Melbourne Limited v Bartlett Concrete Placing Limited

[2022] NZHC 2173

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2022-409-000140

[2022] NZHC 2173

UNDER

Section 290 Companies Act 1993 and Part 19 of the High Court Rules 2016

IN THE MATTER

of an application to set aside a statutory demand

BETWEEN

MELBOURNE LIMITED

Applicant

AND

BARTLETT CONCRETE PLACING LIMITED

Respondent

Hearing:

On the papers

Counsel:

K R Narayan for Applicant

G K Holm-Hansen for Respondent

Judgment:

30 August 2022

COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 30 August 2022 at 3.30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

MELBOURNE LTD v BARTLETT CONCRETE PLACING LTD [2022] NZHC 2173 [30 August 2022]

[1]    The respondent, Bartlett Concrete Placing Ltd (Bartlett), issued a statutory demand to the applicant, Melbourne Ltd (Melbourne), to recover a balance owing under certain payment claims issued under the Construction Contracts Act 2002.

[2]    Melbourne applied to set aside the statutory demand under s 290(4) of the Companies Act 1993.

[3]    In a judgment of 26 July 2022, Melbourne’s application was dismissed. I held that as Bartlett was successful, it was entitled to costs and that if the parties could not agree as to the quantum of those costs they were to file memoranda.1

[4]The parties have not agreed and memoranda have been filed.

[5]    Bartlett has sought indemnity costs. It does so on two bases, namely under clause 9(e) of its terms and conditions (that applied to its dealings with Melbourne) and s 23 of the Construction Contracts Act 2002. In my view, the reference to s 23 is unnecessary and simply serves to confuse what is a particularly straightforward matter and I do not need to consider it further.

[6]Clause 9(e) of Bartlett’s terms and conditions provide

All costs of or incurred by the Vendor or as a result of a default by the Customer including but not limited to administration charges, debt collection costs and legal costs as between solicitor and client shall be payable by the Customer

[7]    Bartlett says that its actual solicitor/client costs amount to $20,224 (excluding GST) and that it incurred disbursements associated with the proceeding of $287.65. In addition to those amounts, it also claims two further amounts namely:

(a)interest of $20,859.60 in accordance with cl 9(d) of its terms and conditions; and

1      Melbourne Ltd v Bartlett Concrete Placing Ltd [2022] NZHC 1786.

(b)administrative costs of $1,742.50, that are said to have been charged to Bartlett by a contractor, Ms Dixon, for services related to the proceeding.

[8]    Melbourne opposes Bartlett’s claim for costs. It argues that costs should lie where they fall because the hearing was unnecessary in circumstances where it had commenced adjudication proceedings to determine what, if any, amount was owed by it to Bartlett.

[9]    In the alternative, Melbourne says that Bartlett is not entitled to indemnity costs, that the amount claimed as indemnity costs is not reasonable and scale 2B costs are appropriate.

[10]   Melbourne’s first argument, that costs should lie where they fall, is unsustainable. Bartlett’s entitlement to costs has already been determined. All that is in issue is quantum. Further, the submissions made are simply an attempt to raise again matters I considered in my judgment and rejected.

[11]   Melbourne’s second argument, that Bartlett is not entitled to indemnity costs, is based on s 23 of the Construction Contracts Act. It overlooks Bartlett’s entitlement under cl 9(e) of its terms and conditions. Under r 14.6 of the High Court Rules 2016, the Court may award a party indemnity costs where the party claiming costs “is entitled to indemnity costs under a contract or deed”. That is the case here.

[12]   Melbourne says that Bartlett’s indemnity costs are unreasonable because the proceeding only required counsel of average skill and experience and did not require partner involvement. Further, Melbourne says that by comparison its actual costs were only $12,972.

[13]   In support of its claim for indemnity costs, Bartlett has provided copies of its invoices including narrations/schedules of attendances, disclosed the authors who worked on the file and their hourly rates. Each invoice has been reviewed to ensure that no costs incurred in relation to separate but related proceedings have been incorporated in its claim.

[14]   Applying the principles in Black v ASB Bank Ltd Bartlett’s solicitor’s charges do not appear excessive given the nature of the proceeding, the range of issues raised and work undertaken.2 I also do not accept that it was not appropriate for there to be partner involvement. This was a case where the Court benefitted from having experienced counsel involved. Further, I agree with Mr Holm-Hansen’s submission that “an unsuccessful party’s costs are not a barometer for the reasonableness of the successful party’s costs.” I note also that Bartlett’s costs are not unreasonably high when considered against scale 2B costs and the principle in r 14.2(d) that an appropriate daily recovery rate should normally be two-thirds of the daily rate considered reasonable in relation to the proceeding or application.

[15]   I am not prepared to award Bartlett interest or the claimed administrative costs. The application before me was to set aside Bartlett’s statutory demand. In refusing that application the only issue reserved for later consideration was Bartlett’s entitlement to its legal costs. Bartlett’s entitlement to interest on amounts claimed in its statutory demand or to payment of administrative costs were not matters that were, or could be, determined in the proceeding or reserved for consideration in this ruling on costs.

Result

[16]   Bartlett is awarded costs of the proceeding in the amount of $20,224 and disbursements of $287.65.

O G Paulsen Associate Judge

Solicitors:

Martelli McKegg, Auckland Hesketh Henry, Auckland

2      Black v ASB Bank Ltd [2012] NZCA 384 at [80].