Mathew Barr Motor Group Limited v Centro Pilgrim Limited

[2023] NZHC 2973

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2023-409-322

[2023] NZHC 2973

IN THE MATTER

of the liquidation of Centro Pilgrim Limited

BETWEEN

MATHEW BARR MOTOR GROUP LIMITED

Plaintiff

AND

CENTRO PILGRIM LIMITED

Defendant

Hearing:

(Determined on the papers)

Counsel:

J E Bayley for Plaintiff

A R Gilchrist for Defendant

Judgment:

24 October 2023

JUDGMENT OF ASSOCIATE JUDGE LESTER

(Costs)

MATHEW BARR MOTOR GROUP LIMITED v CENTRO PILGRIM LIMITED [2023] NZHC 2973

[24 October 2023]

[1]        Following this  winding  up  proceeding  being  discontinued  by  leave  on  28 September 2023, costs need to be determined.

[2]        The funds in issue in this proceeding have now been paid to the creditor, Mathew Barr Motor Group Limited (MBMGL). The appeal against the decision declining to set aside the statutory demand upon which this proceeding was based, has been abandoned by Centro Pilgrim Limited (CPL). MBMGL has been the successful party and is entitled to costs despite its discontinuance.1 CPL does not dispute that costs are payable – the issue is how much.

[3]        Two issues arise; firstly the appropriate items to be included in the scale and at what rate. The second issue is whether an uplift is warranted.

Scale items

[4]        Mr Bayley, counsel for MBMGL, in his reply submissions, identifies the issues taken by CPL with his scale costs claim as being whether there should be allowances for:

(a)memoranda at Band B, which is 0.4 of a day, or at Band A, 0.2 of a day;

(b)an allowance for a second statutory demand – the amount payable by CPL continuing to accrue after the original demand; and

(c)an amended statement of claim, 0.6 of a day.

1      Body Corporate 366611 v B.E.M.A. Property Investments Ltd [2015] NZHC 31 at [15]. The rationale for the award in favour of the discontinuing plaintiff is that “the reason for discontinuance is that the party has achieved the ends that it set out to when it started the proceedings in the first place”: Cornerstone Construction Ltd v Freelance Diggers Ltd [2014] NZHC 70 at [3]. Likewise, in circumstances where the petitioning creditor is “eventually paid”, the creditor is “essentially the successful party”: Northpower Ltd v All Gas Solutions Ltd (HC) Auckland, CIV-2010-404-2564, 22 August 2011) at [26].

The memoranda

[5]        I am satisfied that 2B is an appropriate allowance for all memoranda filed. The award of costs on a 2B basis is the usual award in a liquidation proceeding. While some memoranda filed were relatively brief, others were longer.   The length of       a memorandum does not necessarily reflect the work that may have been required for its preparation. Many of the memoranda here were joint memoranda and so Mr Bayley had to liaise with counsel for CPL and of course, take instructions and finalise the documents. The scale is not intended to be exact – there will be some “unders and overs” in respect of individual items in a particular category and indeed, across the scale.

[6]As Mr Bayley submits:

… “the parties are to be discouraged from disputing the length of time that each step is assumed to have taken” because this “is the very antithesis of achieving a ‘predictable and expeditious’ determination of costs”.²

Statutory demand and amended statement of claim

[7]        When this matter was called on 3 August 2023, Mr Jai Moss appeared for CPL. A Minute issued that date records that Mr Moss confirmed that his instructing solicitor held on trust the amount described in the statement of claim as being “the debt” along with the value of a costs award recently made by the Court.

[8]        At the hearing, Mr Bayley explained that his client had issued a further statutory demand for unpaid sums that continued to accrue. Mr Bayley sought orders that the additional sum be added to the amount to be held on trust.

[9]        I ordered that the amount stated as the debt in the statement of claim and all continuing monthly amounts falling due from 3 August 2023 were to be held on interest bearing deposit until such further order of the Court or agreement in writing of the parties. At that time, the appeal against the statutory demand was still alive. That left the amount due under the second statutory demand, that is, the monthly

2      Moorhouse Commercial Park Ltd v Vero Insurance New Zealand Ltd [2023] NZHC 2377 at [28]. See High Court Rules 2016, r 14.2(1)(g).

accruals prior to 3 August 2023. An offer to hold that additional sum on trust was not made on 3 August 2023.

[10]      I adjourned the proceeding for counsel to discuss whether it could be agreed that the amount claimed in the further statutory demand was also to be held on trust. I also said that Mr Bayley was to consider whether he wished to amend the statement of claim to rely on the second unanswered statutory demand. The claim issued by MBMGL did not update the amount due to MBMGL to include further monthly sums as they fell due.

[11]      As to the second statutory demand, I am satisfied a claim for this amount is appropriate. It was the foundation of the amended statement of claim. The demand was unmet. It follows that I am also satisfied the allowance for the amended statement of claim is appropriate.

[12]      The initial proposal by CPL was only to hold in trust the amounts I have described and not the amount in the second statutory demand. CPL was always going to have to address the debt recorded in the second demand and if it did not do so promptly, it was inevitable that further costs would be incurred by MBMGL.

[13]      Accordingly, I find the scale costs schedule advanced by Mr Bayley on behalf of MBMGL to be correct.

Should there be an uplift of 50 per cent?

[14]      Mr Bayley submits that an uplift is warranted because CPL did not pay the original statutory demand amount within five working days as directed in the statutory demand judgment. This is not conduct that warrants an uplift. While CPL’s failure to pay the amount of the statutory demand necessitated the issuing of the liquidation proceedings, scale costs for that step only are appropriate. On Mr Bayley’s argument, non-compliance with any order to pay money would warrant an uplift in subsequent enforcement proceedings.

[15]      A point of more merit is that MBMGL made a Calderbank offer that the amounts due be held by a stakeholder. That offer is submitted to be on the same terms ultimately ordered by the Court in the Minute I have already referred to. MBMGL made its offer against CPL simply demanding that a liquidation application not be proceeded with.

[16]      Mr Gilchrist, counsel for CPL, submits that Mr Bayley’s offer was not identical to the consent order. That may be true, as Mr Bayley’s 3 July 2023 letter also included the amount in issue in the second statutory demand but ultimately, that sum was also, as I understand it, paid into trust. The other terms proposed by Mr Bayley required the appeal to be advanced promptly. Such was hardly a controversial requirement in the circumstances.

[17]      No explanation is offered by Mr Gilchrist as to why this offer was not accepted or at least explored.

[18]      I do not consider the balance of the matters raised by Mr Bayley warrant an uplift, but I am satisfied that CPL’s failure to take up, or at least explore, Mr Bayley’s pragmatic offer to resolve the debt owed by CPL pending completion of the appeal, warrants an uplift of 25 per cent. I so order.

[19]      This was a commercial dispute where CPL, following the dismissal of its application to set aside MBMGL’s statutory demand,  was deemed  to be  insolvent. It failed to meet its indebtedness and it failed to engage on a reasonable and practical compromise in respect of the amount that was undoubtedly due pending its appeal. Its unreasonable failure to do so, caused the subsequent costs, engaging the High Court Rules 2016, r 14.6(3)(b)(v). An uplift is appropriate as ordered.

Costs in respect of the costs memoranda

[20]      There is a further award to MBMGL of 0.4 of a day in relation to its original costs memorandum.

[21]      Mr Bayley has sought that the costs award attract interest under the Interest on Money Claims Act 2016. There is an order that the costs awards, once sealed, are to attract interest until the date paid.

Associate Judge Lester

Solicitors:

Rhodes & Co, Christchurch (for Plaintiff) Dyer Whitechurch, Auckland (for Defendant)

Copy to counsel:
A R Gilchrist, Barrister, Auckland (for Defendant)