Cornerstone Construction Limited v Freelance Diggers Limited [2014] NZHC 70 (5 February 2014)

Last Updated: 4 March 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-004408 [2014] NZHC 70

UNDER Companies Act 1993

BETWEEN CORNERSTONE CONSTRUCTION LIMITED

Plaintiff

AND FREELANCE DIGGERS LIMITED Defendant

Hearing: 5 February 2014

Appearances: Mr Collecutt for plaintiff

Mr Paul F Chambers for defendant

Judgment: 5 February 2014

_{ORAL JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE}

CORNERSTONE CONSTRUCTION LIMITED v FREELANCE DIGGERS LIMITED [2014] NZHC 70 [5

February 2014]

[1] The liquidation proceedings which have been brought in this matter are not now to proceed. The proceedings were filed on 8 October 2013. There was a significant development thereafter in that on 20 December 2013 the defendant paid the sum of $16,980.19 out of the total amount of $23,747.49 which was the debt upon which the application for liquidation order was based. Sensibly the parties then discussed matters and agreed that the difference between the two figures, $6,746.30 which the plaintiff insisted was still owed and which the defendant denied was owed would have to be resolved but that that could be done in the disputes tribunal. Therefore from that point there was no further need for the liquidator proceedings.

[2] The parties were not however able to agree on costs. The plaintiff seeks costs on the discontinued liquidation proceedings. The defendant for its part took the position that it too sought costs. Mr Chambers, counsel for the defendant, told me that the case for the defendant claiming costs was based upon improper pressure brought to bear by the plaintiff in using the winding up proceedings as a means to extract the payment that has been made.

[3] The outcome of this case seems to me to require application of r 15.23 and the various principles that have been developed by the Courts which govern discontinuance of proceedings. Generally, a party who discontinues proceedings must pay the cost of them. Broadly speaking, the courts, though, recognise an exception to the starting position of payment of costs by the discontinuing plaintiff in circumstances where the reason for discontinuance is that the party has achieved the ends that it set out to when it started the proceedings in the first place. That is what has happened in this case. The payment by the defendant implicitly recognises that there was a legitimate debt up to the amount of $17,000 which was the sum that was paid.

[4] Mr Chambers advanced issues of impropriety as being relevant to the question of costs. However, in my view a defendant who takes the position that his client does, has two alternatives if it wants to preserve its position on costs. It can either insist that the proceedings go the whole way or it can obtain an agreement on the discontinuance that it be paid costs. I do not consider that a defendant can both

pay what the plaintiff is seeking and at the same time continue to protest that the amount sought was improperly sought. For those reasons I do not consider that the complaints that the defendant has about alleged economic duress are irrelevant to the question of costs in this case. They should not be permitted to deflect attention from the central point which is that the plaintiff is discontinuing, having obtained a substantial part of the entire relief that it sought in the first place. For those reasons, in my view, the present case is an exception to the usual presumption in r 15.23. The plaintiff is entitled to an order for costs. Costs are to be paid on a 2B basis together with disbursements as fixed by the Registrar. The plaintiff’s proceeding is struck

_out.

J.P. Doogue

Associate Judge