application.

[18]      HWD raises a more fundamental objection to an award of costs to the Body Corporate in respect of this matter. HWD has appealed to the Court of Appeal against the decision upholding the first statutory demand. HWD argues that the Body Corporate’s costs incurred in opposing the application to set aside the second statutory demand were not reasonably incurred, because the Body Corporate refused to accept HWD’s proposal that HWD’s application to set aside the second statutory demand be adjourned pending the outcome of the appeal.

[19]      HWD submits that this proposal was ultimately accepted by the Body Corporate, on the basis that the parties have now filed a consent memorandum in the Court of Appeal advising that the outcome of the appeal will bind the parties in respect of the second statutory demand.

[20]      I do not accept HWD’s argument because the Body Corporate has not acted unreasonably. The levies that are the subject of the second statutory demand comprised a debt due by HWD to the Body Corporate, and the Body Corporate was entitled to issue the second statutory demand under s 289 of the Companies Act 1993. HWD did not apply for a stay of enforcement of the judgment declining HWD’s application to set aside the first statutory demand.

[21]      When the Body Corporate did not agree to an adjournment of its application to set aside the second statutory demand, HWD applied for an adjournment of the hearing. Lang J ordered that the hearing of that application should proceed, noting that it was open to HWD to accept that its application be dismissed, but without prejudice to the argument it wished to run on appeal. That would have enabled HWD

3      HWD NZ Investment Co Ltd v Body Corporate 392148 [2023] NZHC 526.

to file an appeal against the second judgment upholding the second statutory demand, to be heard at the same time as the appeal in respect of the earlier judgment upholding the first statutory demand. HWD declined to take that approach, and as a result the hearing of the application to set aside the second statutory demand proceeded.

[22]      The indemnity costs of $21,520.70 sought by the Body Corporate are reasonable, considering the work required and based on a review of the invoices.

Result

[23]      HWD shall pay the Body Corporate costs and disbursements of $26,377.75 in respect of the application to set aside a statutory demand in CIV-2022-404-1155.

[24] The Body Corporate shall pay HWD costs and distributions of $13,079.81 in respect of the Body Corporate’s protest to jurisdiction in CIV-2022-404-809. This award of costs shall be set off against the award of costs in para [23].

[25]      HWD shall pay the Body Corporate costs and disbursements of $21,520.70 in respect of the application to set aside a statutory demand in CIV-2022-404-1791.

Associate Judge Brittain