IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CIV-2024-404-1577
[2024] NZHC 3723	

IM THE MATTER	of an application under section 290 of the Companies Act 1993	
BETWEEN	231 HINEMOA INVESTMENT LIMITED
Applicant	
AND	MAXIOM CONSULTING LIMITED
Respondent	

Hearing:	(On the papers)	
Counsel:	K Sun for Applicant
A R Gilchrist for Respondent	
Judgment:	9 December 2024	

JUDGMENT OF ASSOCIATE JUDGE LESTER
(Costs)

This judgment was delivered by me on 9 December 2024 at 4.00pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

……………………………..

231 HINEMOA INVESTMENT LIMITED v MAXIOM CONSULTING LIMITED [2024] NZHC 3723
[9 December 2024]

[1]	By Minute dated 13 November 2024, Moore J recorded that the respondent’s notice of opposition to the application to set aside its statutory demand was withdrawn. His Honour made an order setting aside the statutory demand and vacated the scheduled hearing.

[2]	Moore J, however, recorded that unfortunately counsel had been unable to agree on costs and directed that costs memoranda be filed.

[3]	Those costs memoranda have now been referred to me to fix costs.

[4]	Mr Gilchrist, counsel for the respondent, acknowledges that costs should follow the event and submits it is appropriate that costs be fixed on a 2B basis along with disbursements of $1,437. Mr Gilchrist’s client has taken issue with two minor disbursements which I will refer to at the conclusion of this judgment.

[5]	Mr Sun, counsel for the applicant, submits this is a case warranting indemnity costs or an uplift from scale.

[6]	Under the heading “Background of the proceeding” (which, as I will explain, is a telling heading), Mr Sun explains that matters between the parties go back to      a contract from March 2018 where the respondent agreed to develop a property owned by the applicant. Mr Sun’s memorandum asserts that the development ceased in October 2018 but it was not until 27 March 2024, after five years of no progress on the development, that the respondent apparently without notice issued an invoice demanding payment of $255,000 (including GST). Mr Sun explains that the applicant challenged the invoice but the respondent then issued a statutory demand which prompted the present proceeding.

[7]	McGechan on Procedure deals with pre-proceeding conduct.1 Essentially,  Mr Sun submits here that one ground for an increase in costs is the circumstances prior to the issue of the demand.

1	Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR14.103].

[8]	The authors of McGechan notes a proceeding must be extant before costs can be incidental to it.2 Generally, costs are to reflect how parties have acted during litigation and not before it, “Pre-proceeding conduct has not been accepted as a basis for an award of indemnity costs or increased costs.”3

[9]	Accordingly, the above circumstances of themselves do not warrant increased costs.

[10]	Mr Sun then submits that the applicant had strong grounds to set aside the demand  and  that  the  respondent’s  agreement   to  withdraw  its  opposition  to   the application came after the applicant had already incurred significant costs.

[11]	In support of an application for indemnity costs, Mr Sun notes that the respondent’s solicitor should have known that the invoice was disputed.

[12]	As I have said, Mr Gilchrist acknowledges costs on a 2B basis are warranted. His client opposes indemnity costs or an uplift in costs saying that the facts in this case are disputed. That recognition is no doubt why the opposition to the application was ultimately withdrawn.

[13]	Mr Sun makes a point of there being no settlement offers. I am not sure that it is a point in his client’s favour given it is his client here that is alleged to be the debtor. Mr Gilchrist submits that there was an offer, referring to an email of 20 August 2024, which he attached to his submissions. However, that email was an offer to meet and discuss rather than an offer of settlement. I see this point as neutral.

[14]	At the end of the day, a statutory demand was issued for which the alleged creditor ultimately accepted was subject to a dispute. The circumstances are unremarkable. Nothing in the way the respondent conducted this litigation warrants an uplift.

2	Jessica Gorman and others, above n 1, at [HR14.1.03].
3	At [ HR14.1.04].

[15]	Accordingly, there is an award of costs to the applicant on a 2B basis as per the Schedule annexed to Mr Sun’s submissions, save no uplift is awarded. The disbursements being the Court filing fees are also awarded as per  Mr Sun’s  Schedule A.

[16]	Mr Sun has also invoiced for translation costs. Mr Gilchrist submits it should not be for the respondent to pay the costs of translation fees if such was “for the applicant’s convenience”. I disagree. Clearly, there is a history between these parties. The principal of the respondent would have known that the principal of the applicant would be assisted in the litigation by having a translator. The cost is a natural and direct consequence of the litigation and so, in my view, is a recoverable disbursement. There is no suggestion that the amount claimed is unreasonable. The disbursement is allowed.

[17]	The second disputed charge is for a process server’s fee. Mr Gilchrist says that the respondent agreed to and did accept service by way of email.   Annexed to       Mr Gilchrist’s affidavit is a copy of the email attaching the application by way of service. The process server’s invoice is not produced by Mr Sun, nor does he explain what the invoice related  to.  Given  I  am not told why it was  necessary  to engage  a process server, the process server’s invoice is not allowed.

Associate Judge Lester

Solicitors:
Dyer Whitechurch, Auckland
Capstone Law Limited, Auckland

Copy to counsel:
A Gilchrist, Barrister, Auckland