Triple Eight Contractors Limited v Yeatman
[2021] NZHC 2352
•9 September 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-002242
[2021] NZHC 2352
BETWEEN TRIPLE EIGHT CONTRACTORS LIMITED
ApplicantAND
KERRY YEATMAN
Respondent
Hearing: (On the papers) Counsel:
Ming Pang for the Applicant
Nathan Tetzlaff for the Respondent
Judgment:
9 September 2021
[COSTS] JUDGMENT OF MOORE J
This judgment was delivered by me on 9 September 2021 at 2:00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar / Deputy Registrar Date:
TRIPLE EIGHT CONTRACTORS LIMITED v YEATMAN [2021] NZHC 2352 [9 September 2021]
Introduction
[1] Triple Eight Contractors Ltd (“Triple Eight”) made an application to set aside a statutory demand, set to be heard on 24 March 2021. The demand for $89,615.06 was made by the respondent, Mr Kerry Yeatman, in his capacity as trustee of the Holyoake Trust (“the Trust”), and was received by Triple Eight on 11 November 2020.
[2] Affidavits were filed by both parties in preparation for the hearing. However, on 8 March 2021 the statutory demand was withdrawn. Triple Eight now applies for costs.
Factual background
[3] Mr Anton Buenaventura is the director of Triple Eight. Triple Eight was involved in development works at Sir Keith Park School and Kelston Boys’ High School. The head contractor and project manager for the works was Asset Project Facilitators Ltd (“Asset Project”). Asset Project retained the services of sub-contractors, one of which was Commercial Projects Ltd (“Commercial Projects”), a company closely associated with Asset Project.
[4] Commercial Projects contracted Triple Eight to provide services for the development works. Triple Eight in turn hired individual sub-contractors to perform works on its behalf. One such sub-contractor was Kerry Yeatman, and his partner Mr Brendon Yeatman.1 Brendon Yeatman deposes2 both he and Kerry Yeatman are trustees of the Trust, and that the Trust operates a business which trades as ‘Yeatmans Construction Group’ or ‘Yeatmans’ (“Yeatmans”). Mr Buenaventura’s position is that he had no knowledge of Yeatmans or the Trust until invoices and the statutory demand were provided respectively.
[5] During August and September of 2019, invoices were sent to Triple Eight from Yeatmans. In his affidavit, Mr Buenaventura deposes he asked Kerry and Brendon Yeatman what these related to as no work had been performed at the time. He deposes
1 I will use Messrs Kerry and Brendon Yeatman’s first names for ease of reference. I mean no disrespect in doing so.
2 In his affirmation in support of Kerry’s notice of opposition to Triple Eight’s application to set aside the statutory demand.
that Kerry and Brendon Yeatman accepted the invoices were invalid payment claims. Brendon Yeatman denies any such acceptance was ever made. He says the invoices were for deposits for future works.
[6] On 20 November 2019, after a substantial amount of work had been completed, Brendon Yeatman sent Triple Eight an email with a summary of the work he and Kerry Yeatman claimed to have completed. The amount payable was recorded as
$62,590.99. Mr Buenaventura deposes that included in the summary was an entry for
$7,506.61 stating “Rewiring Variation for Rooms”.
[7] Mr Buenaventura deposes that no such work was ever agreed to or discussed. Brendon Yeatman disputes this and deposes Triple Eight was aware of the rewiring works.
[8] Regardless, Triple Eight accepted that other work included in the summary was performed and subsequently paid a total of $57,408.30 for such work. After payment had been made, Triple Eight became aware that it had incorrectly calculated the amount it considered payable, resulting in an overpayment of $3,450. It also advised Kerry and Brendon Yeatman that the payment for the “Rewiring Variation for Rooms” would be remitted once evidence of approval for the work had been received.
[9] In his affidavit in support of Triple Eight’s application to set aside the statutory demand, Mr Buenaventura deposes he does not know what could justify the
$89,615.06. Brendon Yeatman deposes the demand consists of unpaid invoices issued by Yeatmans to Triple Eight during September, October and November. Although the invoices were not particularised as part of the demand, Brendon Yeatman set them out in his affidavit.
Parties’ position as to costs
[10] Ms Pang, for the applicant, submits costs should be awarded to Triple Eight on a 2B basis with an overall uplift of 50 per cent. Further, that indemnity costs may be appropriate. Referring to Haines v Memelink,3 Ms Pang submits there has been a
3 Haines v Memelink [2019] NZHC 2169.
misuse of the statutory demand process, in that the demand was made in respect of a clearly disputed debt. Kerry Yeatman knew, or should have known, at all times that there was a genuine and substantial dispute over the debt. Further, the demand was ultimately withdrawn, causing unnecessary costs to Triple Eight.
[11] In the alternative, Ms Pang suggests an uplift of 50 per cent should be applied to those events relating to the successful application for substituted service. She submits Kerry Yeatman was attempting to avoid service of the application so that Triple Eight would not be able to comply with the 10 working day time limit; the consequence being he would no longer need to prove the basis of the statutory demand.
[12] Ms Pang includes a schedule of costs on a 2B basis and disbursements. It does not appear that any uplift has been applied. The 2B scale costs and disbursements total
$18,277.50.
[13] Mr Tetzlaff, for the respondent, accepts costs are payable, but submits they should be set at $7,949.50, taking issue with several of the steps set out in the applicant’s schedule of costs. He points out that counsel for Triple Eight does not identify which of the grounds under r 14.3 of the High Court Rules 2016 (“the Rules”) they rely on for increased costs.
[14] Mr Tetzlaff accepts a 2B scale costs award is appropriate on the interlocutory application for substituted service but opposes any uplift. He says that the finding that Kerry Yeatman was “avoiding service”4 was unsupported by the evidence and that the respondent will suffer the consequences naturally resulting from him choosing not to facilitate service or provide an address for service, being an award against him for scale costs.
[15] In regard to the originating application, Mr Tetzlaff submits that the respondent’s actions were reasonable. It was not until the applicant’s reply affidavit was sworn on 5 February 2021, that grounds of dispute too great for determination by the Court as part of the normal course of the statutory demand proceedings, emerged. The affidavit of 5 February 2021 includes allegations of forgery, perjury and criminal
4 Minute of Associate Judge Bell dated 24 November 2020.
activity. The respondent, accepting such allegations clearly passed the threshold for a dispute not capable of resolution in the proceeding, withdrew the claim.
[16] Mr Tetzlaff points out that by raising such allegations in the context of a proceeding where it was impossible to resolve them, the applicant “ensured the success of its application”. There exists a risk that the applicant will go on to benefit from making unsubstantiated allegations because of the presumption that costs would be made in its favour. He submits a reduction of 50 per cent to 2B scale costs is appropriate to account for the fact this case is not an interlocutory application, and as such the allegations are incapable of being determined.
The law
[17] Part 14 of the Rules governs the award of costs. Such awards are a matter of discretion but are governed by the principles under rr 14.2 to14.10. The long accepted starting point in any costs award is that “costs follow the event”5 and “the loser, and only loser pays”.6
[18] Rule 14.6 provides for circumstances where increased costs may be awarded. Such circumstances can be where the party opposing costs has contributed unnecessarily to the time or expense of a proceeding or step in it.
[19] As Associate Judge Gendall set out in Telecom New Zealand v Landmark Technologies Ltd, for the purposes of determining costs:7
“…a statutory demand that is withdrawn is commonly equated to a discontinued proceeding, requiring the withdrawing party to pay costs: Furnz Limited v Goode Industries Limited HC AK CIV-2008-404-1024 13 October 2008 at [6], r 15.23 of the High Court Rules and North Shore City Council v Local Government Commission 9 PRNZ 182. There is a presumption that a discontinuing party will be liable for costs.”
[20] This, of course, is subject to the Court’s general discretion. It may be that a discontinuing party will not be liable for costs in circumstances where the withdrawal
5 Crawford v Phillips [2018] NZCA 351 at [5]; Baker v Hodder [2019] NZCA 270 at [12].
6 Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [19].
7 Telecom New Zealand v Landmark Technologies Ltd (2009) 20 PRNZ 744 at [26].
was made because of the actions of the debtor party. By way of example, where part payment of the debt was made in exchange for withdrawal of the demand.
[21] I note also the general principles surrounding a statutory demand. There are strict timeframes around responding to a statutory demand which means it is incumbent on an issuer to ensure the demand is issued on a proper basis.8 A statutory demand is not to be invoked as a means of obtaining payment where a genuine dispute exists, and as such an issuer must take care to ensure the debt claimed in the demand is not the subject of any such dispute.9
Discussion
[22] Despite the fact this case has never been heard, its merits were brought into question by Triple Eight’s submission that the issuing of the statutory demand amounted to an abuse of process. Generally, a Court will not consider the merits of a case never heard unless the answer is clear and obvious.10 It is my view that the current case is far from clear and obvious. There are several factual disagreements between the parties, which I am not in a position to resolve or make determinations on, based on the minimal evidence and assertions before me and the absence of testing through cross-examination. Three of the most significant are set out below.
[23] First there is a dispute in relation to how and when payments for work done by Yeatmans should have been made. Triple Eight’s position was that prices to be charged by sub-contractors for work required by Triple Eight were based on its Bill of Quantities pricing and forwarded to the sub-contractor in the form of Excel spreadsheets. Mr Buenaventura deposes that any form of work not prescribed in the Bill of Quantities pricing sheet would require written approval by way of a Variation Price Request, with only Asset Project being able to approve a variation. No contractor or sub-contractor would be paid in advance or receive any deposits. All payments would be paid after completion of the work.
8 AAI Ltd v 92 Litchfield Street (in rec and in liq) [2016] NZHC 90 at [20] citing Rembrant Custodians Ltd v Pro-drill (Auckland) Ltd HC Auckland M337/IM03 13 June 2003.
9 At [20].
10 Furnz Ltd v Goode Industries Ltd HC AK CIV-2008-404-1024 13 October 2008 at [6].
[24] Kerry Yeatman’s position is different, as set out by Brendon Yeatman, who deposes the payment process described by Mr Buenaventura may have existed between Triple Eight, Commercial Projects and Asset Project, but was not part of the contract between Kerry and Brendon Yeatman, and Triple Eight. Instead, he says the contract was on a quotation basis, with a deposit payable, and the balance of the payment due on receipt unless otherwise agreed. Brendon Yeatman deposes that Triple Eight’s failure to pay the deposits Yeatmans required eventually became an urgent issue, and that as a result he raised it as an issue directly with Commercial Projects. It appears this, among other things, may have contributed to a breakdown in the relationship between Triple Eight and the other large contractors, although the evidence around this is unclear.
[25] There is no contract before me, nor evidence of the Bill of Quantities or any of the Excel spreadsheets that would have supposedly been forwarded to Kerry and Brendon Yeatman by Triple Eight. Making a determination as to the correct and agreed upon payment process would be unsupported by cogent uncontradicted evidence.
[26] Secondly, a dispute exists as to whether the rewiring work should have been done, and whether approval for it was given. Mr Buenaventura deposes that upon speaking to Kerry Yeatman and Brendon Yeatman about the rewiring work, they accepted they had not asked Triple Eight whether they could do the work, but said they were given approval by the electrical engineer responsible for the Kelston Boys’ High School project. The electrical engineer was supposedly working directly for Asset Project and Triple Eight requested that Yeatmans provide evidence of a Variation Price Request, upon which it would pay. No evidence was ever provided.
[27] Brendon Yeatman disagrees, deposing that after receiving instructions from Commercial Projects’ electrical engineer, he telephoned both Mr Buenaventura or his brother Nico Buenaventura,11 and Commercial Projects, to confirm that Yeatmans should proceed on Triple Eight’s behalf. He says Mr Buenaventura was closely involved in monitoring the rewiring works at all times.
11 Mr Nico Buenaventura worked alongside Mr Anton Buenaventura in managing Triple Eight.
[28] With no contemporaneous documentation to prove either party’s position, I am again thwarted in my ability to make a clear factual finding on this particular aspect of the dispute.
[29] Finally, I note that Mr Buenaventura and his brother make allegations of fraud, deposing in reply affidavits that Kerry and Brendon Yeatman intended to fabricate invoices so as to overcharge Triple Eight. Mr Nico Buenaventura provided an audio recording in which men he says are himself, Kerry Yeatman and Brendon Yeatman, are said to be talking about the mechanisms of such forgery. It is these criminal allegations that Mr Tetzlaff submits lead to the withdrawal of the demand.
[30] Once again, the evidence before me on this is scant and piecemeal. Allegations of criminal fraud are very serious and should only be made in cases where the evidence strongly supports such an assertion. It is wholly inappropriate to make such assertions without the proper evidential foundation. The legitimacy of the voice recording cannot be tested and neither Kerry Yeatman nor Brendon Yeatman has had the opportunity to respond as they are entitled to.
[31] As a result of these substantive, unresolvable issues, it is not appropriate for me to determine this costs application based on an assessment of its merits. I cannot make any findings on the evidence before me as to the terms of the contract between Triple Eight and Yeatmans. I also cannot say whether Kerry Yeatman issued the statutory demand knowing that the sum in question was disputed, or whether the sum included fraudulently fabricated invoices. As a result, it is impossible to reach any justifiable conclusion as to whether the demand was issued on a proper basis.
[32] In relation to the submissions regarding the substituted service, I consider that receiving scale costs is compensation enough for having to take the required steps. Substituted service is designed for circumstances where service cannot be completed and I do not consider an increase on scale costs to be appropriate.
[33] In reliance on the principle that a withdrawal of a statutory demand is akin to a discontinuance of a proceeding, and in light of the fact it would be unjust for me to
make factual findings in favour of either party on the issues present, I consider that 2B scale costs are appropriate. No increases, decreases or indemnity costs are appropriate.
[34]Ms Pang included in her submissions the following tables:
ITEM DESCRIPTION DAYS 37 Filing application and supporting affidavit 2 22 Filing urgent interlocutory application for substituted service 0.6 24 Preparation of written submissions in support of urgent application for substituted service 1.5 28 Obtaining Order for retrospective substituted service without appearance 0.3 29 Sealing Order for retrospective substituted service 0.2 11 Filing memorandum for mention/first call 0.4 12 Appearance at mention/first call 0.2 16 Filing memorandum for amending timetabling directions 0.4 41 Preparation by applicant of bundle for the hearing 0.6 16 Filing memorandum notifying withdrawal of statutory demand and timetabling for costs 0.4 29 Sealing order for costs 0.2 Total days 6.8 Recovery rate per day $2,390.00 Total Costs $16,252.00
DISBURSEMENTS Filing fee for statement of claim $540.00 Attempted service by process server $126.50 Filing fee for interlocutory application (substituted service on urgent basis) $250.00 Hearing fee paid $640.00 Sealing the order (retrospective substituted service) $50.00 Printing and photocopying (50 cents per page and three binders) $369.00
DISBURSEMENTS Sealing order for costs $50.00 Total disbursements $2,025.50
[35] Mr Tetzlaff takes issue with several elements of the above tables. In some cases, I agree.
[36] Step 24 is claimed for the preparation of written submissions in support of the application for urgent substituted service. Mr Tetzlaff submits submissions are not normally included in substituted service applications because the issues involved are simple and well-known. I tend to agree. All that is required is the application and an affidavit. The filing of submissions is not necessary. The element of urgency requires additional content, but not in my view, the 1.5 days claimed under step 24. I agree with Mr Tetzlaff that a more appropriate allocation is 0.4 days under step 11.
[37] Step 16 is used twice by the applicant; “Filing memorandum for amending timetabling directions” and “Filing memorandum notifying withdrawal of statutory demand and timetabling for costs”. Step 16 has a ‘B’ time allocation of 1 day. However, I note the applicant’s submissions record the ‘C’ time allocation of 0.4 days. Neither of the steps recorded as step 16 are specifically provided for in sch 3 of the Rules. However, step 36 allows for other steps not specifically mentioned to have costs awarded for at the Court’s discretion. I would consider these steps to be most similar to step 11, not step 16, and would allocate the ‘B’ time allocation of 0.4 days per step. I acknowledge this makes no practical difference to the amounts ultimately claimed.
[38] Triple Eight claims a disbursement of $369 for printing, photocopying and binders. In previous cases, such expenses have been allowed where receipts or invoices have been provided.12 Here there is no supporting documentation. Further, 50 cents per page is unreasonable. The New Zealand Law Society charges 30 cents per page for photocopying done by their staff. This Court has previously considered 20 cents per page to be the market value, and reasonable for photocopying and printing
12 Zheng v Dheng [2021] NZCA 190 at [17]-[19].
done by the claiming firm itself.13 The lack of detail provided around the number of pages and the cost of the individual binders means it is challenging to work out a reasonable value for this disbursement. However, the retail price for binders is approximately $4 each. That would leave $357 worth of photocopying and printing. Dividing that sum by 50 cents results in a total of 714 pages of printing and photocopying. Applying the market rate of 20 cents per page, I consider $142.80 is appropriate for the printing and photocopying, with an additional $12 for the binders. I allow this claim, but for $154.80.
[39] The disbursement of $640 for the hearing fee paid can be refunded. That claim is not allowed.
Result
[40] Triple Eight is awarded 2B costs and disbursements totalling $14,794.30, in accordance with the tables below.
ITEM DESCRIPTION DAYS 37 Filing application and supporting affidavit 2 22 Filing urgent interlocutory application for substituted service 0.6 11 Filing submissions in support of urgent application for substituted service 0.4 28 Obtaining Order for retrospective substituted service without appearance 0.3 29 Sealing Order for retrospective substituted service 0.2 11 Filing memorandum for mention/first call 0.4 12 Appearance at mention/first call 0.2 11 Filing memorandum for amending timetabling directions 0.4 41 Preparation by applicant of bundle for the hearing 0.6 11 Filing memorandum notifying withdrawal of statutory demand and timetabling for costs 0.4
13 Northwest Developments Ltd v Zhang [2019] NZHC 2146 at [29] and [30].
ITEM DESCRIPTION DAYS 29 Sealing order for costs 0.2 Total days 5.7 Recovery rate per day $2,390.00 Total Costs $13,623.00
DISBURSEMENTS Filing fee for statement of claim $540.00 Attempted service by process server $126.50 Filing fee for interlocutory application (substituted service on urgent basis) $250.00 Sealing the order (retrospective substituted service) $50.00 Printing and photocopying (20 cents per page and three binders) $154.80 Sealing order for costs $50.00 Total disbursements $1,171.30
Moore J
Solicitors:
Ms Pang, Auckland Mr Tetzlaff, Auckland
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