Optimizer HQ Limited v Reached Limited

[2015] NZHC 1305

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-1080 [2015] NZHC 1305

UNDER	THE COMPANIES ACT 1993
AND IN THE MATTER	of an application for orders to set aside a statutory demand
BETWEEN	OPTIMIZER HQ LIMITED Applicant
AND	REACHED LIMITED Respondent

Hearing:	5 June 2015
Appearances:	Ms M Moon for applicant Ms E Moore for respondent
Judgment:	5 June 2015

ORAL JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE (ON COSTS)

OPTIMIZER HQ LIMITED v REACHED LIMITED [2015] NZHC 1305 [5 June 2015]

[1]    The applicant filed an originating application seeking orders pursuant to s 90 of the Companies Act 1993 setting aside the statutory demand which the respondent served on the applicant and which was dated 29 April 2015.  The statutory demand was served on 1 May 2015.   The applicant has filed evidence in support of the application.  The respondent has filed a notice of appearance and it was pursuant to that document that Ms Moore appeared today and sought to be heard on the question of costs.

[2]    The applicant seeks costs on a 2B basis and disbursements to be fixed by the

Registrar.

[3]    Ms Moore submits that in this case there ought not to be an order for costs but that costs should lie where they fall.   She says that the reason for that is that the applicant did not provide a sufficiently detailed explanation of the matters that it asserted gave rise to a dispute in this proceeding.  Ms Moore, of course, accepted that if there was a substantial dispute it would not have been appropriate for the respondent to have proceeded with the statutory demand.

[4]    Ms Moon however points to the fact that even before the statutory demand was served the evidence shows that the solicitors acting for the applicant have set out the nature of the dispute between the parties.  In fact the letter setting out those respects that were in dispute was sent to the debt collector acting for the respondent on or about 21 April 2015.  Since the application has been served an affirmation has been filed providing additional details of the dispute.

[5]    The general principle is that if a statutory demand is withdrawn before the hearing of it the withdrawing party will be required to take costs of the application to set  aside;  Furnz  Limited  v  Goode  Industries.1   That  is  to  say  the  position  is assimilated  to  that  where a party discontinues  a proceeding.    The costs  though remain in the discretion of the Court and it may be that there are compelling reasons

why the usual approach to fixing costs, which I have just set out, should be departed from.

[6]    The usual position concerning the issue of costs requires the Court to take into account the principle that so far as possible the determination of costs should be predictable and expeditious.2    The purpose of enacting the costs rules was to bring some certainty to the situation so that the need to dispute costs would not be a standard requirement and would be limited to unusual or exceptional cases.

[7]    There may be cases where a party issuing a statutory demand can justifiably point to circumstances which require that no costs order be made or, indeed, that a costs order be made in favour of the respondent in circumstances where the creditor is not proceeding with the statutory demand.  If, for example, a statutory demand had been served on a company and there was a manifest error, such as a mistake as to the name of the true debtor so that the applicant was actually cited as the respondent, then an applicant standing by would hardly complain if the respondent in ignorance of the true circumstances proceeded with the statutory demand.

[8]    In  this  case  there  was  at  least  one  communication  from  the  respondent indicating that the proceeding was in dispute.  In the face of those communications it would behove the respondent to proceed with caution.  As I understand it the point that is now taken for the respondent is that the supposed dispute over the debt was not described in a sufficiently particularised way to enable it to come to a view as to whether it would be justified in proceeding with the statutory demand.

[9]    On reviewing the correspondence on the file it is not clear to me that that contention  is  correct.    I do  not  consider  that  it  is  manifest  on  the  face  of  the correspondence that has been exchanged that there is insufficient particularisation or that subsequently the nature of the dispute emerged for the first time when affidavit evidence was provided.   The respondent, in my view, took the risk of proceeding with the statutory demand in this case.  It is now, perhaps on more mature reflection, accepted that the statutory demand cannot be maintained.  In my view it ought to pay

costs and there will be an order that it does so on a 2B basis together with a further order that the respondent is to pay disbursements as fixed by the Registrar.

[10]  The substantive order which is sought in paragraph 1(a) of the originating application dated 14 May 2015 is granted.

[11]  On the question of costs Ms Moore raises the additional issue that the amount sought on a 2B basis for the memorandum which counsel provided for the applicant is 0.4 of a day.   She submitted that that would be excessive in the circumstances. Ms Moon did not accept that proposition.

[12]  The memorandum itself is a very brief three paragraph document that has annexed to it a calculation of costs which is an additional page.  In general, it would not be correct in principle for a party to be given costs for the purpose of calculating or arguing costs, therefore the real question is whether 0.4 of a day is out of scale with the three paragraph memorandum which is filed for the applicant.  I consider that it is and that a more just provision would be made for that category of costs if costs on a 2A basis were ordered in respect of that item of the applicant’s cost

calculation.

J P Doogue

Associate Judge