CONTACT ENERGY LTD V GREAT WESTERN LAND LTD HC AK CIV-2010-404-5808

CONTACT ENERGY LTD V GREAT WESTERN LAND LTD HC AK CIV-2010-404-5808 6 January 2011IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2010-404-5808IN THE MATTER OF the Companies Act 1993 BETWEEN CONTACT ENERGY LIMITED Plaintiff AND GREAT WESTERN LAND LIMITED Defendant Hearing: By memoranda Appearances: Ms N K King for plaintiff Mr J Nguy for defendant Judgment: 6 January 2011 at 3 pmJUDGMENT OF LANG J [on costs]This judgment was delivered by me on 6 January 2011 at 3 pm, pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy Registrar DateSolicitors: Buddle Findlay, Auckland Jesse & Associates, Auckland[1] On 18 November 2010 I dismissed an application by Contact Energy Limited ("Contact") for an order placing Great Western Land Limited ("Great Western Land") in liquidation. I reserved leave to both counsel to file submissions in relation to the issue of costs in the event that they could not reach agreement regarding that issue. The parties have been unable to reach agreement and I am accordingly required to determine that issue on the basis of memoranda that counsel have filed. [2] Contact maintains that it has incurred actual and reasonable costs totalling $11,319.59 exclusive of GST, together with disbursements totalling $896.25. That claim is supported by invoices that its solicitors have rendered to it. Great Western Land says that no award of costs should be made, although it has offered to pay the sum of $4000 in full settlement of Contact's claim for costs. [3] Great Western Land contends, firstly, that Contact should not be awarded costs because it has abused the Court's process by instituting liquidation proceedings when it knew that Great Western Land was not insolvent. I reject this submission. The liquidation proceeding followed the service of a statutory demand requiring Great Western Land to pay outstanding electricity charges that it owed to Contact. Great Western Land did not pay the amount claimed in the statutory demand, and it did not challenge the basis upon which Contact had issued the demand. Contact was therefore entitled to proceed upon the basis that Great Western Land was insolvent and unable to pay its debts. Any doubt regarding that issue is dispelled by the fact that a cheque that Great Western Land tendered to Contact on or about 13 October 2010 was later dishonoured. In my view Contact was entitled to proceed throughout upon the basis that Great Western Land was unable to pay the outstanding electricity charges, and that it was appropriate for it to be placed in liquidation. The liquidation proceeding was not an abuse of the Court's process. [4] As I noted in my earlier judgment at [19], Contact has a contractual right under the supply agreement with Great Western Land to recover any actual and reasonable costs that it incurred in recovering monies owing under the agreement. Great Western Land's next argument is that the liquidation proceeding is not a proceeding for the recovery of outstanding monies. Rather, it is a proceeding in which the plaintiff seeks to place the defendant in liquidation. I accept that that isthe case, but I also accept that Contact issued the proceeding because of the outstanding monies. There can be no doubt, either, that Great Western Land ultimately paid those monies because it knew that it would be placed in liquidation if it did not do so. For that reason I accept that the costs of the present proceeding come within the category of proceedings in respect of which Contact has a contractual right to recover its actual and reasonable costs. [5] I do not accept, however, that attendances by Contact's solicitors after I dismissed the proceeding on 18 November 2010 are recoverable in terms of the supply agreement. Those charges relate to Contact's assertion that the electricity has been unlawfully reconnected to Great Western Land's premises. That is something that occurred after the present proceeding was dismissed, and it also falls outside the ambit of the supply agreement. It should not form part of any award of costs in this proceeding. [6] In all other respects I am satisfied that the costs and disbursements that Contact has incurred are reasonable. I leave it to counsel to reach agreement regarding the amount by which Contact's claim must be reduced to remove the attendances since 18 November 2010. This should be a simple matter based on records held by Contact's solicitors. In the unlikely event that counsel cannot reach agreement, I reserve leave to the parties to ask the Court to determine that issue also. Lang J