Marac Finance Limited v McFarlane HC Wellington CIV-2010-485-185

[2010] NZHC 2356

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2010-485-185

BETWEEN  MARAC FINANCE LIMITED Plaintiff

ANDDUNCAN BARRY MCFARLANE Defendant

Judgment:      11 November 2010 at 3.30 pm

JUDGMENT AS TO COSTS OF ASSOCIATE JUDGE D.I. GENDALL

This judgment was delivered by Associate Judge Gendall on 11 November 2010 at

3.30 pm under r 11.5 of the High Court Rules.

Solicitors:           Lane Neave, Solicitors, PO Box 13149, Christchurch

Peter E Gilbert, Solicitors, PO Box 2420, Wellington

MARAC FINANCE LIMITED V DB MCFARLANE HC WN CIV-2010-485-185  11 November 2010

[1]      This  judgment  relates  to  costs  on  the  plaintiff’s  successful  summary judgment application against the defendant.

[2]      On 15 October 2010 I awarded summary judgment to the plaintiff against the defendant for the sum of $185,937.34 representing the principal sum owing under a loan guarantee by the defendant together with interest.

[3]      In that 15 October 2010 judgment I reserved costs although I noted that the successful plaintiff did seek indemnity costs against the defendant.  In the judgment I indicated that in the event that counsel were unable to resolve the issue of costs between  them  directly then  that  issue  could  be the  subject  of  memoranda filed sequentially which were to be referred to me for decisions.

[4]      Counsel for the plaintiff has now filed a memorandum as to costs dated 1

November 2010.  There is no memorandum before the Court from counsel for the defendant.   On 5 November 2010 at my request a Deputy Registrar of this Court contacted counsel for the defendant to ascertain whether any memorandum as to costs for the defendant was to be forthcoming.  Counsel confirmed that there would not be a memorandum on costs from the defendant.

[5]      I now proceed to determine the issue of costs based upon the material before the Court.  As I have noted this includes one memorandum only from counsel as to costs, this being the 1 November 2010 memorandum from counsel for the plaintiff.

[6]      In my judgment of 15 October 2010 I awarded summary judgment to the plaintiff against the defendant in terms of his guarantee of a loan to Mr Mostyn Hainsworth, the outstanding principal sum of which was $150,024.06.  In addition a lesser amount for interest than that claimed by the plaintiff was awarded on the basis that interest should run only in this case from 19 June 2009 being the date of the Loan Agreement and Guarantee.

[7]      A copy of that Loan Agreement and Guarantee are before the Court.  Para

13.2 of the Deed of Guarantee and Indemnity (“Deed of Guarantee”) signed by the defendant in favour of the plaintiff states:

13.2     The guarantor will pay on demand each cost and expense (including all legal expenses on a solicitor and own client basis and taxes) sustained or incurred by the lender as a result of the exercise of, or in protecting or enforcing or  otherwise in  connection with, its  rights  under a  Relevant Document [which includes the  current Guarantee, Securities and  Loan Agreements provided by the  lender] or  another transaction required or contemplated by a Relevant Document, in all cases on a full indemnity basis.

[8]      Here, the plaintiff contends that its solicitor and client costs in bringing this proceeding against the defendant in terms of the Deed of Guarantee were clearly incurred as a result of the exercise of or the protection or enforcement of its rights under the Deed of Guarantee and the Loan Agreement.   Accordingly, the plaintiff argues  that  its  solicitor  and  client  costs  incurred  in  this  proceeding  should  be awarded against the defendant.

[9]      No submission has been made by the defendant in response to this.

[10]     It is clear from r 14.6(4)(e) High Court Rules which is part of the provision dealing with indemnity costs that:

(4)        The Court may order a party to pay indemnity costs if - ...

(e)         The party claiming costs is entitled to indemnity costs under a contract or deed ....

[11]     I have no doubt that in the present case the wording of the Deed of Guarantee signed by the defendant here as outlined at para [7] above is such that it provides an entitlement to the plaintiff to indemnity costs.   In Attorney-General v Feary, High Court,  Wellington,  7  March  2007,  Clifford  J,  CIV-2006-485-610  a  provision requiring payment of “all legal costs” was held to provide a full costs indemnity.  In addition,  in  Clay  Exports  Ltd  v  Waitoto  Developments  Limited,  High  Court, Auckland, 15 February 2007, Associate Judge Gendall, CIV-2006-404-7740 a provision  whereby  “all  sums  expended  by  the  mortgagee  ...  in  exercising  or enforcing ... any power, right or remedy contained or implied in this mortgage” was held to entitle the plaintiff to full solicitor/client indemnity costs.

[12]     In the present case the terms of clause 13.2 of the Deed of Guarantee refer to a requirement for the defendant borrower to pay “each cost and expense” which is to

include “all legal expenses on a solicitor and own client basis” sustained or incurred by the lender as a result of “the exercise of or in protecting or enforcing or otherwise in connection with its rights” under the Deed of Guarantee and Loan Agreement.

[13]     In my view it is clear the wording of this Deed of Guarantee contract is sufficient to entitle the plaintiff here to indemnity costs on default under the loan arrangements with the plaintiff and that default has occurred here.  There has been no opposition from the defendant to an indemnity costs award being made in this case.

[14]     Under  the  circumstances  in  this  case,  an  award  of  indemnity  costs  is appropriate and is to follow.

[15]     The next question before the Court relates to the quantum of that costs award.

[16]     In his Memorandum dated 1 November 2010, counsel for the plaintiff has attached invoices from his firm addressed to the plaintiff relating to this matter. Those invoices are as follows:

(a)      Invoice dated 29 January 2010 for $4,762.75 (b)      Invoice dated 26 March 2010 for $1,491.50; (c)      Invoice dated 9 April 2010 for $731.25;

(d)       Invoice dated 30 April 2010 for $2,042.50; (e)           Invoice dated 29 June 2010 for $7,092.50;

(f)       Invoice dated 18 October 2010 for $16,513.16. [17]    In addition a sealing fee of $40.89 is sought.

[18]     These amounts represent a total claim of $32,674.55.

[19]     Each of these invoices together with accompanying letters which have been exhibited contain narrations for the services provided by the plaintiff’s solicitors to the plaintiff.

[20]     Also enclosed is a copy of a letter dated 18 October 2010 from counsel for the plaintiff to counsel for the defendant which encloses copies of these various tax

invoices and sets out the total indemnity costs claim which the plaintiff makes. There has apparently been no reply to that 18 October 2010 letter.

[21]     Nor has the Court received any response or memorandum from counsel for the  defendant  with  regard  to  the  earlier  direction  I  made  in  this  proceeding concerning costs memoranda included in my 15 October 2010 judgment.  Indeed, as I have indicated above, on 5 November 2010 counsel for the defendant confirmed that there would be no memorandum or response from the defendant on this question of costs.

[22]     That said, and noting that indemnity costs are to be determined with reference to actual costs reasonably incurred, I am satisfied that the indemnity costs award sought  by the  plaintiff  which  I have  noted  is  effectively unopposed,  in  all  the circumstances here is reasonable and justified.   On this quantum question, I have already noted that the Court has been provided with detailed invoices and accompanying letters specifying the work undertaken and I am satisfied these actual costs incurred in each  invoice were reasonable under  all the  circumstances.   A significant number of affidavits and appearances on behalf of the plaintiff were required in this case, and the plaintiffs needed to respond to a detailed and vehement opposition from the defendant to its summary judgment application right up to and including the hearing of this matter.

[23]     Costs on an indemnity basis (and disbursements including the sealing fee of

$40.89) as set out in the Memorandum from counsel for the plaintiff filed herein dated 1 November 2010 which total in all $32,674.55 are awarded to the plaintiff on its successful summary judgment application against the defendants.   An order to this effect is now made.

‘Associate Judge D.I. Gendall’