Joinery Scene Limited v Hispec Homes NZ Limited

[2022] NZHC 959

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2021-409-000009

[2022] NZHC 959

UNDER

the Companies Act 1993

IN THE MATTER

of the liquidation of HISPEC HOMES NZ LIMITED

BETWEEN

JOINERY SCENE LIMITED

First Plaintiff

AND

FIXRIGHT FASCIA & SPOUTING LIMITED

Second Plaintiff

AND

HISPEC HOMES NZ LIMITED

Defendant

Hearing:

On the papers

Counsel:

J M Stringer for First Plaintff

D M Jackson for Second Plaintiff G P Davis for Defendant

Judgment:

6 May 2022

COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 6 May 2022 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

JOINERY SCENE LTD v HISPEC HOMES NZ LTD [2022] NZHC 959 [6 May 2022]

[1]                   This is a proceeding for an order that the defendant company be put into liquidation. The debt owed to the first plaintiff (Joinery Scene) has been paid, but at the last hearing on 28 April 2022 I was advised there was disagreement between Joinery Scene and the defendant company in relation to costs. The defendant company does not dispute Joinery Scene is entitled to costs. It does, however, dispute quantum.

[2]                   I have adjourned the substantive proceeding to 12 May 2022 and called for submissions on costs from Joinery Scene and the defendant company in the expectation costs would be fixed and paid before the matter next comes before the Court.1

[3]I have now received counsels’ respective memoranda for which I am grateful.

[4]                   For Joinery Scene, Ms Stringer advises that its actual legal costs total $10,500 plus GST and that scale costs (calculated on a 2B basis) amount to $14,579. Joinery Scene has also incurred disbursements of $1,397.06. On Ms Stringer’s assessment, Joinery Scene’s actual costs are less than scale costs.

[5]                   Ms Stringer does not state an amount Joinery Scene seeks for costs, but I presume it claims actual rather than scale costs. This is so because it is, of course, a general principle that an award of costs should not exceed the costs incurred by the party claiming costs.2

[6]                   In response for the defendant company, Mr Davis makes several points, but most significantly:

(a)If Joinery Scene seeks actual costs then it cannot recover Goods and Services Tax (GST) as it will not incur any expense by paying GST. There is evidence that Joinery Scene is GST-registered so the GST component of its legal costs will be recovered as a GST input credit.3

1      McVicar  Buildings Supplies Ltd v Hispec Homes NZ Ltd  HC Christchurch  CIV-2021-409-9,  28 April 2022 (Minute).

2      High Court Rules 2016, r 14.2(1)(f).

3      New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282 at [16].

(b)The amount of Joinery Scene’s actual costs appear excessive for the attendances required of counsel which involved short appearances and uncomplicated legal submissions.

(c)Joinery Scene’s calculation of scale costs contains errors and 2B scale costs in fact amount to $9,679.50.

(d)No submissions have been advanced on behalf of Joinery Scene that there are grounds to support an uplift on scale costs or an award of indemnity costs.

(e)There is no dispute as to the disbursements claimed by Joinery Scene.

[7]                   The defendant company’s position is that if the Court was to accept its calculation of 2B scale costs then they should be awarded.

[8]                   In my view, the defendant company’s position is correct. Joinery Scene has not advanced any submissions justifying increased or indemnity costs. While several indulgences have been granted to the defendant company in the course of the proceeding, Mr Davis’s approach on its behalf has always been sensible, pragmatic and plainly designed to keep costs for all parties to a minimum. I do not see a basis to award anything other than scale costs.

[9]                   It is appropriate then that Joinery Scene be awarded scale 2B costs as the defendant company contends. I also agree with the defendant company’s calculation of scale costs for the reasons set out in Mr Davis’s memorandum. Joinery Scene is also entitled to its disbursements.

Result

[10]               The defendant company is to pay Joinery Scene Ltd costs of $9,679.50 plus disbursements of $1,397.06.

O G Paulsen

Associate Judge

Solicitors:

Davidson Legal, Christchurch

Mortlock McCormack Law, Christchurch Shaun Cottrell Law, Christchurch