Oneheat Limited v MacNamara

[2021] NZHC 829

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-002237

[2021] NZHC 829

BETWEEN

ONEHEAT LIMITED

Applicant

AND

NOEL JAMES MACNAMARA

Respondent

Hearing:	On the papers
Counsel:	J S Langston for Applicant J D Ryan for Respondent
Judgment:	20 April 2021

COSTS JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by Associate Judge Andrew on 20 April 2021 at 4.00 pm

pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar

Date ..……………………..

ONEHEAT LTD v MACNAMARA [2021] NZHC 829 [20 April 2021]

Introduction

[1]                These are proceedings under s 290 of the Companies Act 1993 seeking to set aside a statutory demand.

[2]                The respondent withdrew the statutory demand in February 2021 and the application to set aside was subsequently dismissed by Moore J on 25 February 2021.

[3]                In accordance with the minute of Moore J of 25 February 2021, I am determining the question of costs on the papers.

[4]                The applicant, Oneheat Ltd, seeks indemnity costs in the total sum of $13,167 (excluding GST and disbursements) or in the alternative, increased costs, being scale 2B costs with a 30 per cent uplift (i.e. $12,428) plus GST and disbursements.

[5]                Mr MacNamara, the respondent, opposes any award of costs and contends that costs should lie where they fall.

Relevant legal principles

[6]                The principles for determining costs are well established. They include the following:

(a)The unsuccessful party to a proceeding should pay costs to the successful party on a scale basis (High Court Rules 14.2(a));

(b)A statutory demand that is withdrawn equates to discontinued proceeding for the purposes of costs and the presumption is that a discontinuing party will be liable for costs;1

(c)Indemnity costs are permitted where the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing or

1      Telecom NZ Ltd v Landmark Technologies Ltd HC Wellington, CIV-2008-485-2799, 26 August 2009 at [26].

defending a proceeding or a step in a proceeding (High Court Rule 14.6(4)(a));

(d)Increased costs are permitted, amongst other things, where:

(i)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by taking or pursuing an unnecessary step or an argument that lacks merit (High Court Rule 14.6(3)(b)(ii));

(ii)the party opposing costs has failed without reasonable justification, to accept an offer of settlement, whether in the form of an offer under r 14.10 or some other offer to settle or dispose of the proceeding (High Court Rule 14.6(3)(b)(v)).

Analysis and decision

[7]                I accept that the applicant, Oneheat Ltd, is entitled to an award of costs. It is the successful party and the presumption is that the discontinuing party,  namely    Mr MacNamara, will be liable for costs.

[8]                The critical issue is whether there should be an award of indemnity costs or increased costs as sought by Oneheat.

[9]                It is clear from the affidavits filed by One Heat, including those of Mr Patterson and Mr Darlow, that prior to the serving of the statutory demand, there was a genuine dispute as to the existence of the debt and that it appears that Mr MacNamara, in issuing the statutory demand, was attempting to side-step the consent orders of proceeding CIV-2020-404-404 and CIV-2020-404-646.

[10]            In my view there was no legitimate basis for the statutory demand and it was of course ultimately withdrawn. The proper course was to await the reconciling of the accounts by the Trustees. I also note that Mr MacNamara served the statutory demand at his own residential address on 4 November 2020.

[11]            I reject the application for indemnity costs. In my view, the high threshold for an award of indemnity costs has not been made out here, albeit the steps taken by  Mr MacNamara appear to have been ill-advised.

[12]            Instead, I find that Mr McNamara, the respondent, should pay increased costs as sought by Oneheat, namely scale 2B costs plus a 30 per cent uplift. Mr MacNamara, in my view, has contributed unnecessarily to the time and expense of the proceedings by pursuing steps that lack merit. Prior to filing of the application to set aside the statutory demand, the trustees of the MacNamara Family Trust invited Mr MacNamara to withdraw his demand. He did not. Instead, as Oneheat submits, he put Oneheat to the expense of having to file the application and attend to timetabling matters. A proper basis for an award of increased costs, as sought, has been made out.

Result

[13]            I order that the respondent, Mr MacNamara, is to pay costs to Oneheat Ltd on a 2B basis together with a 30 per cent uplift plus disbursements i.e. costs of $12,428 (excluding GST) plus disbursements as fixed by the Registrar.

Associate Judge P J Andrew