Phi Construction Limited v Insight Plumbing (NZ) Limited
[2021] NZHC 1847
•21 July 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-402-2790
[2021] NZHC 1847
BETWEEN PHI CONSTRUCTION LIMITED
Applicant
AND
INSIGHT PLUMBING (NZ) LIMITED
Respondent
Hearing: On the papers Appearances:
W McCartney for applicant
C Patterson and E Grove for respondent
Judgment:
21 July 2021
JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
[Costs]
This judgment was delivered by me on 21 July 2021 at 4.00 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
[1] This is a costs application by the applicant, PHI Construction Ltd (PHI). It is opposed by the respondent, Insight Plumbing (NZ) Ltd (IPL). The background is unusual.
[2] PHI applied for an order pursuant to s 290 of the Companies Act 1993 setting aside a statutory demand dated 5 December 2019 served on it by IPL. I heard the
PHI CONSTRUCTION LIMITED v INSIGHT PLUMBING (NZ) LIMITED [2021] NZHC 1847 [21 July 2021]
application on 23 July 2020. My judgment in which I set aside the statutory demand was delivered on 5 August 2020.1
[3] By joint memorandum dated 10 August 2020, counsel for both parties raised with me what they regarded as an error in my judgment and jointly sought a recall of the same so that the error could be addressed. Here is how counsel raised the issue in their memorandum:
2.At paragraph 39 of the Judgment, His Honour recorded that, in respect of the Wellpark and Curran Street payment claims that were emailed by the Respondent to the Applicant on 1 May 2019:
[39] As Mr Peat for PHI submits, that at least raises a question of whether, mistakenly or otherwise, these forms have been added to the purported copies of the claims emailed by Insight to PHI that are in evidence.
3.It appears that there has been a misapprehension of, or miscommunication of, Counsel for the Applicant’s submissions in relation to the ‘Wellpark Avenue’ and ‘Curran Street’ payment claims (identified at paragraph [27(E)] and [27(F)] of the Judgment).
4.The submission (concerning the possibility of an after-the-fact inadvertent or incorrect inclusion of a notice form) was intended to be in respect of the notice form that originally accompanied the statutory demand, rather than those which were included with the payment claims emailed on 1 May 2019.
5.The Applicant accepts that, in respect of the ‘Wellpark Avenue’ and ‘Curren [sic] Street’ payment claims sent by email on 1 May, they included the notice forms as produced by Mr Durrant as exhibits to his affidavit.
6.To clarify, the Applicant’s position in respect of the ‘Wellpark Avenue’ and ‘Curren [sic] Street’ payment claim is that there is no money owing under either claim, and the statutory demand in respect of those claims should therefore be set aside: see paragraphs 11(a) and 11(b) of the Applicant’s written synopsis of submissions.
7.Counsel respectfully seek, by consent, that to the extent there has been a miscommunication of and/or misapprehension as to the Applicant’s submission in relating to the ‘Wellpark Avenue; and ‘Curran Street’ payment claims, and that has impacted upon the contents of the judgment, the Judgment be recalled and to the extent considered necessary by His Honour if at all, corrected.
[Footnote omitted]
1 PHI Construction Ltd v Insight Plumbing (NZ) Ltd [2020] NZHC 1944.
[4] Counsel’s memorandum of 10 August 2020 did not reach me until 18 November 2020. On receipt of this I directed the Registrar to arrange a teleconference, which took place on 23 November 2020. Following that conference, I issued a minute identifying the sole issue as being whether the circumstances would justify a recall. One point was that whilst the statutory demand was for a total of
$115,864.32 the issue in respect of which counsel said I had dealt with under a misapprehension concerned only $8,774.20. I observed in my minute that it would be uneconomic for these two commercial entities to pursue an appeal or a resumed hearing for such an amount, though I acknowledged that the issue might affect costs. By that I meant that if the issue in question resulted in the outcome of the proceeding being reversed and IPL’s statutory demand being upheld then that might result in a different costs outcome. I therefore invited counsel to come back by memorandum by 30 November 2020 to let me have their views as to the most practical approach.
[5] I did not receive memoranda from counsel until early this year. In their memoranda counsel informed me that they have been unable to reach any agreement. Both suggested a hearing on the papers in relation to whether or not I was prepared to recall my original judgement.
[6] In response to this I issued a short minute dated 12 February 2021 in which I directed an exchange of submissions on the recall point.
[7] Having received counsel’s submissions as to this, I issued a judgment dated 14 April 2021 in which I declined to recall my earlier judgment.2
[8] That left only the issue of costs to be dealt with. At the conclusion of my judgment I once again invited counsel to confer as to costs but indicated that if they were unable to agree then I would deal with costs on the papers on the basis of my original judgment.
[9] Again, counsel have not been able to sort out the costs issue — as I had expected they would — and there has been a further exchange of memoranda as to costs.
2 PHI Construction Ltd v Insight Plumbing (NZ) Ltd [2021] NZHC 793.
[10] Mr McCartney in his memorandum dated 29 June 2021 for the applicant seeks costs in both the application for an order setting aside the statutory demand and the application for a recall. He submits that in the case of the former PHI should recover costs on a 2B basis given that it was wholly successful. These he calculates at
$14,453.55 (inclusive of disbursements). Insofar as the unsuccessful application for a recall is concerned, Mr McCartney again seeks costs on a 2B basis, but this time with a 50 per cent uplift on account of two factors:
(a)first, he submits that the application was doomed to failure because the established law was clear, and this application did not fall into any of the three recognised categories of cases where a recall is available; and
(b)second, because prior to the application for a recall, PHI’s advisers had written to IPL’s advisers proposing in effect that to avoid additional costs in connection with an issue involving only $8,774.20, that amount be set off against whatever costs award was made in favour of PHI, but without prejudice to the applicant’s contention that it does not owe that amount and therefore to its entitlement to argue that in any subsequent litigation. That proposal was apparently ignored or rejected.
[11] Costs on a 2B basis in respect of the application in respect of the application for a recall are calculated at $6,214, and with a 50 per cent increase these would be
$9,321.
[12] Mr Patterson for IPL responded to the plaintiff’s costs application by memorandum dated 9 July 2021.
[13] With the exception of one point to which I will need to return, Mr Paterson’s submissions on behalf of IPL relating to the application to set aside the statutory demand effectively repeat the submissions made by the company in support of the application to recall the judgment.
[14]I agree with Mr McCartney that the only principled approach open to the Court
— having declined to recall the judgment — is to assess costs on the basis of the
outcome in the original judgment, that is to say that PHI’s application to set aside the statutory demand was wholly successful.
[15] That approach is not inconsistent with the joint position of the parties that an aspect of IPL’s submission was misconstrued in the judgment because, as Mr McCartney says, even if IPL’s position had not been misconstrued, the outcome may not have been any different.
[16] In the penultimate paragraph of my original judgment I recorded my preliminary view that PHI was entitled to scale costs together with disbursements, and nothing in counsel’s most recent exchange of memoranda as to costs have caused me to alter that view.3
[17] Mr Patterson does however raise a valid point relating to one aspect of the cost calculation, namely the claim in relation to the joint memorandum for the first call of the proceeding on 20 February 2020. As I understand it that memorandum was drafted jointly by counsel then acting in the matter and accordingly, I allow only 50 per cent of the costs associated with that. That will reduce the amount of the claim for that item from $956 to $478 and therefore the total amount of costs and disbursements claimable from $14,453.55 to $13,975.55.
[18] In relation to the application for a costs award in connection with the recall, Mr Patterson emphasises that this was originally a joint application (if it is appropriate to call it that, when in fact what the Court received was a memorandum).
[19] In effect both parties concluded that an aspect of IPL’s case had been misunderstood and invited the Court to recall the judgment and readdress that point. I declined to do so, and it is not helpful to speculate what the outcome would have been had the judgment been recalled and the matter being reconsidered.
[20] However, as Mr Patterson submits, what we are dealing with here is an application that was initiated by both parties.
3 PHI Construction Ltd v Insight Plumbing (NZ) Ltd, above n 1, at [43].
[21] That being so, it appears to me that Mr Patterson’s submission that costs should be left to lie where they have fallen is unanswerable.
[22] Certainly, in my view, that is the outcome that will achieve substantial justice between the parties.
[23] The applicant company will have its costs in connection with the application for an order setting the statutory demand aside in the total sum of $13,975.55 (inclusive of disbursements).
[24] There will be no costs award in relation to the joint application for a recall of the judgment.
Associate Judge Johnston
Solicitors:
Duncan King Law, Auckland for applicant
Lateral Lawyers Ltd, Auckland for respondent
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