VICTORIA QUARTER NO. 1 LIMITED (AS TRUSTEE OF THE VICTORIA QUARTER NO. 1 TRUST) v FBB HOLDINGS LIMITED [2016] NZHC 2691

VICTORIA QUARTER NO. 1 LIMITED (AS TRUSTEE OF THE VICTORIA QUARTER NO. 1 TRUST) v FBB HOLDINGS LIMITED [2016] NZHC 2691 [10 November 2016]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2014-404-001218[2016] NZHC 2691BETWEEN VICTORIA QUARTER NO. 1 LIMITED(AS TRUSTEE OF THE VICTORIAQUARTER NO. 1 TRUST)PlaintiffAND FBB HOLDINGS LIMITEDFirst DefendantDAVID ROBERT DANIEL MCGRATHSecond DefendantOn the papersJudgment: 10 November 2016COSTS JUDGMENT (NO. 2) OF HINTON JThis judgment was delivered by me on 10 November 2016 at 9.30 ampursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarCounsel/Solicitors:D Grove, Barrister, AucklandA R Davie, Treadwells, Wellington[1] By my decision of 14 July 2016, the first defendant was ordered to pay costs to the plaintiff and I made a provisional costs order against the plaintiff, in favour of the second defendant.[2] On the basis of the "no-profit" rule, I directed the second defendant to quantify its scale costs with an appended schedule and to confirm with the Court that the scale costs do not exceed the costs actually incurred by him. The second defendant has not done so. His counsel has filed a memorandum saying that"invoices were addressed to the first and second respondents jointly and severally",without referring to the quantum of those invoices, let alone attempting to assess that part that relates to the second defendant's defence. He says, "the second [defendant]has become solely liable for all but $8,663.00 of the invoices rendered".[3] This does not comply with my direction, or at least the clear intent of my direction. The second defendant clearly cannot claim costs incurred by, or relating to the defence of, the unsuccessful first defendant, whether the second defendant pays them or not. That would completely subvert the judgment and costs award against the first defendant.[4] I accept the plaintiff's submission that, in the absence of the information I required, the second defendant would be entitled to one-sixth of the scale costs he has quantified, namely $5,400.[5] In the defendants' earlier costs submission, counsel proposed a set-off of the costs awards in favour of the plaintiff and the second defendant respectively.[6] Since my interim costs decision, there has been a change in circumstances. The first defendant has been placed into liquidation. In circumstances where the plaintiff is unlikely to be paid, and the second defendant was the sole director and shareholder of the first defendant, I consider it is appropriate to set off the seconddefendant's costs award against the plaintiff's costs award. In doing so, I rely in part by analogy on r 14.17, but also on the fact that such a set-off was proposed by the second defendant himself in his counsel's costs submissions.---------------------------------------------------------Hinton J