Plumbco New Zealand Limited v Plumbco Commercial and Civil Limited

[2023] NZHC 1819

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-002550

[2023] NZHC 1819

BETWEEN

PLUMBCO NEW ZEALAND LIMITED

First Plaintiff

JASON PATRICK LALLY
Second Plaintiff

AND

PLUMBCO COMMERCIAL AND CIVIL LIMITED

First Defendant

MICHAEL JOHN GIBSON

Second Defendant

Hearing:	[On the Papers]
Appearances:	C R Andrews for Plaintiffs M D Branch for Defendants
Judgment:	12 July 2023

JUDGMENT OF EDWARDS J

[Costs and Interest]

This judgment was delivered by me on 12 July 2023 at 4.00pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

McVeagh Fleming, Auckland Harkness Henry, Auckland

PLUMBCO NEW ZEALAND LTD v PLUMBCO COMMERCIAL and CIVIL LTD [2023] NZHC 1819 [12 July 2023]

[1]    In my Judgment dated 31 March 2023, I allowed the plaintiffs’ claims and dismissed the defendants’ counterclaims (except for those admitted by the plaintiffs).1

[2]    The plaintiffs were the successful parties and as such were entitled to an award of costs. I also sought further memoranda on the claims for interest in relation to some of the sums awarded. This judgment deals with both issues.

Costs

[3]    The plaintiffs claim costs in the sum of $93,069.50.2 This has been calculated according to scale, on a category 2B band basis. The plaintiffs also claim disbursements in the sum of $50,739.09 which includes expert witness fees.

[4]    The first defendant raises two points in relation to the costs claimed. The first relates to discovery. The first defendant says that “as a result of a successful application for further and better discovery, the defendants were required to undertake a second inspection”. On this basis it is submitted that there should be a deduction of

$3,585 to cover that cost.

[5]    It appears from the Court file that the defendants’ application for further and better discovery was resolved before it was heard, and orders were made by consent. Those orders required the plaintiffs to file and serve a supplementary affidavit of documents. The consent orders further provided that if the parties were unable to agree on costs, the costs of the application were to be determined on the papers with each party filing a memorandum of costs not to exceed three pages. There is no record on file of any memoranda being filed.

[6]    The plaintiffs are the successful parties in the proceeding and costs follow the event. The first defendant was the unsuccessful party and is not entitled to recover its costs. Even if the costs of the defendant’s application had been determined at the time, the likely result, given the joint position, is that costs would have lay where they fell. Moreover, any costs awarded would only relate to the application, and not to the costs

1      Plumbco NZ Ltd v Plumbco Commercial and Civil Ltd [2023] NZHC 690.

2      Neither the claim for costs nor the opposition to quantum makes a distinction between the first and second plaintiffs’ costs. Any award is made on a joint and several basis.

of inspection. There is no basis upon which to reduce the costs otherwise payable to the plaintiffs.

[7]    The second point raised by the first defendant relates to the claim for expert expenses made by Mr Irwin. The total claimed is the sum of $27,433.

[8]    The first defendant submits that the costs summary provided in the invoices shows that a large portion of the invoices relate to general assistance with the litigation as the first plaintiff’s accountant, rather than as an expert witness. It is submitted that those non-expert costs are already covered within the schedule 2B steps and should not be allowed.

[9]    I agree with counsel for the plaintiff that r 14.12 of the High Court Rules 2016 allows for recovery of expert witness fees that go beyond the provision of an expert brief of evidence. Fees may be recoverable if they meet the criteria set out in r 14.12(2) and (3). That is, the disbursement must be: specific to the conduct of the proceeding; reasonably necessary for the conduct of the proceeding; reasonable in amount; and proportionate in the circumstances.

[10]   Copies of Mr Irwin’s invoices, and a more detailed breakdown, were provided to the Court. On review of that breakdown, I am satisfied that all of Mr Irwin’s attendances, including those which went beyond the preparation of an expert brief, meet the criteria set out in r 14.12. Accordingly, the award of disbursements shall include all of Mr Irwin’s fees.

[11]   I award costs to the plaintiffs in the sum of $93,069.50 plus disbursements in the sum of $50,739.09.

Interest

[12]   At [227] of the Judgment, I granted leave to the parties to file memoranda addressing claims for interest on the following sums:

(a)the first plaintiff’s claim of $39,413.67 for retentions;

(b)the second plaintiff’s claim of $93,750 for payments due under the Consultancy Agreement; and

(c)the first defendant’s (admitted) claim against the plaintiff for the sum of $55,559.29 for retentions.

[13]   Counsel for the first defendant submits that no interest should be awarded on these sums as there is non-compliance with the Interest on Money Claims Act 2016. Furthermore, counsel submits that to a significant degree the set-off available (presumably in relation to the respective claims for retentions) will negate any claim for interest.

[14]   Neither of these grounds provides reason not to award interest in this case. I say that for the following reasons:

(a)The first plaintiff’s claim for interest under the Interest on Money Claims Act was pleaded and claimed. The extent of the non- compliance was the failure to specify an interest rate in the prayer for relief. That omission has since been remedied by the memoranda filed after the hearing. There is no prejudice to the defendants.

(b)The fact that interest payments may be set-off against each other does not provide a reason not to award interest in the first place. Furthermore, any set-off would only be in relation to the retentions and does not address the second plaintiff’s claim for payments due under the Consultancy Agreement.

(c)The primary purpose of the Interest on Money Claims Act is to provide for the award of interest as compensation for a delay in payment of money claims in respect of which civil proceedings are commenced.3 Not awarding interest in the circumstances of this case would be contrary to the purposes of that Act.

3      Interest on Money Claims Act 2016, s 3.

[15]   As to the rate of interest, I agree with counsel for the plaintiffs’ that s 24 of the Act is engaged. This means the Court may not award interest on the specified claims pursuant to s 10 of the Interest on Money Claims Act but may award interest “at a rate not exceeding the rate prescribed and calculated in a manner (with or without compounding) that the Court directs.”4

[16] The prescribed maximum interest rate is five per cent.5 That is also the prescribed interest rate pursuant to s 87 of the Judicature Act 1908 which was in force at the time the contracts the subject of the proceeding were concluded. I am satisfied that interest should be awarded at five per cent per annum (without compounding) on each of the sums set out at [12] above.

Liquidation of the first defendant

[17]   In a memorandum filed on 7 July 2023, counsel for the plaintiff informed the Court that after memoranda on costs were exchanged, the first defendant placed itself into liquidation on 22 June 2023. This means that s 248(1)(c) of the Companies Act 1993 is engaged. That section prohibits the commencement or continuation of legal proceedings and the exercise or enforcement of a right or remedy over company property unless the liquidator agrees or the Court orders otherwise.

[18]   I am grateful to counsel for the plaintiffs for drawing my attention to this fact. I agree that s 248 does not preclude this Court from determining matters of cost or interest in this proceeding. This approach accords with that taken in other cases, including GLW Group Ltd v Lepionka and Company Investments Ltd.6

Result

[19]I make orders in the terms set out at [11] and [16] of this Judgment.

Edwards J

4 Interest on Money Claims Act 2016, s24(2).

5 Interest on Money Claims Regulations 2019, reg 4.

6 GLW Group Ltd v Lepionka and Company Investments Ltd [2018] NZHC 2445.