Hawkes Bay Investment Holdings Limited v Kelt Finance Limited HC Napier CIV 2010-441-579 [2010] NZHC 2064 (28 October 2010)

Last Updated: 30 November 2010

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

_{CIV 2010-441-579}

BETWEEN HAWKES BAY INVESTMENT HOLDINGS LIMITED

Plaintiff

AND KELT FINANCE LIMITED First Defendant

AND DAVID ANDREW JAMES KELT Second Defendant

AND DONALD JAMES FORSYTH Third Defendant

Hearing: 28 October 2010 (Heard at Wellington)

Counsel: D J O'Connor for Plaintiff

DJS Parker for First and Second Defendants

R B Philip forThird Defendant

Judgment: 28 October 2010

JUDGMENT OF MILLER J (ON COSTS)

Introduction

[1] In a minute dated 20 September 2010 I awarded costs to the defendants for an interim injunction application on a category 2B basis, being one set of costs for the first and second defendants and one set for the third. Counsel have not been able to reach agreement, and have filed memoranda.

[2] On 13 September 2010 the plaintiff filed a Notice of Proceeding and

_{Statement of Claim and sought an urgent interim injunction on a ‘Pickwick’ basis.}

HAWKES BAY INVESTMENT HOLDINGS LIMITED V KELT FINANCE LIMITED AND ORS HC NAP CIV 2010-441-579 28 October 2010

The plaintiff is a holding company for the Opey group, which is in turn associated with the Ednez group. On 16 and 17 of September receivers were appointed to Ednez and Opey. On 17 September the plaintiff filed and served a memorandum indicating they would withdraw their application for an interim injunction, which they did on 20 September. It filed a Notice of Discontinuance for the substantive proceeding on 24 September.

[3] Counsel for the first and second defendants and counsel for the third defendants are seeking costs for both the interim injunction application and the discontinued substantive proceeding.

Costs for the interim injunction

[4] The first and second defendants seek costs of $3,290 for the interim injunction. In the plaintiff’s memorandum dated 11 October it disputes the time allocation for one item; the costs for preparing for the hearing of a defended interlocutory application, which consisted of preparing, filing and serving three memoranda of counsel opposing the application. The defendants seek a time allocation of half a day. However, the appropriate time allocation is the time occupied by the hearing measured in quarter days. The hearing took a quarter day, so the time for preparing for that hearing is also a quarter day. The appropriate quantum of costs is $2,820, which I have set out in the table below:

Description	Multiplier	Rate	Amount
Appearance at mentions hearing	0.2	$1,880	$376
Preparing and filing opposition to interlocutory application and supporting affidavits	0.6	$1,880	$1,128
Preparation for hearing of defended interlocutory application	0.25	$1,880	$470
Appearance at hearing of defended interlocutory application (quarter day)	0.25	$1,880	$470
Sealing of order as to costs	0.2	$1,880	$376
$2,820

[5] The third defendants seek costs of $2,068 for the interim injunction. The plaintiff has not specifically addressed the costs claim of the third defendants. However, in its memorandum dated 5 October, it submitted that the defendants were able to claim the categories of costs the third defendant has since claimed, though the plaintiff calculated the total as $2,018, which was an error. The appropriate costs for

_{the third defendant are $2,068, which consists of the following:}

Description	Multiplier	Rate	Amount
Preparing and filing opposition to interlocutory application and supporting affidavits	0.6	$1,880	$1,128
Preparing for hearing of defended interlocutory application	0.25	$1,880	$470
Appearance at hearing of defended interlocutory application (quarter day)	0.25	$1,880	$470
$2,068

Costs for the substantive proceeding

[6] The defendants are also seeking costs of $2,500 for the discontinued substantive proceeding. This is based on item 2 of Schedule 3 of the High Court Rules, which is described as “[c]ommencement of defence by defendant (receiving instructions, researching facts and law, and preparing, filing, and serving statement of defence or notice of opposition)”. For a category 2B proceeding, this would normally entitle a defendant to $3760, so the defendants are seeking a reduced quantum.

[7] The third defendant notes that r 15.23 creates a presumption that a plaintiff who discontinues its claim will pay “costs to the defendant of and incidental to the proceeding up to and including the discontinuance”. However, r 15.23 does not more than determine who is liable for costs, should they be due; it replaces the general principle that costs follow the event. Schedule 3 determines what costs the defendants are entitled to receive.

[8] I am not prepared to grant costs for the discontinued substantive proceeding. The defendants have not prepared, filed or served a statement of defence; they have simply had discussions with their clients. The third defendant recognises this was a “modest” amount of work only and that no statement of defence was drafted. The first and second defendants state they incurred “significant” costs and were preparing to file a statement of defence, however they have not provided any indication of how much time they spent preparing to commence their defence. The defendants are seeking costs for preliminary work, for which time is only allocated if they actually commence a defence; they have not done this.

Observation

[9] I note that memoranda as to costs were filed after Mr Parker, for the first and second defendants, served the plaintiff with a claim for costs which bore no relationship to the Rules. As this Court and the Court of Appeal have said on many occasions, the costs regime is meant to be self-policing; counsel should be able to apply it without the Court’s intervention. Had he persisted in advancing his claim, I would have deducted something from his costs on account of it. Since he thought better of filing the claim, however, I refrain from doing so on this occasion.

Conclusion

[10] Costs of $2,820 are awarded to the first and second defendants. Costs of

$2,068 are awarded to the third defendant.

Miller J

Solicitors:

Lunn & Associates Ltd, Napier for Plaintiff

Parker & Associates, Wellington for First and Second Defendants

Bate Hallett, Hastings for Third Defendant