TOYOTA NEW ZEALAND LIMITED V FRETTON & GABRIEL ENTERPRISES LIMITED TRADING AS BUDGET MANUKAU HC AK CIV-2011-404-7454

TOYOTA NEW ZEALAND LIMITED V FRETTON & GABRIEL ENTERPRISES LIMITED TRADING AS BUDGET MANUKAU HC AK CIV-2011-404-7454 [1 May 2012]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2011-404-7454[2012] NZHC 850UNDER the Companies Act 1993BETWEEN TOYOTA NEW ZEALAND LIMITEDPlaintiffAND FRETTON & GABRIEL ENTERPRISESLIMITED TRADING AS BUDGETMANUKAUDefendant(On the papers)Counsel: SA Barker for plaintiffEJL Werry for defendantJudgment: 1 May 2012JUDGMENT OF ASSOCIATE JUDGE FAIRE[for costs]This judgment was delivered by me on 1 May 2012 at 4:30pm,pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors: Buddle Findlay, PO Box 2694, Wellington 6140Atmore & Co, PO Box 147 483, Ponsonby[1] The plaintiff filed this proceeding and sought an order placing the defendant company into liquidation and appointing a liquidator.[2] No statement of defence was filed.[3] On 3 February 2012 the matter was called before Associate Judge Christiansen. Counsel for the defendant submitted that the plaintiff had adequatesecurity for the debt. The Judge's minute on the file records that Mr Werry had received late instructions and that the plaintiff had adequate security. The response from the plaintiff was that counsel needed time to investigate the matter. It was apparently on that basis the judge adjourned the proceeding until the companies list at 10:45am on 9 March 2012.[4] On 8 March 2012 a two-and-a-half page affidavit was sworn on behalf of theplaintiff. It sets out the history of the transactions which led to the defendant'sindebtedness and, in particular, covered the question of security.[5] The matter was called before Associate Judge Christiansen on 9 March 2012. It is apparent that the defendant conceded that the plaintiff had no security. TheJudge's minute records the position as follows:Investigations show security doesn't exist. Defendant promises to pay in fullplus costs. Adjourned to the liquidation list at 10:46am on 16 March 2012 for payment by then in cleared funds.[6] The matter was called before me on 16 March 2012. I was advised that the debt had been paid but that the parties were unable to resolve the question of costs. As a result, I struck out the proceedings. I reserved the question of costs and directed the filing of memoranda. Those memoranda have been filed.[7] The plaintiff has itemised the costs sought in reliance on the following items contained in Schedule 3 of the High Court Rules that relate specifically to liquidation proceedings. They are the following:SCHEDULE – 2B CostsCosts on a scale 2B basisItem 21 – Preparing and issuing statutory demand (0.2 x$1,880 per day)$376.00Item 22 – Preparing statement of claim and otherdocuments (0.6 x $1,880 per day)$1,128.00Item 23 – Appearance at hearing on 3 February 2012(0.4 x $1,880 per day)$752.00Preparation of affidavit evidence under HCR 14.1(1) $1,880.00Item 4.17 – Appearance at mentions hearing or call overon 9 March 2012 (9.2 x $1880 per day)$376.00Item 4.17 – Appearance at mentions hearing or call overon 16 March 2012 (0.2 x $1880 per day)$376.00SUB TOTAL $4,888.00[8] The one item that is not mentioned in the Third Schedule, but is contained thethe plaintiff's counsel's memorandum, is the preparation of the affidavit to which Ihave made reference and in respect of which a claim of $1,880 is made. That is the one item the defendants take issue with.[9] The preparation and filing of the affidavit is not specifically covered in the Third Schedule. It must therefore be dealt with pursuant to Item 11 in the Third Schedule which provides:11 Other steps in the proceeding not specifically mentioned.The principles applicable in awarding costs[10] Rule 14.1 gives the Court a discretion to order costs in relation to a step taken in a proceeding. That discretion is generally to be exercised in accordance with the specific Rules contained in rr 14.2-14.10: Glaister v Amalgamated Dairies Ltd.1In Mansfield Drycleaners Ltd v Quinny's Drycleaning (Dentice Drycleaning UpperHutt) Ltd2 it was said of the costs regime contained in what is now rr 14.2-14.10 that:there is a strong implication that a Court is to apply the regime in the absence of some reason to the contraryThe test to be applied is entirely an objective and not a subjective one. The only reference which it is necessary to make towards actual costs is to be found in r 14.2(f), namely that an award of costs should not exceed the costs incurred by the party claiming the costs: Glaister v Amalgamated Dairies Ltd.3[11] Rule 14.2 lists the principles applying to determination of costs. Subrule (a) affirms the principle that the losing party should pay the costs to the successful party. Subrule (b) requires that the costs reflect the complexity and significance of the proceedings and refers specifically, therefore, to the categorisation of a proceeding which is provided for in r 14.3. Subrule (c) requires a consideration of each step for which costs are sought and an application of the daily rate having regard to the appropriate band which is to be applied after a consideration of r 14.5(2) and the Third Schedule to the High Court Rules.[12] The affidavit that was filed was a necessary step to inform the court of the background to the indebtedness and why there was no particular security held by the plaintiff to which it could have recourse in satisfaction of the debt. It is perfectly understandable, where a point is raised at a mention hearing of a liquidation, for a plaintiff to respond in the way the plaintiff did in this case. Although there is no specific allowance for it in the Third Schedule, I must take account of the general principle specified in r 14.2 and also bear in mind that what is required is a1 Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 [19].2 Mansfield Drycleaners Ltd v Quinny's Drycleaning (Dentice Drycleaning Upper Hutt) Ltd (2002)16 PRNZ 662 at 668 (CA).3 Glaister v Amalgamated Dairies Ltd, above n 1, at 610[14].determination of the reasonable time for a step to be taken, in this case the preparation and filing of the affidavit concerned having regard to r 14.5. I approach the question of costs in relation to the additional affidavit on that basis. I have considered the affidavit and consider that a ¼-day allowance, or $470, is the appropriate allowance that should be made. When that is added to the specific items that are referred to in the plaintiff's schedule, excluding preparation of affidavitevidence, the amount that should be paid by the defendant for costs total $3,478. That is the appropriate quantum of costs that must be paid by the defendant in this case. The plaintiff must give credit for that part of the costs that have already been paid by the defendant to it. I order accordingly.[13] No contest was raised as to the disbursements claimed in the sum of $1,207.15. They all appear appropriate. The defendant must pay disbursements in the sum of $1,207.15._____________________JA FaireAssociate Judge