Investor Homes Limited v Complete Building Solutions (Auckland) Limited [2012] NZHC 1182 (4 May 2012)

Last Updated: 16 July 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-1803 [2012] NZHC 1182

IN THE MATTER OF the Companies Act 1993

BETWEEN INVESTOR HOMES LIMITED Applicant

AND COMPLETE BUILDING SOLUTIONS (AUCKLAND) LIMITED

Respondent

Hearing: 4 May 2012

Appearances: Mr N Whittington for applicant

Mr R Potter for respondent

Judgment: 4 May 2012

_{ORAL JUDGMENT OF ASSOCIATE JUDGE DOOGUE}

Counsel:

Meredith Connell Solicitors, P O Box 2213, Auckland – [e-mail]

_{Martelli McKegg, P O Box 5745, Auckland - [e-mail]}

INVESTOR HOMES LIMITED V COMPLETE BUILDING SOLUTIONS (AUCKLAND) LIMITED HC AK CIV-2012-404-1803 [4 May 2012]

[1] On 3 April the applicant filed an application setting aside a statutory demand served on it 20 March 2012. Essentially the applicant said that it was evident on the face of the statutory demand and the annexures thereto that the debt which underlaid the statutory demand was not one that the applicant owed specifically. The attached invoices which were said to support the statutory demand were addressed to a different company “Sentinel Homes Limited”.

[2] On 2 May after the applicant had filed and served two reasonably substantial affidavits the parties by their counsel filed a consent memorandum that they had agreed that the application to set aside the statutory demand should be granted by the Court. I accordingly make the order sought. The parties were unable to agree on costs and filed memoranda.

[3] The applicant’s position is that solicitor/client costs or increased costs should be directed against the respondent. The position of the respondent was that a reduced order or no order was the appropriate outcome.

[4] The Court faces a not uncommon difficulty in attempting to carry out assessment of the merits of the respective cases where there has never been a hearing and the fact where the evidence is incomplete. By that I mean in this case the applicant has filed affidavits concerning its position but there is no evidence on file about the respondent’s position. However there has been some correspondence exhibited, two affidavits, which the applicant has filed which emanated from the respondent and which made its position clear.

[5] It would seem that the respondent formed a view that the applicant was indebted to it and insolvent. It required from the applicant that the applicant produce some evidence of solvency. The applicant by response rejected that any indebtedness was owed. The fact that the respondent has at a relatively late stage agreed to the application being granted and the very relief which the applicant sought being made available in the form of a Court order in favour of the applicant shows that the applicant’s position was probably correct from the outset in that sense

although the Rules on discontinuances in substantive proceedings may not apply in the circumstances of this case. By analogy this is a case where the applicant has been successful and the respondent has not. As well, by analogy with the principles set out in Rule 14.2 (that a party who fails with respect to a proceeding should pay the costs), it is clear to me that there ought to be an order for costs in favour of the applicant.

[6] It is difficult to come to any reasoned view about the alleged lack of responsibility on the part of the respondent in issuing a statutory demand and persisting with it. In the factual setting of this case there are some suggestions that the conduct of the respondent may have crossed the line from what is to be expected of a responsible party however there is insufficient clarity to justify me ordering solicitor/client costs or increased party and party costs and I consider that justice will be done by making an order that 2B costs are to be awarded to the applicant together with disbursements fixed by the Registrar.

[7] There is also a dispute about what items are allowable by way of costs from Schedule Three to the High Court Rules. I allow items identified in paragraph 14 of Mr Whittington’s memorandum as “paragraph 25” and “28” and “4.18”. I do not allow paragraph 27. Paragraph 27 is designed for a different situation than coming to Court to appear on a consent arrangement. Also, there is authority to the effect that costs are not allowed on presenting argument in costs disputes and to the extent that any memorandum dealt with the matter of costs I would not be prepared to allow

_{costs on a memorandum.}

J.P. Doogue

Associate Judge