INTERNATIONAL DIRECT LIMITED (IN LIQUIDATION) HC WN CIV-2006-485-002020 [2007] NZHC 550 (29 May 2007)

IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY
                                                              CIV-2006-485-002020


              IN THE MATTER OF the Companies Act 1993
              AND IN THE MATTER OF an Application pursuant to s266 for
 
                              production of records by

              AND                        INTERNATIONAL DIRECT LIMITED
  
                                      (IN LIQUIDATION)
                                         Defendant


Judgment:     29 May
2007 at 4 p.m.


In accordance with r540(4) I direct the Registrar to endorse this judgment with a
delivery time of 4.00 p.m. on
the 29th day of May 2007.



            JUDGMENT OF ASSOCIATE JUDGE D I GENDALL
                           As to Costs



[1]  
 In my judgment dated 9 March 2007 issued in this proceeding, I ordered
costs and disbursements to the liquidator of International
Direct Limited (in
Liquidation) against Mr Michael Hebden Bennett (Mr Bennett) and Ms Deidre
Watson (Ms Watson). Costs were awarded
on a category 2B basis.


[2]    With respect to the issue of quantum of those 2B costs, in my 9 March 2007
judgment I noted that
neither Mr Bennett nor Ms Watson had responded to a
schedule of costs which counsel for the liquidator had attached to his submission.


[3]    Directions were therefore given (at paragraphs [22] and [34]) that both Mr
Bennett and Ms Watson were to have an opportunity
to respond by memorandum
with regard to this quantum issue.




INTERNATIONAL DIRECT LIMITED (IN LIQUIDATION) HC WN CIV-2006-485-002020
29 May 2007

[4]       On 21 March 2007 counsel for Ms Watson filed his memorandum in relation
to the quantum issue, and on 26 March
2007 counsel for Mr Bennett filed his
memorandum on this question.


[5]       In response, as directed by me on 28 March 2007, counsel
for the liquidator
has filed his memorandum dated 13 April 2007 on this costs issue.


[6]       I have had an opportunity to consider
the various memoranda filed, and now
give my decision on this disputed quantum issue.


[7]       The category 2B costs sought by
the liquidator against Mr Bennett are noted
at paragraph [15] of a memorandum dated 23 February 2007 from counsel for the
liquidator.
The total scale 2B costs are noted at 9.1 days based on $1600.00 per day,
totalling $14,560.00. Disbursements, being a service agent's
fee of $225.00, are also
sought.


[8]       The category 2B costs sought against Ms Watson are also noted at paragraph
[15] of the
23 February 2007 memorandum from counsel for the liquidator. These
are calculated at 7.6 days based on $1600.00 per day and total
$12,160.00.
Disbursements, being a service agent's fee of $112.50, are also sought.


[9]       A breakdown of the calculation of
these costs is set out in this 23 February
2007 memorandum. Counsel for Mr Bennett and Ms Watson take issue with a
number of items
claimed for costs by the liquidator. I will now consider each of
these in turn.


Item 3

[10]      In Item 3, counsel for the liquidator
seeks costs for 2.5 days for preparing an
affidavit in support of his originating application. He indicates this is pursuant to
item
7.1 in schedule 3 to the High Court Rules. As to this, counsel for Ms Watson
notes that the liquidator filed one affidavit in support
of the application which was
two and a half pages long without exhibits. He comments that the affidavit is
unlikely to have taken
counsel of average skill and experience two and a half days to
prepare, particularly given that the liquidator also claims an allocation
of three days

for the commencement of the proceeding. Under the circumstances, counsel for Ms
Watson submits that 0.5 days would
be a proper allowance for the preparation of this
affidavit.


[11]    In my view there is substance in these contentions. I take
the view that 0.5
days for preparation of this affidavit would be an appropriate allowance.


[12]    This Item 3 in the liquidator's
claims for costs against Ms Watson is now to
be 0.5 days, in place of the 2.5 days claimed. A similar amount is approved for
completion of the affidavit in
support with respect to the application against Mr
Bennett.


Items 4 and 5

[13]    In Items 4 and 5, counsel for the liquidator
claims against Ms Watson one full
day for preparation for the hearing on 14 November 2006, and 0.5 days for
appearance at the hearing
on that date. The same allocations are claimed against Mr
Bennett.


[14]    Counsel for Ms Watson takes issue with this. He notes
that the applications
against Mr Bennett and Ms Watson were both heard in the half-day fixture on 14
November 2006. By claiming an
allocation of half a day from each party, counsel
for both Ms Watson and Mr Bennett suggest that the liquidator is effectively
"double-dipping"
by recovering a total allocation of one day for appearing at a half-
day hearing. He submits, therefore, that only 0.25 days should
be awarded against
Ms Watson and 0.25 days against Mr Bennett for the 14 November 2006 hearing,
with 0.5 days allocated for preparation
for this hearing against Ms Watson and also
against Mr Bennett.


[15]    In his memorandum dated 13 April 2007, counsel for the
liquidator accepted
that the liquidator cannot claim the same time twice for the hearing. An adjustment
to the schedule, as requested
by counsel for Ms Watson and Mr Bennett, to record a
total one half-day allowance for the hearing, and one day of preparation time
shared

between Mr Bennett and Ms Watson was accepted as appropriate. These changes to
Items 4 and 5 are to be made.


The Service
Agent's fee

[16]   In the memorandum from counsel for Ms Watson, objection is taken to the
liquidator's claim for $112.50 as a disbursement
for a service agent's fee. No similar
objection, however, appears to be taken by Mr Bennett to the $225 service agent's
fee charged
as a disbursement to him.


[17]   On her behalf, counsel for Ms Watson states that despite having been in
regular contact before
the proceedings were issued, neither the liquidator nor counsel
for the liquidator advised Ms Watson that the proceedings had been
filed.
Accordingly it is contended that Ms Watson was never given the opportunity of
accepting service by post or facsimile.


[18]
  Counsel for Ms Watson contends that personal service of Ms Watson was not
"necessary" as required by r48H High Court Rules, and
accordingly the service
agent's fee should not be awarded as a disbursement.


[19]   In response, counsel for the liquidator notes
first that on 9 October 2006 an
order was made that the application to produce documents was to be served on Ms
Watson, and secondly
that service was effected in compliance with the order and
r197 High Court Rules.


[20]   Accordingly, counsel for the liquidator
submits that the service fee was
properly incurred, and this fee should be reimbursed.


[21]   This proceeding has a reasonably
long and unfortunate history. As I see it,
service of the proceedings on Ms Watson was required, and it was appropriate for
service
to be effected pursuant to r197 High Court Rules.


[22]   In terms of r48H, I am satisfied that the agent's service fee was a proper
expense for "serving documents for the purposes of the proceeding", and that in

terms of r48H(2) it was a "necessary" disbursement
for the conduct of this
proceeding.


[23]   The service agent's fee disbursement of $112.50 is to be awarded.


Category 2B or Category
1A?

[24]   So far as the memorandum filed by counsel for Mr Bennett is concerned, an
additional matter he raises is the claim that
costs in this matter should be awarded at
the lowest end on a category 1A basis, rather than on a category 2B basis. His
justification
for this contention is that the application was made under mechanical
provisions of the Companies Act 1993 in a situation where he
contends Mr Bennett
had "simply agreed he would appear". He goes on to contend that the liquidator
misled all parties, and the Court,
as to whether he had received any contact from Mr
Bennett in the first place.


[25]   As to these matters, there is no doubt that in this Court
Mr Bennett at first
objected to the jurisdiction of the New Zealand Court to deal with the liquidator's
application. It was only
when that argument failed that he was then given the
opportunity to file a further affidavit, in which he consented to being examined.
I
therefore reject the claim that the application was not necessary as Mr Bennett
"agreed he would appear".


[26]   The liquidator
was clearly faced with the need for an application and hearing
given this approach by Mr Bennett. Further, there is nothing before
the Court to
support the suggestion (denied by the liquidator) that he misled the parties nd the
Court over the issue of contact
with Mr Bennett. Costs which were awarded against
Mr Bennett on a category 2B basis are therefore appropriately awarded here on that
category 2B level. Category 1A is not appropriate.


Paragraph 7.1

[27]   Next, counsel for Mr Bennett appeared to take issue with
item 3 which
related to paragraph 7.1 of schedule 3. This is the liquidator's claim against Mr
Bennett for 2.5 days for an affidavit
in support of the originating application. Unlike

the approach taken by counsel for Ms Watson (noted at paragraph [10] above),
counsel for Mr Bennett contended that no allowance at all should be made for this, as
it is subsumed in preparation of the interlocutory
application itself.


[28]   I reject this suggestion. In my view it is appropriate for an amount for costs
to be allowed for preparation
of the liquidator's affidavit in support. It is provided
for in paragraph 7.1 of schedule 3. As noted above, in paragraph [12] the
amount for
preparation of this affidavit, however, is to be 0.5 days.


Costs for Unsuccessful s261(5) Companies Act Application

[29]   One final matter requires mention. Counsel for the liquidator notes in his
memorandum dated 13 April 2007 that since the
preparation of the original costs
schedule filed on 23 February 2007, Ms Watson has failed in her application for
costs under s261(5)
Companies Act 1993. He refers to the fact that a Notice of
Opposition was filed on behalf of the liquidator on 23 February 2007.
Therefore the
liquidator seeks $960.00 costs against Ms Watson in respect of this failed application
on the following basis:

  
    Schedule 3 reference 4.13

       Description ­ preparing and filing opposition to application for costs under
       s261(5)
Companies Act ­ 0.6 day

       0.6 days at $1600 per day = $960.00

[30]   It is clear from paragraph [53] of my judgment in this
matter dated 9 March
2007 that Ms Watson's application for costs/remuneration under s261(5) Companies
Act 1993 was rejected. This
application was strenuously opposed by the liquidator.
In my view, the liquidator is therefore entitled to an order for costs against
Ms
Watson with respect to this application. The 0.6 day sought, pursuant to paragraph
4.13 of schedule 3 totalling $960.00 is appropriate
here. This costs award is to be
included in the order which will follow.


[31]   For all the reasons outlined above, quantum is
set on the following basis and
orders for costs and disbursements are now made in favour of the liquidator:

     a)       against
Michael Hebden Bennett, for $10,385.00 total, calculated as
              follows;

Item Schedule 3 Description                 
                            Days
No. Reference
1.   4.12       Ex parté interlocutory application for leave             0.6
    
           to commence proceedings by way of
                originating application ­ 8 September 2006
2.   1          Commencement
        of     proceeding    by             3.0
                originating application ­ 19 October 2006
3.   7.1        Affidavit
in support of originating                      0.5
                application ­ 31 August 2006
4.   8          Preparation for hearing
(¼ day x2)                       0.5
5.        9              Appearance at hearing on 14 November 0.25
                         2006
6.        8              Preparation for
Second hearing (½ day x2) 1.0
7.        9              Appearance at hearing on 5 December 2006        0.5
                     
   Total Days                                      6.35


     Scale 2B ­ 6.35 days @ $1600.00 per day =                   $10,160.00
     Disbursement: service agent's fee                           $ 225.00
                                                      
          -------------
                                                                 $10,385.00
                            
                                    -------------

     b)       against Deidre Watson, for $8832.50 total, calculated as follows;

Item Schedule 3 Description                                              Days
No. Reference
1.   4.12       Ex parté interlocutory
application for leave             0.6
                to commence proceedings by way of
                originating application ­
8 September 2006
2.   1          Commencement         of     proceeding    by             3.0
                originating application
­ 19 October 2006
3.   7.1        Affidavit in support of originating                      0.5
                application ­ 31 August
2006
4.   8          Preparation for hearing (¼ day x2)                       0.5
5.        9              Appearance at hearing
on 14 November 0.25
                         2006
6.        4.13           Preparing and filing opposition to s261(5) 0.6
      
                  Companies Act 1993 costs application
                         Total Days                                 5.45


        Scale 2B ­ 5.45 days @ $1600.00 per day =                     $8720.00
        Disbursement: service agent's fee       
                     $ 112.50
                                                                      -----------
                
                                                     $8832.50
                                                                  
   -----------




                                                 ________________________________
                           
                     Associate Judge D.I. Gendall



Solicitors:
Tripe Matthews & Feist, Wellington for Liquidator Mr Walker
McDonald
Pilcher Partnership, Auckland for Mr Bennett and Ms Watson