Robbies Bar and Bistro Limited v Robbies Bar and Bistro Franchising Limited

[2019] NZHC 868

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-245

[2019] NZHC 868

BETWEEN

ROBBIES BAR AND BISTRO LIMITED

Plaintiff

AND

ROBBIES BAR AND BISTRO FRANCHISING LIMITED

Defendant

Hearing:

(Determined on the Papers)

Counsel:

J Shingleton for Plaintiff

M S Henderson for Defendant

Judgment:

17 April 2019

JUDGMENT OF ASSOCIATE JUDGE LESTER

(Costs)

Background

[1]        By an application dated 14 December 2018, the defendant, Robbies Bar and Bistro Franchising Ltd, applied for an order that the plaintiff give security for costs.

[2]        In support of the proposition that there was reason to believe that the plaintiff would be unable to pay the costs of the defendant, the defendant referred to the fact that the plaintiff company had been removed from the Companies Register between 2009 and 2016.

[3]        On 26 November 2018, the defendant’s counsel raised the issue of security for costs with the plaintiff and referred to the plaintiff having been removed from the

ROBBIES BAR AND BISTRO LIMITED v ROBBIES BAR AND BISTRO FRANCHISING LIMITED [2019] NZHC 868 [17 April 2019].

Companies Register. It proposed that security be granted on a staged basis. The email concluded:

Should your client not be agreeable, then it should provide real evidence of the Plaintiff company’s ability to enter an award of costs in this litigation failing that an Application for Security for Costs will be made.

[4]        The response sent only 30 minutes later by the plaintiff’s solicitor was that no security was on offer.

[5]        Prior to the first call of the application for security on 5 February 2019, an offer of security was made by the plaintiff. Ultimately, the terms upon which security would be given were agreed and those arrangements put in place.

[6]        An order for security was made by consent on 21 March 2019, apparently an order being a precondition to allow the Registry to hold money to be paid in to Court.

[7]The defendant now seeks an award of costs in respect of that application.

Submissions in support of costs

[8]        Mr Henderson for the defendant, refers to the approach of 26 November 2018 requesting that security for costs be agreed, and the rebuffing of that approach. He says the interlocutory application was successful given that security was offered following the application being made, and he relies on r 14.8 of the High Court  Rules 2016 which provides that costs on interlocutory applications should be fixed when the application is determined and there are no special circumstances justifying otherwise. An increase over 2B costs was also sought. Further, costs on the application for costs are also sought.

Plaintiff’s submissions

[9]        Mr Shingleton for the plaintiff submitted that it cannot be said the plaintiff failed in respect of the interlocutory application and he submits that there was no determination of the application with the parties negotiating the outcome. If that submission is not accepted an increase over scale costs is opposed. In particular, there is opposition to any increase in costs being justified on time spent on negotiating the

terms of security which included the provision of personal guarantees which needed to be prepared.

Discussion

[10]McGechan on Procedure provides for:1

An interlocutory application may be “determined” either by decision of the Court or by another mechanism such as agreement of the parties or withdrawn by leave.

[11]      What Mr Singleton’s submissions do not address is why, given the pre-emptory dismissal of the approach about security there was an about face by the plaintiff to offer security after the application was filed and served.

[12]      The fact that the plaintiff company had been removed from the Companies Register for so many years did suggest the plaintiff would be unable to meet costs if it was unsuccessful. If that was not the case, then the first defendant’s invitation to the plaintiff to show that the plaintiff could meet the costs award should have been taken up.

[13]      Accordingly, in my view there is no reason why costs should not follow the event. In a practical sense the defendant has been successful. It had a proper basis for raising the issue of security for costs. That request was rebuffed. When the application was made the plaintiff offered security, the terms of which were then negotiated. In the absence of any attempt to explain why the initial request that the plaintiff provide security was unreasonable, in my view it is appropriate that there be an order of costs on a 2B basis in the defendant’s favour in terms of the schedule set out at para 11 of the defendant’s memorandum for costs dated 4 April 2019.

[14]      As to the request for an uplift in costs, the reality is that if the basis upon which the issue of security for costs was settled had been offered by the plaintiff before the application, the defendant would have incurred the costs of negotiating and documenting the terms of the guarantees that were eventually offered.

1      McGechan on Procedure (online loose-leaf ed, Thomson Reuters) at [HR 14.8.01], citing Ip v Ip

[2016] NZHC 528 at [12]; Winton v Winton [2018] NZHC 486 at [16] - [17].

[15]      The defendant seeks costs on the basis that the offer of security was not made earlier. I have accepted that submission. Had the offer of security been made after the letter of 26 November 2018 in terms that were ultimately acceptable to the first defendant, then as I have said, it would have incurred the costs which it now says justify an uplift. I note the defendant’s counsel in an email responding to the offer of security, noted the offer was silent on costs and said that costs involved “…need to be paid on say a 2B basis”. This was at a time when the terms of the guarantee offered by the plaintiff were still to be worked through. In my view, counsel’s instincts as to the basis upon which costs should be paid were correct.

[16]The uplift is declined.

[17]I agree an award of costs in respect of the application for costs in the sum of

$500 is also appropriate. There is no suggestion that the plaintiff made an offer in respect of costs on the security for costs application other than that they be reserved. It does not reflect the requirements of r 14.8 and the allowance of $500 for the issue of costs as sought by the defendant is confirmed.

Associate Judge Lester

Solicitors:

First Law Limited, Christchurch Corcoran French, Christchurch