WAIPIPI SCHOOL BOARD OF TRUSTEES V XTREMEBUILD LIMITED (IN LIQ) HC AK CIV-2010-404-4874

WAIPIPI SCHOOL BOARD OF TRUSTEES V XTREMEBUILD LIMITED (IN LIQ) HC AK CIV-2010-404- 4874 [1 July 2011]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2010-404-4874CIV-2010-404-7132BETWEEN WAIPIPI SCHOOL BOARD OFTRUSTEESApplicantAND XTREMEBUILD LIMITED (IN LIQ)RespondentHearing: 30 June 2011 (On the papers)Counsel: C J R Baird for ApplicantNo appearance for Official AssigneeJudgment: 1 July 2011COSTS JUDGMENT OF ASSOCIATE JUDGE BELLThis judgment was delivered by me on 1 July 2011 at .. 11:00ampursuant to Rule 11.5 of the High Court Rules....................................Registrar/Deputy RegistrarSolicitors/Counsel:Insight Legal (G O'Brien), PO Box 72153, PapakuraInder Lynch, PO Box 72045, PapakuraOfficial Assignee, Private Bag 4714, ChristchurchCJR Baird, PO Box 5444, AucklandE St John, PO Box 105 270, Auckland[1] This decision is about costs. There are two proceedings. In CIV-2010-404- 004874, the Waipipi School Board of Trustees is the defendant and judgment debtor. It applied for a stay of execution while it brought its own proceeding against Xtremebuild Ltd. In CIV-2010-404-7132, the Waipipi School Board of Trustees applied to set aside a statutory demand served on it by Xtremebuild Ltd (In Liq).Both cases were called before me on 10 November 2010. I directed that they were tobe heard on 28 February 2011 for a half-day. Before then, on 18 February 2011,Xtremebuild Ltd was ordered to be put into liquidation. The Official Assignee is theliquidator.[2] On 23 February 2011, Lang J made orders staying the proceedings pending the liquidator giving consent or the Court ordering the proceeding to be continued, vacating the fixture on 28 February, and directing the applicant to file a memorandum as to costs. The applicant has filed a memorandum seeking costs. On 21 June 2011, the Official Assignee advised that, having considered the memorandum, the Official Assignee does not propose to make representations as tocosts. The Official Assignee will abide the Court's decision. It is unfortunate thatthe applicant has been kept waiting for its costs decision.[3] Xtremebuild Ltd had a contract with the Waipipi School Board of Trustees to erect a multi-purpose building. The man behind Xtremebuild Ltd was Mr Robert Wray. At the time, he was an undischarged bankrupt. His wife was a director of thecompany but Mr Wray had held himself out to some people as director.[4] From the school's point of view, the contract did not go well. It has a large number of complaints about the company's performance under the building contractand issued its own proceeding against the company. However, Xtremebuild Ltd gotthe better of the board of trustees under the Construction Contracts Act 2002. It gavepayment claims under the Construction Contracts Act directly to the school, ratherthan to the project manager the school had engaged. The school did not reply withpayment schedules in time and this entitled Xtremebuild Ltd to payment under thepayment claims. It brought an application for summary judgment and obtainedjudgment against the board of trustees on 9 September 2010 for $210,195.75. Shortly after judgment was given, the board of trustees issued its own proceeding against Xtremebuild Ltd claiming about $484,000.[5] When Xtremebuild Ltd served a statutory demand for payment of thejudgment sum, the board brought the present applications. It claims costs up to andincluding preparation for hearing of its applications, including the sealing of anorder. Costs on a 2B basis would be $6,768 based on 3.6 days. In addition, theapplicant seeks disbursements totalling $10,714.45. Most of the disbursementsclaimed are normal but they do include private investigator's invoices of $6,086.81and $2,056.78, totalling $8,143.59.[6] The board's applications were difficult ones to bring. Generally, to succeed,the applicant would have to show a real risk that any interim payments made to Xtremebuild Ltd would become final payments and that it had a good arguable case that its own claims against Xtremebuild Ltd would exceed any amounts Xtremebuild Ltd was entitled to recover from it.1 These applications are difficult to bring becauseof the strong policy under the Construction Contracts Act of requiring payers to payfirst and run their arguments for counterclaims at a later date. The applicant'sarguments would require the court to depart from that general policy under theConstruction Contracts Act.[7] The board put considerable effort into putting forward as strong a case as it could. It filed 10 affidavits in support of its application. There was evidence not only from the school and its project manager, but also from other contractors. It also provided evidence about other projects in the Tuakau/Waiuku area which Xtremebuild Ltd had carried out unsatisfactorily.[8] The applicant has been vindicated by the later liquidation of Xtremebuild Ltd. It is entitled to costs on its applications.1 Kariiti Ltd v Donovan Drainage & Earthmoving Ltd HC Whangarei CIV-2010-488-613, 19November 2010.[9] The applicant seeks costs on the 2C band for all steps, or, in the alternative, a 100% uplift if costs are fixed on the 2B basis.[10] This is a category 2 case. I allow costs on the C band for preparing and filing the application to set aside the statutory demand. Band C is appropriate because acomparatively large amount of time was required for this particular step. Some legalresearch would be required. But I also take into account that extensive preparationof many affidavits was reasonably required.[11] The applicant has claimed .5 of a day for preparation for the hearing of the application to set aside and a further .5 of a day for preparation for the hearing of the application for stay of execution. In fact, the same preparation was involved for bothapplications, so there should not be separate costs awards. In the circumstances ofthis case, I am satisfied that one day is a proper allowance for preparation for thehearing on 28 February 2011. That is, I allow for one day for preparation under r14.6(3)(a) because that amount of time was reasonably required and is not givenunder band C.[12] For the other steps claimed by the applicant, the B band is appropriate. The preparation of the application for stay of execution is largely subsumed under the work for preparing the application to set aside the statutory demand.[13] Accordingly, my calculation of the steps taken by the applicant is:Preparing and filing originating application and supportingaffidavit (item 25): 4.8Preparing and filing interlocutory application and supportingaffidavits (item 4.12): .6Appearance at mentions hearing (item 4.17): .2Preparation for hearing of both applications: 1.0Sealing of orders: .26.8 daysCosts on 6.8 days @ $1,880 per day is $12,784.[14] The applicant ran arguments for increased costs based on Xtremebuild Ltd'salleged unmeritorious opposition. I do not address these arguments at length,because even if I accepted them, I would not give the applicant higher costs.Xtremebuild Ltd's opposition appears to have been ineffectual, rather thanunmeritorious. I am not persuaded that that gives proper grounds for increasingcosts under r 14.6.[15] In the circumstances of this case, I also accept that it was proper to engage investigators to obtain the information for the affidavits. Accordingly, I approve all the disbursements claimed by the applicant.[16] In summary, on both applications, the applicant is awarded costs of $12,784 and disbursements of $10,714.45, totalling $23,498.45.__________________________R M BellAssociate Judge