Whitley v Ribble Limited (formerly Ground Support (Wgtn no.1) Limited)

[2017] NZHC 3240

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-000337

[2017] NZHC 3240

BETWEEN

KEVIN JOHN WHITLEY

Applicant

AND

RIBBLE LIMITED (formerly Ground Support (Wgtn No. 1) Limited)

First Respondent

AND

MICHAEL EDWIN KOOIMAN

Second Respondent

Hearing:	(On the papers)
Counsel:	Robert Hucker for the Applicant Second Respondent in Person
Judgment:	20 December 2017

[COSTS] JUDGMENT OF MOORE J

This judgment was delivered by me on 20 December 2017 at 11:00 am pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar Date:

WHITLEY v RIBBLE LIMITED (formerly Ground Support (Wgtn No. 1) Limited) & ANOR [2017] NZHC 3240 [20 December 2017]

Introduction

[1]                 In my judgment  delivered  on  9  August  2017  I  made  orders  requiring  Mr Kooiman, as director of Ribble Limited, to deliver up books, records and documentation as requested by its receiver.1

[2]                 I indicated that the applicant, being the successful party, was entitled to an award of costs.2 This judgment deals with quantum.

[3]                 The receiver seeks costs on a 2B basis increased by 50 per cent on the basis Mr Kooiman pursued an argument that lacked merit and/or failed without reasonable justification to admit facts, evidence or accept a legal argument.

[4]                 Mr Kooiman resists a costs award on the basis he adopted a reasonable position in defending the substantive application. Mr Kooiman submits he should not be liable for costs or, at worst, liable for half of scale costs.

Submissions for the receiver

[5]                 Mr Hucker, for the receiver, submits Mr Kooiman adopted an unreasonable and unduly broad position in opposing the substantive application. Mr Hucker submits his opposition therefore attracts the operation of r 14.6(3)(b)(ii) and (iii) which permit the Court to order increased costs if the party opposing costs has contributed unnecessarily to the time or expense of the proceeding by pursuing an argument lacking merit or by failing, without reasonable justification to admit facts or accept a legal argument.

[6]Mr Hucker submits Mr Kooiman illegitimately:

(a)took the position that no security had been granted to the creditor;

(b)put in issue the validity of the receiver’s appointment without a reasonable basis to do so;

1      Whitley v Ribble Limited [2017] NZHC 1884.

2      At [74]-[76].

(c)raised issues as to whether proper advertising of the receiver’s appointment had been carried out;

(d)raised an issue as to whether the application had been filed in the correct registry; and

(e)suggested there had been exempt collateral under the security agreement when the instructions to his solicitors were clear that the panels were not exempt.

[7]                 Mr Hucker further submits that Mr Kooiman failed to produce a deponent for cross-examination whose affidavit evidence he relied upon in opposing the application.

[8]                 Next, Mr Hucker submits it is irrelevant the Court decided to exercise jurisdiction under a different section of the Receivership Act. He submits costs should not be reduced on this basis.

[9]                 Finally, Mr Hucker contends that the creditors of Ribble Limited ought not to suffer loss as a result of Mr Kooiman’s conduct which increased the costs of obtaining the basic information to which a receiver is entitled to under the Receiverships Act.

Mr Kooiman’s submissions

[10]              Mr Kooiman objects to the submission he took an unreasonable position in opposing the application. He says he sought legal advice and the matters he raised in opposition were a product of that advice.

[11]              Mr Kooiman submits the receiver could not have succeeded in its application if I had not amended the receiver’s pleadings to allow orders to be made under s 34 of the Receiverships Act. He says he could not have anticipated the Court would amend the applicant’s pleadings to allow an order to be made under a different section of the Receiverships Act 1993 than the sections referred to in the receiver’s application.

[12]              Mr Kooiman also submits that the matters he raised in opposition arose out of the “sloppy paper work” filed in support of the receiver’s application. For example, the receiver attached the incorrect version of the standard form general security agreement (“GSA”) used as a template for the relevant agreement between Mr Kooiman and the creditor.

[13]              For these reasons, Mr Kooiman submits he should not be made liable to a costs award.

Increased costs?

[14]              Increased costs may be awarded where a party has failed to act reasonably.3 A percentage uplift will be justified to the extent that this failure reasonably contributed to the time or expense of the proceedings in question.4 The percentage increase given is unlikely to exceed 50 per cent of scale costs given the daily recovery rate is two- thirds of the daily rate considered reasonable for the particular proceeding.5

[15]              I am not satisfied this is a proper case for increased costs. There were essentially three arguments raised in opposition to the application:

(a)that Mr Whitley was not validly appointed as a receiver because his appointment was made under terms which did not form part of the GSA entered into between Ribble Limited and the creditor;

(b)that any and all personal property owned by Ribble constitutes “exempt collateral” under the GSA; and

(c)Mr Whitley’s appointment as Ribble’s receiver was invalid because he failed to give notice of his appointment in terms of s 8 of the Act.

[16]              The first two arguments, while technical, were reasonable arguments requiring the Court to engage in an exercise of contractual interpretation. The majority of the

3      Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27].

4      Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24 NZTC 24,500 at [165].

5      Andrew Beck (ed) McGechan on Procedure (looseleaf ed, Brookers) at [HR14.6.02].

judgment is spent dealing with these two arguments. The other matters identified by the receiver became largely peripheral.

[17]              In those circumstances, I am not satisfied Mr Kooiman contributed unnecessarily to the time or expense of the proceeding in a sufficiently material way to justify increasing scale costs.

Reduced costs?

[18]              I am not satisfied there is any proper basis upon which to refuse or reduce costs. None of the specific circumstances listed in r 14.7 appear applicable meaning Mr Kooiman must identify some other reason which justifies the refusal or reduction of costs despite the principle that the determination of costs should be predictable and expeditious.6

[19]              While Mr Kooiman is correct that I amended the receiver’s pleadings so that orders could be made under s 34 of the Receiverships Act, the arguments Mr Kooiman had to meet were precisely those which led me to make the orders under s 34. I do not consider Mr Kooiman was prejudiced in his opposition to the application.

[20]              The fact the receiver annexed the incorrect standard form GSA to his affidavit in support of the application does not provide sufficient reason to refuse or reduce costs. The correct version was annexed to a subsequent affidavit prior to a mention hearing before Gordon J.

[21]              I conclude that there is no reason to refuse or reduce the costs and thereby depart from the principle that costs determinations be predictable and expeditious.

Result

[22]              I have reviewed the table of scale costs and disbursements prepared by Mr Hucker. The steps and disbursements he claims are properly claimable.

[23]I allow costs in the sum of $10,865.50.

6      High Court Rules 2016, r 14.7(g).

[24]I allow disbursements in the sum of $940.75.

Moore J

Solicitors/Counsel:

Mr Hucker, Auckland

Copy to:

The Second Respondent