TI RAKAU DRIVE LIMITED (FORMERLY DEBT RECOVERY CO NZ LTD) V TNT MATERIALS HANDLING PTY LIMITED HC AK CIV 2006-404-1771

TI RAKAU DRIVE LIMITED (FORMERLY DEBT RECOVERY CO NZ LTD) V TNT MATERIALS HANDLING PTY LIMITED HC AK CIV 2006-404-1771 24 August 2006IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2006-404-1771UNDER the Companies Act 1993 BETWEEN TI RAKAU DRIVE LIMITED (FORMERLY DEBT RECOVERY CO NZ LTD) Plaintiff AND TNT MATERIALS HANDLING PTY LIMITED Defendant Hearing: 24 August 2006 (on the papers) Counsel: B Pamatatau for plaintiff R Hucker for defendant Judgment: 24 August 2006 at 14:30JUDGMENT OF ASSOCIATE JUDGE FAIRE [on costs]Solicitors: Malcolm Whitlock, PO Box 259 059, Auckland for plaintiff Hucker & Associates, PO Box 3843, Auckland for defendant[1] The plaintiff issued this proceeding and sought by it an order that the defendant company be placed into liquidation and that a liquidator be appointed. [2] The proceeding pleads that the defendant failed to comply with a statutory demand served upon it. [3] An application to set aside the statutory demand was filed outside the time specified in s 290 of the Companies Act 1993. As a result, the application was withdrawn with a cost order being made against the defendant. [4] The defendant applied to restrain advertising and sought a stay of this proceeding. Two mentions of that application were necessary before the defendant's affidavits in support were filed. [5] At the third mention, counsel confirmed that the substantive proceeding and the application for stay and to restrain advertising could be struck out. An order to that effect was made. Costs were reserved and directions for the filing of memoranda in relation to costs were given. [6] Both plaintiff and defendant seek costs. [7] It is appropriate to record that it is the plaintiff who has elected not to proceed and that position has led to the proceeding being struck out. [8] I had to deal with a similar situation in a case referred to by counsel, Scaffold Shore Load Ltd v Gill & Gundry Concrete Construction Ltd AK HC Civ 2006-404- 1207 30 June 2006. In that case, I made comments in relation to the position where a plaintiff in liquidation proceedings decides to proceed no further. I said:[5] Because the plaintiff has effectively elected not to proceed, the position is analogous to that which applies where a plaintiff discontinues. When that occurs r 476C of the High Court Rules applies. [6] The Rule raises a presumption that a discontinuing party will be liable for costs: North Shore City Council v Local Government Commission 9 PRNZ 182. Generally, the Court will not inquire into the merits of the case unless the answer is clear and obvious.[7] Once the above considerations are taken into account, the matter is to be considered pursuant to the cost regime which was introduced on 1 January 2000 and is found in rr 46 to 53 of the High Court Rules. [8] It is appropriate that I refer briefly to the approach which the Court must take on an applications for costs. Rule 46 provides that costs are to be in the discretion of the Court. In Mansfield Drycleaners Ltd v Quinny's Drycleaning (Dentice Drycleaning Upper Hutt) LtdCA 296/01 29 September 2002 the Court of Appeal, in noting the Court's over-riding discretion pursuant to r46 said:there is a strong implication that a Court is to apply the regime in the absence of some reason to the contrary: Body Corporate 97010 v Auckland City Council. We do not think that a Court should hesitate to depart from the regime where appropriate but we agree that some articulation of the reason for doing so is to be expected, however succinct. If no reason is given it will expose the award to close appellate scrutiny.[9] The general principles to be applied in the exercise of that discretion are those contained r47. The first general principle there stated is that the party who fails with respect to a proceeding should pay the costs to the party who succeeds. [10] In Glaister & Ors v Amalgamated Dairies Ltd & Anor [2004] 2 NZLR 606 the Court of Appeal endorsed the proposition it made in the earlier decision in Mansfield Drycleaners Ltd v Quinny's Drycleaning (Dentice Drycleaning Upper Hutt) Ltd. It noted that if there was any departure from the costs regime as set out by the High Court Rules, that could only be done on a particularised and principled way.[9] The plaintiff's counsel invites me to distinguish the line of reasoning set forth in Scaffold Shore Load Ltd v Gill & Gundry Concrete Construction Ltd. That is essentially because the plaintiff had filed this proceeding in circumstances where the statutory demand had not been challenged. I have already referred to the fact that the statutory demand was challenged but the challenge was not made within the time specified in s 290 which means the Court could not hear it. The plaintiff, however, elected to proceed with liquidation proceedings. The plaintiff's counsel is critical of steps taken by the defendant thereafter which in fact may have led to additional mention hearings. Certainly, the minutes of the hearings on 19 April 2006 and 1 June 2006 note the need for the defendant to file further affidavits in support of its application for stay and, in that respect, the defendant can hardly seek costs in respect of appearances at that time, which were made necessary by its own failure to comply with the Rules.[10] The plaintiff company has elected to issue proceedings at least with some knowledge that there would be a challenge to those proceedings. It has elected to proceed no further with those proceedings. I see no reason, therefore, to depart from the analysis of the position that I set out in Scaffold Shore Load Ltd v Gill & Gundry Concrete Construction Ltd. This is not a case where the plaintiff is entitled to costs. [11] The defendant advances a case for indemnity or increased costs. Provision is made in r 48C in appropriate cases for orders for increased and/or indemnity costs. Particular reference is made to r 48C(3)(b)(ii) and (iii). That position is adopted because reference had been made to the financial accounts of the defendant in correspondence forwarded to the plaintiff's solicitor. Against that, however, I must take into consideration the fact that the statutory demand in this case was based upon a judgment issued in the District Court at Manukau dated 7 December 2005 against the defendant. [12] Bearing all these factors in mind, I see no justification for an order for increased/indemnity costs in this case. [13] The defendant is, however, entitled to costs. The case is a Category 2 case. The appropriate band for each must be considered. I do not accept counsel for the defendant's submissions that the affidavit in support of the application for a stay and restraint justified a C banding. Certainly, the document contains many exhibits, however, its content represents some four typed pages only. Further, I must consider its preparation as part of the matters considered under Item 3 of the Third Schedule. [14] With the exception of an affidavit of Mr R Price, sworn on 21 July 2006 and the mention hearing on 27 July 2006, all steps were taken in this proceeding prior to 1 June 2006 and therefore the amendment which was introduced by High Court Amendment Rules 2006 SR2006/98. The consequences of that position are: a) Apart from the mention hearing, the daily rate is $1,450;b) An allowance for commencement of the defence pursuant to Item 2 of the Third Schedule must be considered. I consider one day or Band A is appropriate. c) An allowance for the preparation of the interlocutory application for stay and supporting affidavits pursuant to Item 4.12 of .6 of a day based on Band B is appropriate. d) In addition, I allow one mention appearance, because the other appearances were because of non-compliance by the defendant with the Rules. That justifies .2 of a day. I see no reason to allow it under the new rate because, had the material been supplied on time, the matter would have been determined prior to 1 June 2006. [15] The result of the above analysis is that 1.8 days at $1,450 per day is the appropriate allowance for costs. That indicates a costs figure of $2,610.Orders[16] I order that the plaintiff pay the defendant's costs of $2,610 together with disbursements as fixed by the Registrar. _____________________ JA Faire Associate Judge