Tubbs v Ruby 2005 Limited HC Timaru CIV-2009-476-000615

[2011] NZHC 1701

IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY

CIV-2009-476-000615

BETWEEN  STEPHEN JOHN TUBBS AND COLIN ANTHONY LATHAN GOWER (AS RECEIVERS OF WAIMATE TIMBER PROCESSING LIMITED)

First Plaintiff

ANDANZ NATIONAL BANK LIMITED Second Plaintiff

ANDRUBY 2005 LIMITED Defendant

Judgment:      28 November 2011

JUDGMENT OF CHISHOLM J AS TO COSTS

[1]      When delivering judgment for the defendant in this matter[1]  I expressed a preliminary view that the defendant should receive 2B costs.  However, if agreement could not be reached, counsel were invited to submit memoranda.  Agreement has not been reached.

[1] Tubbs & Ors v Ruby 2005 Limited CIV-2009-476-000615 27 July 2011

[2]      The defendant seeks costs and disbursements totalling $27,192.  On the other hand, the defendants contend that the proper award would be a net payment of

$12,530 by the plaintiffs to the defendant.

Background

[3]      The first plaintiffs are the receivers of Waimate Timber Processing Limited

(Waimate).  They sought an order that the proceeds of timber sales during a specified period be paid to them on the basis that those proceeds were either secured to ANZ

TUBBS V RUBY 2005 LIMITED HC TIM CIV-2009-476-000615 28 November 2011

National Bank by virtue of a security agreement or as the result of a constructive trust. The defendant maintained that it was entitled to the proceeds.

[4]      After the proceeding was issued the first plaintiffs (the second plaintiff not having  been  joined  at  that  stage)  sought  an  interim  injunction  to  prevent  the defendant from dissipating the proceeds of the timber sales.  This application was opposed by the defendant.  In a judgment issued on 26 February 2010[2].0 French J found that there was no serious question to be tried and dismissed the plaintiff’s application.

[2] Tubbs & Anor v Ruby 2005 Limited HC CIV-2009-476-000615

[5]      When dismissing the application French J expressed a provisional view that the plaintiffs  should  pay costs  on  a  2B  basis  to  the defendant.    She  indicated, however, that if agreement could not be reached counsel would need to submit memoranda so that the matter could be resolved by the Court.  For reasons that will become apparent, the issue of costs in relation to the interlocutory application before French J was never resolved.

[6]      The plaintiff appealed to the Court of Appeal.  While most of the arguments advanced by the first appellant failed, the Court of Appeal decided, in a judgment delivered on 5 August 2010,[3]  that the plaintiff had an arguable case in respect of timber sales during October 2009.  An interim injunction was granted pending the substantive hearing before this Court.  When arriving at that conclusion the Court of Appeal noted that there had been no discovery or affidavit from the former manger of Waimate (whose actions lay at the heart of the dispute).[4]   Although the defendant was ordered to pay the plaintiff’s costs in the Court of Appeal, there was no mention of costs in the High Court.

[3] Tubbs & Anor v Ruby 2005 Limited [2010] NZCA 353

[4] At [39]

[7]      In due course I heard the substantive application and found for the defendant. No further documentation or evidence was adduced.   In other words, the evidence before the Court was the same as that before the Court of Appeal (and French J), although  an  amended  statement  of  claim  had  been  filed  before  the  substantive

hearing.  In effect I arrived at the same conclusion as French J.

[8]      For the defendant Mr Lester submits that the judgment of French J has been effectively vindicated by the substantive judgment that I delivered.  Given that costs were left at large by French J and were not raised directly in the appeal to the Court of Appeal, the defendant seeks costs of $7426 in relation to the hearing before French J.

[9]      In relation to the substantive hearing the defendant seeks a further $19,552 for costs plus disbursements of $214, totalling $19,766.  This includes an uplift of

100% (amounting to $5640) for what the defendant claims were unnecessary attendances after the defendant had sent the first plaintiff a Calderbank letter on

6 May 2011.    In that letter the defendant offered to accept $100,000.   In the end result it recovered a significantly larger amount.

Plaintiffs’ response

[10]   The plaintiffs contend that they should receive costs of $4324 plus disbursements of $600, making a total of $4924, in relation to the hearing before French J.  This is on the basis that their successful appeal to the Court of Appeal overturned the decision of French J and that there should be an award of costs in their favour to reflect that outcome.  They note that the notice of appeal to the Court of Appeal sought an order granting the relief that had originally been sought in the High Court which included costs.

[11]     In relation to the substantive hearing they concede that there should be an order for the payment of costs and disbursements totalling $17,454.  The difference between their calculation of costs and the award sought by the defendant reflects that they have reduced the allowance for discovery and also reduced the disbursements. Whereas the defendant claimed 1.5 days for discovery ($2820) and $214 for disbursements, the plaintiffs have allowed $600 and $122 respectively.

[12]     To the extent that both parties are seeking costs in relation to the interlocutory hearing before French J, they are at least implicitly acknowledging that costs in relation to that hearing are at large.  Having considered the competing submissions I have concluded that the appropriate outcome is for the plaintiffs to receive costs and disbursements totalling $4924 in relation to the interlocutory hearing.

[13]     The preliminary indication by French J that the defendant should receive costs on a 2B basis reflected the outcome that she had reached, and the underlying principle  that  costs  should  follow  the  event.    However,  the  Court  of  Appeal overturned that decision, but without resolving the issue of costs in the High Court. There being no order of this Court as to costs in relation to the interlocutory hearing it is necessary for this Court to make an order.

[14]     The plaintiffs are entitled to costs for three reasons:  first, in light of the Court of Appeal decision the interlocutory outcome in this Court should have favoured the plaintiffs; secondly, there is no reason to depart from the principle that costs should follow the event; thirdly, the outcome of the substantive hearing has no direct relevance because it involved a different phase of the process.

[15]    In relation to the substantive hearing I am satisfied from the additional information provided by Mr Lester in relation to discovery that the allowance for a proceeding categorised as 2B (1.5 days) should apply.   I am also satisfied that the defendant’s claim for disbursements is correct and that the uplift arising from the Calderbank offer is appropriate.   The defendant is therefore entitled to costs of

$19,552 and disbursements of $214, making a total of $19,766.

[16]     Once  allowance  is  made  for  the  costs  payable  to  the  plaintiffs  the  net payment to the defendant will be $14,842.

[17]     The plaintiffs are to pay costs and disbursements to the defendant in the sum of $14,842.

Solicitors:
Lane Neave Lawyers, PO Box 13149, Christchurch 8141

Meares Williams, PO Box 660, Christchurch 8140