Samy Trustee Limited v Pauanui Dream Estate Limited

[2016] NZHC 2393

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-4219 [2016] NZHC 2393

UNDER

Section 91 of the Companies Act 1993

BETWEEN

SAMY TRUSTEE LIMITED Plaintiff

AND

PAUANUI DREAM ESTATE LIMITED First Defendant

ANTHONY DAVID BANBROOK AS TRUSTEE OF THE PECUNIA IN POSTERUM INSTITUTUM TRUST Second Defendant

GREGORY ABE NEEDHAM Third Defendant

RICHARD ALEXANDER NEEDHAM Fourth Defendant

Hearing:	On the papers
Counsel:	E J Werry for Plaintiff A D Banbrook for Defendants
Judgment:	7 October 2016

JUDGMENT OF FOGARTY J

This judgment was delivered by Justice Fogarty

On 7 October 2016 at 4.00pm Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

Date:…………………………

Solicitors:

Parshotam & Co, Auckland

Brookfields, Auckland

SAMY TRUSTEE LTD v PAUANUI DREAM ESTATE LIMITED & ORS [2016] NZHC 2393 [7 October 2016]

[1]      On 5 April last, judgment was entered for the plaintiff.   As to costs, the judgment recorded that the plaintiff is entitled to costs against the first, third and fourth defendants, and against Mr Banbrook as second defendant, but limited to the assets of the PPI Trust.

[2]      The Court has received submissions from the plaintiff and from the third defendant, but not from Mr Banbrook.  In the case of Mr Banbrook, the judgment awards costs but limited to the assets of the PPI Trust.

[3]      The plaintiff seeks costs on a 2B basis, calculated in the sum of $40,927, coupled with a claim for increased costs on the basis that the defendant has contributed unnecessarily to the time or expense by taking an argument that lacks merit, thereby seeking an uplift of 50 per cent on the aforesaid $40,927, making a total of $61,390.50. The plaintiff seeks disbursements of $8,200.

[4]      The submissions by counsel for the third defendant contend that the plaintiff is wrongly categorising the case as 2B and it should be 2A, for the following steps:

(a)      preparation of briefs of evidence;

(b)      preparation of issues and common bundles; and

(c)      preparation for hearing.

[5]      The Court received a general submission:

It is submitted that when the scope of this proceeding is compared with the ordinary run of cases in the High Court, band A should be applied to the steps identified. The net result of that is:

(a)       the allowance for preparation of briefs of evidence is 1.5 days rather than 2.5;

(b)      the allowance for the plaintiff’s preparation of the list of  issues, authorities and common bundle is 1.5 days rather than 2.5; and

(c)       the allowance for the plaintiff’s preparation for hearing is 2 days

rather than 3.

[6]      I do not agree.  This case required careful attention to the evidence and to the issues, as is demonstrated by the 56 paragraph judgment at a little over 15 pages. As a trial Judge, it was certainly by no means clear to me at the outset that the defence was hopeless.  I made the finding that it was after the benefit of examination of the evidence.

[7]      In   respect   of   the   increased   costs   argument,   the   plaintiff   relies   on r 14.6(3)(b)(ii).  Essentially that the defendants have contributed unnecessarily to the time or expense by taking or pursuing an unnecessary steps or an argument that lacks merit.

[8]      The response of the third defendant is that every defendant is entitled to defend a claim.  The defendants argue that increased costs should only sound if the defence has been run in an unreasonable fashion.  Counsel for the defendants invite the Court to compare r 14.6(3)(b)(ii) with r 14.6(4)(a).  But that latter rule is directed to an examination as to whether a party should pay indemnity costs.   It is not directed to whether or not a party should pay increased costs.  The latter rule justifies increased costs where the Court is satisfied that the argument being pursued lacks merit.  For this Court to find that the defence was hopeless includes the proposition that the defence lacked merit.  Therefore it follows that there is a basis of jurisdiction under r 14.6(3) for the award of increased costs.

[9]      The principle ground of the defence was that the Memorandum of Agreement (MOA) was merely a preliminary agreement.  Read on its own, it might be capable of having such characterisation.  But read against the commercial exigencies at the time of the related company PMEL and the provision in the MOA for a specific payment of $200,000 by 9 March and the balance at the latest by 16 April, recorded to be the day of “full and final settlement”, it became obvious as a matter of fact that it was not a preliminary agreement.  See paragraph [42] of the judgment.  So this was the case in which the plaintiff succeeded by establishing the commercial context of the execution of the subject agreement.  It was essential for the plaintiff ’s success that it establish the context carefully and prove this.  It did.  It should not have had to.   There was no disputing the indebtedness of PMEL, and its urgent need for money, by the end of the trial.

[10]     Accordingly, the plaintiff succeeds in its arguments on costs on a 2B basis with an uplift of 50 per cent based on the pursuit of a meritless defence and is awarded costs in the sum of $61,390.50, together with disbursements of $8,200.  The costs  were dealt  with  on  the papers.   There is  no  order for costs  on the costs

argument.

Fogarty J