WAIPAREIRA INVESTMENTS LTD v GRANT [2013] NZHC 2867

WAIPAREIRA INVESTMENTS LTD v GRANT [2013] NZHC 2867 [31 October 2013]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2013-404-003477[2013] NZHC 2867UNDER Section 3 of the Declaratory Judgment Act1908 and Part 18 of the High Court RulesIN THE MATTER of the liquidation of WEST HARBOURHOLDINGS LIMITED (INLIQUIDATION)BETWEEN WAIPAREIRA INVESTMENTSLIMITEDPlaintiffAND DAMIEN GRANT and KIRSTEN SMITHDefendantsHearing: 21 October 2013Counsel: TJG Allan for PlaintiffDE Smyth for DefendantsJudgment: 31 October 2013COSTS JUDGMENT OF ASHER JThis judgment was delivered by me on Thursday, 31 October 2013 at 11.00 ampursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors/Counsel:Grove Darlow & partners, Auckland.Waterstone Insolvency, Auckland.[1] This is a file set down on the fast track, and the substantive case is to be heard on Monday, 4 November 2013. The issue in the proceedings is whether theactions of lawyers at a meeting acting for the applicants were sufficient to constitutea surrender of mortgage securities under the Companies Act 1993 and theCompanies Act Liquidation Regulations 1994. Given that the statement of claimwas filed on 16 July 2013, the case has proceeded to hearing with remarkable andcommendable speed.[2] On 2 October 2013, the defendants/applicants sought discovery from theplaintiff/respondent. That application was opposed. In a minute of 7 October 2013 afixture was allocated for that discovery application by Woodhouse J, who noted therewas a question as to whether the defendants were entitled to bring the application.He observed that the defendants had allowed over two months to elapse after havinggiven notice of the possibility of discovery before bringing the application.[3] The documents sought by the defendants were aimed at obtaining materialthat would prove that the solicitors involved at a crucial meeting were acting underthe authority of the plaintiff. The documents relating to authority were prima facieprivileged. If there was an issue as to the authority of the solicitors at the meeting,then there might well have been an argument that the documents were relevant andthat privilege was waived by the claims of lack of authority. There was also a claimfor discovery of the names of certain parties to agreements for sale and purchase.[4] The discovery application was set down to be heard on 21 October 2013. Onthat day, after a telephone conference and some discussion between myself andcounsel on the day before, the application was withdrawn.[5] The parties now argue about costs. Mr Allan for the plaintiff seeks costs withan uplift of 50 per cent. He argues that the defendants unreasonably delayed theapplication, and that it plainly had no merit.[6] Concerning the argument that the documents were relevant to authority, I amsatisfied that at no point could it have been reasonably assumed that it was one of thedefendants' answers to the plaintiff's allegations that their solicitors had no authorityat the relevant meeting. In particular in a letter of 5 September 2013 Grove Darlow recorded that the solicitor in question, Mr Morrison, had ostensible authority. The applicants' claim would have failed.[7] I am also satisfied that the names of the parties to the agreements for sale andpurchase that the defendants sought by way of further discovery were not relevant tothe points at issue in the proceeding. Indeed, the point has been effectively concededby the defendants.[8] Thus, the defendants, who effectively abandoned the application at the startof the trial, are in the position of a losing party. I see no reason why costs should notfall on the losing party in the usual way and be calculated on a 2B basis.Importantly, I do not accept the defendants' submission that their actions could beconstrued as properly putting in issue the question of the authority of the solicitors.That issue was not pleaded, and difficult to infer. If in doubt, the defendants couldhave sought clarification. The documents sought were not relevant and theapplication should not have been brought.[9] Thus, insofar as Mr Smyth for the defendants is seeking to persuade me thatthe ordinary rule that costs should follow the event should not apply because untilthe time of the hearing there was a proper basis for the discovery application, I rejectthat submission. There was no proper basis for the discovery application and thedefendants would have failed in their application had it proceeded. They would havealso failed in their application for the names of the parties to the agreement for saleand purchase.[10] Therefore, although the fixture is imminent, I think it is appropriate to awardcosts in favour of the successful respondent/plaintiff.[11] The next question is whether I should award an uplift on scale because ofwhat Mr Allan describes as the "silly" behavior of the defendants.[12] I am not prepared to do this. I do not see the conduct of the defendants asgoing beyond that which unfortunately commonly arises in discovery issues whereone party has failed to analyse properly the relevance of the documents. The veryshort timeframes involved provide some excuse for the defendants who wereundoubtedly working under pressure. It is possible also that the reference and theconcession of "ostensible" authority resulted in some understandable suspicion in theminds of the defendants whether the issue would be raised, even though I have foundthat to be an erroneous suspicion. The request for the name of the parties wasentirely unjustified and may have been tactical, but it was something of an add-onand is not in itself a factor of sufficient magnitude to warrant the award of extracosts. It would have been if it had been the focus of the application.[13] Thus, I will not go beyond the 2B scale. However, I recognise that Mr Allanhad to prepare fully for the hearing and come to court ready to argue it. I alsorecognise that most of the work was in the preparation and that the hearing wouldnot have taken much longer than the actual time involved in appearing in any event,and then preparing this costs memorandum.[14] In all the circumstances I award the plaintiff costs on a 2B basis, and they areto be calculated as if the discovery hearing took place and took one hour...Asher J