Inde Legacy Limited v S J Distributors Limited

[2017] NZHC 2859

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE

CIV-2017-485-829 [2017] NZHC 2859

BETWEEN

INDE LEGACY LIMITED

Applicant

AND

S J DISTRIBUTORS LIMITED Respondent

Hearing:	21 November 2017
Appearances:	S J Iorns for the Applicant No appearance for the Respondent
Judgment:	21 November 2017

ORAL JUDGMENT OF ASSOCIATE JUDGE SMITH

[1]      The respondent served a statutory demand on the applicant on 2 October 2017. The amount claimed in the statutory demand was $1,887.70, which included a claim for costs of preparing and issuing the demand and a service fee of $70.

[2]      The applicant filed an application to set aside the statutory demand, contending that it had not ordered the supplies which were the subject of the demand.   The applicant’s position was that the statutory demand should have been addressed to a separate company called Silk Route Spice Limited.   The applicant’s director, Mr Uppal, said that he had previously owned Silk Route Spice Limited, but sold the company in December 2016.   The invoice which was the subject of the statutory demand was an invoice to Silk Route Spice Limited, but was not dated until February

2017.

INDE LEGACY LIMITED v S J DISTRIBUTORS LIMITED [2017] NZHC 2859 [21 November 2017]

[3]      The respondent elected not to pursue the statutory demand. By letter dated 17

October 2017, the collection company acting on the respondent’s behalf advised the applicant’s counsel that the respondent’s claim had been referred to the Disputes Tribunal. By further letter dated 18 October 2017 the respondent’s agent advised that the statutory demand had been withdrawn.

[4]      I am satisfied that there is a genuine dispute over the existence of the debt, and

I accordingly make an order setting aside the statutory demand.

[5]      Mr Iorns seeks indemnity costs, on the basis that the statutory demand should never have been issued (because the respondent was aware of the nature of the dispute before the demand was issued).   As at today’s date, Mr Iorns tells me that the applicant’s actual costs and disbursements come to approximately $5,232.

[6]      I do not think I need to consider the principles in which indemnity costs may be awarded following the withdrawal of a statutory demand.  That is because if scale costs  were  awarded  on,  say,  a  2B  basis,  by my  calculation  the  total  costs  and disbursements would be approximately $5,700, which would exceed the amount of the applicant’s actual solicitor/client costs.

[7]      Counsel for the applicant wrote a letter to the respondent’s agent on 18 October

2017, in which he advised that, as at that date, solicitor/client costs and disbursements came to $2,121.25. The same day counsel was advised that the statutory demand had been withdrawn.

[8]      In the circumstances, I do not think this is a case where full solicitor/client costs are justified, particularly as a significant part of the additional costs incurred since 18 October 2017 appear to have been directed to the recovery of costs.  One might have expected the applicant’s activity to have been minimal after 18 October

2017, when it knew that the statutory demand would be withdrawn.

[9]      In all the circumstances, I think the appropriate order is to allow costs on a 1B basis, at $1,480 per day.   On that basis, the applicant is entitled to $2,960 for the preparation of the originating application, together with disbursements in the sum of

$712.50 (filing fee of $540 and service fee $172.50). Allowing for a further attendance today, I think the justice of the case will be met by an award of $4,000, including disbursements, to the plaintiff.  That figure should sufficiently mark the fact that the respondent appears to have known of the existence of the dispute before the statutory demand was issued, and should not have proceeded with it.

Result

[10]     I make the following orders:

(a)       Setting aside the statutory demand; and

(b)For   costs   to   the   applicant   in   the   sum   of   $4,000,   including disbursements.

Associate Judge Smith