RAFFLES EDUCATION CORPORATION LIMITED V MILLS HC AK CIV 2007-404-001096

RAFFLES EDUCATION CORPORATION LIMITED V MILLS HC AK CIV 2007-404-001096 20 February 2008IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-001096UNDER the Arbitration Act 1996 IN THE MATTER OF an application for Mareva Injunction BETWEEN RAFFLES EDUCATION CORPORATION LIMITED Plaintiff AND KAREN ANN MILLS Defendant Hearing: On the Papers Counsel: C Patterson for Plaintiff R J Latton for Defendant Judgment: 20 February 2008JUDGMENT (No.2) OF COOPER J ON COSTSThis judgment was delivered by Justice Cooper on 20 February 2008 at 1.30 p.m., pursuant to r 540(4) of the High Court Rules Registrar/Deputy Registrar Date: Solicitors: Jones Young, PO Box 189, Shortland Street, Auckland Lee Salmon Long, PO Box 2026, Shortland Street, Auckland Copy to: C Patterson, PO Box 2886, Auckland[1] In my judgment of 16 November 2007 I granted the defendant's application to set aside a Mareva order that had been granted ex parte by Winkelmann J on 5 March 2007. I held that the defendant was entitled to costs, and stated that if costs could not be agreed, I would receive memoranda from counsel. [2] I have now received memoranda from counsel, although counsel for the defendant asserts that costs were in fact agreed by an exchange of e-mails between the solicitors for the parties. [3] I do not think there was any such agreement. On the basis of e-mails both parties have placed before me it appears that after some initial discussions, counsel for the plaintiff indicated that it would be prepared to pay $14,000 in costs. Solicitors acting for the defendant then wrote:In the interests of avoiding further costs, our client accepts your client's offer of payment of the sum of $14,000 in respect of costs arising out of Cooper J's judgment, provided that payment is made into out trust account by 5.00 p.m. on Wednesday 19 December 2007. A copy of our trust account details is attached.[4] That e-mail drew a response from counsel for the plaintiff to the effect that quantum and time of payment were separate issues. He indicated that the plaintiff would not agree to the condition as to timing of payment, stating that payment would be made "if at all" once the award had been issued on an arbitration between the parties. As mentioned in [8] in my judgment, the parties are in an arbitration about their rights and obligations under a share purchase agreement. [5] Mr Latton now submits that the condition as to the timing of payment was one that was clearly made for the benefit of the defendant and, I infer, would be able to be waived by the defendant, although he does not specifically make that submission. I do not think that is the way the matter is to be analysed. The acceptance of the plaintiff's offer was conditional on the payment being made. The response of counsel for the plaintiff rejected the condition, and stated effectively that payment would be made after release of the arbitrator's award. In my view, that was a counter offer, itself not accepted. In the circumstances, there has been no agreement as to costs.[6] By a memorandum dated 15 January 2008, counsel for the plaintiff now submits that costs should be payable in the sum of $9,440. Those costs were calculated on a Category 2B basis, notwithstanding that reference had been made during the hearing to costs being claimable on a 2C basis, and, following delivery of the judgment, negotiations between the parties apparently took place on that basis. [7] Mr Latton calculates costs on a 2C basis in the sum of $13,920 using the same steps of the proceeding as has Mr Patterson. He also seeks, however, a further sum to reflect the fact that because the plaintiff's case was commenced by way of originating application on an ex parte basis, there was no need for a statement of defence or a notice of opposition to be filed, but the defendant was still required to incur costs in respect of the steps usually associated with the commencement of proceedings, such as receiving instructions, researching the facts and law, and the receipt of and consideration of the proceedings filed by the plaintiff in order to obtain the Mareva orders. [8] Pointing out that there is no provision in Schedule 3 for the necessary steps in responding to an ex parte originating application, he suggests that an analogy can appropriately be made with another step in that schedule, in this case commencement of defence by the defendant. On a Category 2C basis, he maintained that half of the costs the defendant would otherwise be entitled to under that step would be appropriate, namely the sum of $4,800. [9] By that means, the total costs claimed by the defendants rise to $18,720. [10] In my view, this case was sufficiently complex to justify costs on a 2C basis and I accept Mr Latton's argument that some amount in addition to the costs of preparing and filing an interlocutory application and supporting affidavits (being the defendant's application to set aside the Mareva order) would also be appropriate. An allowance of $4,800 in respect of that, however, seems to me too great an uplift on the $3,200 sum allowed for preparing and filing the interlocutory application to set aside the Mareva order, an item effectively provided for in Schedule 3 and which the defendant has also claimed.[11] I consider that the appropriate response to Mr Latton's submission is to allow a further $1,000 on the calculation of scale costs, so as to require payment of costs in the sum of $14,920. [12] The defendant is also entitled to her disbursements as mentioned in Mr Latton's memorandum. They are a filing fee for the interlocutory application of $600, and photocopying costs $227.50. [13] In the result, I order that the plaintiff is to pay the defendant's costs in the sum of $14,920 , together with disbursements of $827.50.