VALASAY HOLDINGS LIMITED V LYTTELTON SUPERMARKET LIMITED HC CHCH CIV-2011-409-1441

VALASAY HOLDINGS LIMITED V LYTTELTON SUPERMARKET LIMITED HC CHCH CIV-2011-409- 1441 26 January 2012IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2011-409-1441[2012] NZHC 25UNDER the Companies Act 1993BETWEEN VALASAY HOLDINGS LIMITEDApplicantAND LYTTELTON SUPERMARKET LIMITEDRespondentHearing: 26 January 2012 (On the Papers)Counsel: K T Dalziel for ApplicantD M Lester for RespondentJudgment: 26 January 2012JUDGMENT OF ASSOCIATE JUDGE MATTHEWS ON COSTS[1] On 10 November 2011 judgment was issued on an application to set aside a statutory demand in the sum of $100,000. The demand was in respect of a single sum owing under a contract for sale and purchase of a business; it was met with a cross claim for damages for a number of smaller sums, together amounting to $90,345. The applicant established that it had an arguable case to a cross claim in the sum of $40,750; accordingly no arguable defence was shown in relation to liability to pay the remaining $59,250. In paragraph [47] I indicated that each party had succeeded, in part and reserved costs. Counsel have been unable to agree on this issue so memoranda have been filed.[2] Both sides have succeeded in part. The question of costs in this circumstance is to be approached in accordance with the principle enunciated by the Court ofAppeal in Packing In Ltd (In Liquidation) formerly known as Bond Cargo Ltd v Chilcott.1 At paragraph [5] the Court of Appeal said:[5] In a case such as the present, where in broad terms each party has had similar success, we do not consider it helpful to focus too closely on the question which party has failed and which has succeeded. Costs in a case such as this should rather be based on the premise that approximately equal success and failure attended the efforts of both sides. To that starting point should be added issues such as how much time was spent on each transaction or group of transactions in issue, and any other matters which can reasonablybe said to bear on the Court's ultimate discretion on the subject of costs. Inthe end, as in all costs matters, the Court must endeavour to do justice to both sides, bearing in mind all material features of the case.[3] As in that case, both parties have in my view achieved approximately equal success and failure. I accept that the figures are weighted slightly in favour of the respondent, but only moderately so. I think it appropriate to proceed with my consideration of this issue in accordance with the time spent on the transactions in issue. These are analysed in some detail in the judgment. The issue which occupied by far the greatest amount of time was the condition of the various items of refrigeration equipment. Detailed analysis of the evidence on these items of plant was required in order to determine whether there was a valid dispute and, if so, in respect of which of the numerous of items of plant involved. In the end the applicant succeeded on this item to the extent of just under $20,000. Of the other three issues on which the applicant succeeded, one was conceded and the other two (LPG reticulation and three-phase outlets, fittings and connectors) occupied little time.[4] The principles relating to the use of demands under s 289 of the Companies Act to recover debts are well-established and it is unnecessary to set them out at any length in this judgment. Suffice it to say that it is quite improper to issue a demand under s 289 where there is a valid dispute on liability to pay the debt. In this case demand was made for a balance indisputably owing under a contract; although thedemand should, on the respondent's own admission, have been for the sum of $84,500 as there was an accepted set-off in relation to lighting, I do not think on the balance that any criticism can be levelled at the respondent for issuing a notice under s 289 to recover the balance of the sum owing under the contracts.1 Packing In Ltd (In Liquidation) formerly known as Bond Cargo Ltd v Chilcott 16 PRNZ 869.[5] Although the applicant succeeded in demonstrating an arguable dispute, which would, if determined in its favour, result in a set-off in a further sum of $25,250, it also failed to demonstrate that it had an arguable claim to a set-off in relation to around a further $60,000.[6] Taking into account all matters, in my view the costs on this application should lie where they fall and I therefore decline to make an order for costs in favour of either party._______________________J G MatthewsAssociate Judge_________________________________________________________________________________Solicitors:Taylor Shaw, ChristchurchMDS Law, Christchurch(Counsel: D M Lester)