ANDREW V ISLAND 2000 LIMITED HC AK CIV-2006-404-003625

ANDREW V ISLAND 2000 LIMITED HC AK CIV-2006-404-003625 12 September 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2006-404-003625UNDER the Companies Act 1993 BETWEEN JENNIFER ANDREW Plaintiff AND ISLAND 2000 LIMITED Defendant Hearing: 12 September 2007 Appearances: J Andrew appears In Person D Smith for Defendant Judgment: 12 September 2007REASONS AS TO JUDGMENT CONCERNING COSTS OF ASSOCIATE JUDGE CHRISTIANSEN[1] This fixture was originally allocated to hear Ms Andrew's liquidation application. That application was filed on 28 June 2006. [2] At the first call of the application on 31 August the matter was adjourned so that issues relating to the referral of all relevant bills of cost to the Auckland District Law Society (ADLS) were resolved. [3] By order dated 28 September 2006, Judge Faire directed some 12 bills of costs, totalling $109,659.99 be referred to the ADLS for revision. This order was made without opposition of Ms Andrew. [4] By letter dated 22 June 2007 Ms Andrew filed a copy of the cost reviser's decision. Ms Andrew noted the sole remaining issue concerned one of costs. Notingthere was a fixture on 12 September 2007, she recorded that submissions and evidence on costs would be filed "within the next ten days". [5] The application for costs was filed yesterday, by facsimile, at about 3.20 p.m. [6] This morning, and after hearing counsel's submissions, I directed that costs should lie where they fall. The following provides my reasons for that decision.Additional background[7] Ms Andrew is a solicitor. On instructions from Island 2000 she instructed Ms Grupen, a barrister, to act for Island 2000 in certain respects. In due course, Ms Grupen rendered accounts to Ms Andrew. Ms Andrew now wishes to recover the costs of Ms Grupen's services from Island 2000. Until any question of an issue arose regarding payment of Ms Grupen's accounts, Ms Andrew acted for Island 2000. [8] On 12 May 2006 Ms Andrew issued a statutory demand claiming a total sum of $35,091.13. Island 2000 took no action upon the statutory demand and Ms Andrew's liquidation application followed. Belatedly, a statement of defence was filed which pleaded, inter alia: a) Ms Grupen attended to her work without formal instruction from Ms Andrew; b) Ms Grupen agreed she would be paid only in the event of a successful outcome; c) Ms Grupen did not complete the work; d) her costs were excessive and had been referred to the ADLS for revision. [9] Following the matter being referred by the Court to the ADLS for revision, a number of affidavits were filed on behalf of both sides. The revision process stalledfor many months until the reviser's decision issued. Affidavits on behalf of Ms Andrew complained about the form and content of Island 2000 affidavits. [10] The evidence discloses a dispute between the parties regarding discovery of Ms Grupen's diary of time records. The reviser's position was that whilst he requested they be provided to Mr Smith, he could not direct their disclosure. To me, Ms Andrew advises disclosure was refused because the diary in question contained confidential information concerning other clients. In my view the Court is well able to ensure considerations of confidentiality are met whilst permitting disclosure of relevant contents. I have no doubt at all that this conflict regarding disclosure itself contributed significantly to the delay in the production of the cost revision decision. [11] On 7 June 2007 the costs reviser issued his decision. He noted: a) Ms Grupen refused to disclose her diary notes; b) (in the absence of any disclosure being forthcoming following a complaint to the Privacy Commissioner) the cost reviser determined to proceed with the revision regardless; c) he felt able to complete the revision, notwithstanding that Island 2000 did not have access to the relevant diary notes which were otherwise available to the cost reviser; d) Mr Smith, for Island 2000, objected to the reviser proceeding on the basis that he had access to the diary notes but Mr Smith and his client did not. [12] In his decision, the cost reviser upheld bills of costs totalling $87,159.99. In the result, and because part of the sum for which the liquidation application was originally filed had since been paid, there was outstanding on the statutory demand a sum of $19,687.07. Island 2000 paid that outstanding sum within days of receiving the reviser's decision.[13] Ms Andrew seeks an award of indemnity costs under r48C(4)(a). Many reasons are offered in support of that application, including: i) the defendant improperly defended the proceedings because it had no defence, at no stage adduced evidence as to the existence of a defence, and misled the Court regarding the need for the bill of costs revision hearing ordered by the Court; ii) the defendant caused the cost of the proceeding to escalate to an unacceptable degree by causing delay; iii) improper and scandalous attacks were made upon Ms Grupen, whose bills formed the basis of the s289 notices; iv) the defendant failed to pay the bills after 11 October 2006 when the bills in question were upheld; v) the defendant provided no evidence of solvency; vi) the defendant led the Court to believe a defence would in the end be mountedConsiderations[14] The plaintiff was not successful with her liquidation application. There is evidence that before the issue of the statutory demand an issue had arisen regarding payment of Ms Grupen's bill of costs. The statutory demand included a sum of money which was subject to a separate dispute in the District Court, and in respect of which resolution was achieved. [15] Evidence disclosed concern by the reviser regarding the unwillingness of plaintiff's counsel to provide original diary notes of bills of cost. This contributed to a delay in the conclusion of the revision process.[16] From early on the parties submitted to the revision process. Implicitly they agreed to be bound by it. In the outcome the decision was adopted and payment was made. This is not a case to include in any consideration of an application for costs, the costs of counsel involved in attending to matters pursuant to the revision process. [17] The actions of both parties are not without criticism. Although clearly the plaintiff should not receive any award of costs, neither should the defendant. In the outcome of the costs revision, counsel's charges were totally justified. Although the revision process was anticipated by the defendant to provide an outcome which could alter the amount claimed under the statutory demand, the statutory demand did not include any amounts which were the subject of the bills that were revised. [18] In balance, principles of fairness and justice does not favour one side against the other. Costs are ordered to lie where they fall.Solicitors: J Andrew, Auckland Advocacy Chambers, Auckland