Toyota New Zealand Limited v Fretton & Gabriel Enterprises Limited t/a Budget Manukau

[2012] NZHC 850

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-7454 [2012] NZHC 850

UNDER  the Companies Act 1993

BETWEEN  TOYOTA NEW ZEALAND LIMITED Plaintiff

ANDFRETTON & GABRIEL ENTERPRISES LIMITED TRADING AS BUDGET MANUKAU

Defendant

(On the papers) Counsel:          SA Barker for plaintiff

EJL Werry for defendant

Judgment:      1 May 2012

JUDGMENT OF ASSOCIATE JUDGE FAIRE [for costs]

This judgment was delivered by me on 1 May 2012 at 4:30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Buddle Findlay, PO Box 2694, Wellington 6140

Atmore & Co, PO Box 147 483, Ponsonby

TOYOTA NEW ZEALAND LIMITED V FRETTON & GABRIEL ENTERPRISES LIMITED TRADING AS BUDGET MANUKAU HC AK CIV-2011-404-7454 [1 May 2012]

[1]      The plaintiff filed this proceeding and sought an order placing the defendant company into liquidation and appointing a liquidator.

[2]      No statement of defence was filed.

[3]      On   3 February   2012   the   matter   was   called   before  Associate   Judge Christiansen.   Counsel for the defendant submitted that the plaintiff had adequate security for the debt.   The Judge’s minute on the file records that Mr Werry had received late instructions and that the plaintiff had adequate security.  The response from the plaintiff was that counsel needed time to investigate the matter.   It was apparently on that basis the judge adjourned the proceeding until the companies list at 10:45am on 9 March 2012.

[4]      On 8 March 2012 a two-and-a-half page affidavit was sworn on behalf of the plaintiff.   It sets out the history of the transactions which led to the defendant’s indebtedness and, in particular, covered the question of security.

[5]      The matter was called before Associate Judge Christiansen on 9 March 2012. It is apparent that the defendant conceded that the plaintiff had no security.   The Judge’s minute records the position as follows:

Investigations show security doesn’t exist.  Defendant promises to pay in full plus costs.  Adjourned to the liquidation list at 10:46am on 16 March 2012 for payment by then in cleared funds.

[6]      The matter was called before me on 16 March 2012.  I was advised that the debt had been paid but that the parties were unable to resolve the question of costs. As a result, I struck out the proceedings.   I reserved the question of costs and directed the filing of memoranda. Those memoranda have been filed.

[7]      The plaintiff has itemised the costs sought in reliance on the following items contained in Schedule 3 of the High Court Rules that relate specifically to liquidation proceedings. They are the following:

SCHEDULE – 2B Costs

Costs on a scale 2B basis

Item 21 – Preparing and issuing statutory demand (0.2 x

$1,880 per day)

$376.00

Item  22  –  Preparing  statement  of  claim  and  other documents (0.6 x $1,880 per day)

$1,128.00

Item 23 – Appearance at hearing on 3 February 2012 (0.4 x $1,880 per day)

$752.00

Preparation of affidavit evidence under HCR 14.1(1)            $1,880.00

Item 4.17 – Appearance at mentions hearing or call over on 9 March 2012 (9.2 x $1880 per day)

$376.00

Item 4.17 – Appearance at mentions hearing or call over on 16 March 2012 (0.2 x $1880 per day)

$376.00

SUB TOTAL  $4,888.00

[8]      The one item that is not mentioned in the Third Schedule, but is contained the the plaintiff’s counsel’s memorandum, is the preparation of the affidavit to which I have made reference and in respect of which a claim of $1,880 is made.  That is the one item the defendants take issue with.

[9]      The preparation and filing of the affidavit is not specifically covered in the Third Schedule.   It must therefore be dealt with pursuant to Item 11 in the Third Schedule which provides:

11       Other steps in the proceeding not specifically mentioned.

The principles applicable in awarding costs

[10]      Rule 14.1 gives the Court a discretion to order costs in relation to a step taken in a proceeding. That discretion is generally to be exercised in accordance with the specific Rules contained in rr 14.2-14.10: Glaister v Amalgamated Dairies Ltd.[1]

[1] Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 [19].

In Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper

Hutt) Ltd[2] it was said of the costs regime contained in what is now rr 14.2-14.10 that:

[2] Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt) Ltd (2002)

16 PRNZ 662 at 668 (CA).

there is a strong implication that a Court is to apply the regime in the absence of some reason to the contrary

The test to be applied is entirely an objective and not a subjective one. The only reference which it is necessary to make towards actual costs is to be found in r

14.2(f), namely that an award of costs should not exceed the costs incurred by the party claiming the costs: Glaister v Amalgamated Dairies Ltd.[3]

[3] Glaister v Amalgamated Dairies Ltd, above n 1, at 610[14].

[11]     Rule 14.2 lists the principles applying to determination of costs. Subrule (a) affirms the principle that the losing party should pay the costs to the successful party. Subrule (b) requires that the costs reflect the complexity and significance of the proceedings and refers specifically, therefore, to the categorisation of a proceeding which is provided for in r 14.3. Subrule (c) requires a consideration of each step for which costs are sought and an application of the daily rate having regard to the appropriate band which is to be applied after a consideration of r 14.5(2) and the Third Schedule to the High Court Rules.

[12]     The affidavit that was filed was a necessary step to inform the court of the background to the indebtedness and why there was no particular security held by the plaintiff to which it could have recourse in satisfaction of the debt.  It is perfectly understandable, where a point is raised at a mention hearing of a liquidation, for a plaintiff to respond in the way the plaintiff did in this case.  Although there is no specific allowance for it in the Third Schedule, I must take account of the general

principle  specified  in  r 14.2  and  also  bear  in  mind  that  what  is  required  is  a

determination  of  the  reasonable  time  for  a  step  to  be  taken,  in  this  case  the preparation and filing of the affidavit concerned having regard to r 14.5.  I approach the question of costs in relation to the additional affidavit on that basis.   I have considered the affidavit and consider that a ¼-day allowance, or $470, is the appropriate allowance that should be made.  When that is added to the specific items that are referred to in the plaintiff’s schedule, excluding preparation of affidavit evidence, the amount that should be paid by the defendant for costs total $3,478. That is the appropriate quantum of costs that must be paid by the defendant in this case.  The plaintiff must give credit for that part of the costs that have already been paid by the defendant to it.  I order accordingly.

[13]     No  contest  was  raised  as  to  the  disbursements  claimed  in  the  sum  of

$1,207.15.  They all appear appropriate.  The defendant must pay disbursements in the sum of $1,207.15.

JA Faire

Associate Judge