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