Waipareira Investments Limited v Grant

[2013] NZHC 2867

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-003477 [2013] NZHC 2867

UNDER

Section 3 of the Declaratory Judgment Act

1908 and Part 18 of the High Court Rules

IN THE MATTER

of the liquidation of WEST HARBOUR HOLDINGS LIMITED (IN LIQUIDATION)

BETWEEN

WAIPAREIRA INVESTMENTS LIMITED

Plaintiff

AND

DAMIEN GRANT and KIRSTEN SMITH Defendants

Hearing:	21 October 2013
Counsel:	TJG Allan for Plaintiff DE Smyth for Defendants
Judgment:	31 October 2013

COSTS JUDGMENT OF ASHER J

This judgment was delivered by me on Thursday, 31 October 2013 at 11.00 am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Grove Darlow & partners, Auckland. Waterstone Insolvency, Auckland.

WAIPAREIRA INVESTMENTS LTD v GRANT [2013] NZHC 2867 [31 October 2013]

[1]      This is a file set down on the fast track, and the substantive case is to be heard on Monday, 4 November 2013.  The issue in the proceedings is whether the actions of lawyers at a meeting acting for the applicants were sufficient to constitute a  surrender  of  mortgage  securities  under  the  Companies  Act  1993  and  the Companies Act Liquidation Regulations 1994.   Given that the statement of claim was filed on 16 July 2013, the case has proceeded to hearing with remarkable and commendable speed.

[2]      On 2 October 2013, the defendants/applicants  sought discovery from  the plaintiff/respondent.  That application was opposed.  In a minute of 7 October 2013 a fixture was allocated for that discovery application by Woodhouse J, who noted there was a question as to whether the defendants were entitled to bring the application. He observed that the defendants had allowed over two months to elapse after having given notice of the possibility of discovery before bringing the application.

[3]      The documents sought by the defendants were aimed at obtaining material that would prove that the solicitors involved at a crucial meeting were acting under the authority of the plaintiff.  The documents relating to authority were prima facie privileged.  If there was an issue as to the authority of the solicitors at the meeting, then there might well have been an argument that the documents were relevant and that privilege was waived by the claims of lack of authority.  There was also a claim for discovery of the names of certain parties to agreements for sale and purchase.

[4]      The discovery application was set down to be heard on 21 October 2013.  On that day, after a telephone conference and some discussion between myself and counsel on the day before, the application was withdrawn.

[5]      The parties now argue about costs.  Mr Allan for the plaintiff seeks costs with an uplift of 50 per cent.   He argues that the defendants unreasonably delayed the application, and that it plainly had no merit.

[6]      Concerning the argument that the documents were relevant to authority, I am satisfied that at no point could it have been reasonably assumed that it was one of the defendants’ answers to the plaintiff’s allegations that their solicitors had no authority

at the relevant meeting.  In particular in a letter of 5 September 2013 Grove Darlow recorded that the solicitor in question, Mr Morrison, had ostensible authority.  The applicants’ claim would have failed.

[7]      I am also satisfied that the names of the parties to the agreements for sale and purchase that the defendants sought by way of further discovery were not relevant to the points at issue in the proceeding.  Indeed, the point has been effectively conceded by the defendants.

[8]      Thus, the defendants, who effectively abandoned the application at the start of the trial, are in the position of a losing party.  I see no reason why costs should not fall  on  the  losing  party  in  the  usual  way  and  be  calculated  on  a  2B  basis. Importantly, I do not accept the defendants’ submission that their actions could be construed as properly putting in issue the question of the authority of the solicitors. That issue was not pleaded, and difficult to infer.  If in doubt, the defendants could have sought clarification.   The documents sought were not relevant and the application should not have been brought.

[9]      Thus, insofar as Mr Smyth for the defendants is seeking to persuade me that the ordinary rule that costs should follow the event should not apply because until the time of the hearing there was a proper basis for the discovery application, I reject that submission.   There was no proper basis for the discovery application and the defendants would have failed in their application had it proceeded.  They would have also failed in their application for the names of the parties to the agreement for sale and purchase.

[10]     Therefore, although the fixture is imminent, I think it is appropriate to award costs in favour of the successful respondent/plaintiff.

[11]     The next question is whether I should award an uplift on scale because of what Mr Allan describes as the “silly” behavior of the defendants.

[12]     I am not prepared to do this.  I do not see the conduct of the defendants as going beyond that which unfortunately commonly arises in discovery issues where

one party has failed to analyse properly the relevance of the documents.  The very short timeframes involved provide some excuse for the defendants who were undoubtedly working under pressure.  It is possible also that the reference and the concession of “ostensible” authority resulted in some understandable suspicion in the minds of the defendants whether the issue would be raised, even though I have found that to be an erroneous suspicion.   The request for the name of the parties was entirely unjustified and may have been tactical, but it was something of an add-on and is not in itself a factor of sufficient magnitude to warrant the award of extra costs.  It would have been if it had been the focus of the application.

[13]     Thus, I will not go beyond the 2B scale.  However, I recognise that Mr Allan had to prepare fully for the hearing and come to court ready to argue it.   I also recognise that most of the work was in the preparation and that the hearing would not have taken much longer than the actual time involved in appearing in any event, and then preparing this costs memorandum.

[14]     In all the circumstances I award the plaintiff costs on a 2B basis, and they are to be calculated as if the discovery hearing took place and took one hour.

……………………………..

Asher J