L R M Builders Limited v Jamon Construction & Civil Limited

[2016] NZHC 1059

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH  REGISTRY

CIV-2015-409-000811 [2016] NZHC 1059

UNDER

Section 290 of the Companies Act 1993

IN THE MATTER

of an application for costs

BETWEEN

L.R.M. BUILDERS LIMITED Applicant

AND

JAMON CONSTRUCTION & CIVIL LIMITED

Respondent

Hearing:	17 May 2016
Appearances:	J E Bayley for the Applicant D J C Russ for the Respondent
Judgment:	19 May 2016

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

on costs

Introduction

[1]      In  my judgment  yesterday  I set  aside  a  statutory  demand  issued  by  the respondent, Jamon.1    Following the delivery of my above judgment, I heard from counsel in relation to costs and reserved my decision on costs.

General approach to the exercise of costs discretion

[2]      This judgment needs to be read in the light of the findings in yesterday’s

judgment.

1      L.R.M. Builders Ltd v Jamon Construction & Civil Ltd [2016] NZHC 1058.

L.R.M. BUILDERS LIMITED v JAMON CONSTRUCTION & CIVIL LIMITED [2016] NZHC 1059 [19 May

2016]

[3]      I first indicated to counsel that my preliminary view was that there should be no order as to the costs or disbursements of the application in favour of either party. I had not found that Jamon was other than entitled to issue a statutory demand. What led to the setting aside of the statutory demand was Jamon’s subsequent decision, once LRM’s costing response was available, to press on in an attempt to justify the full amount of the demand.  On the other hand, LRM had substantially created the situation which brought about Jamon’s issuing of the statutory demand, by failing to respond with a different calculation for two months after Jamon’s 1 October 2015 amended invoice was presented.  LRM then complicated the appropriate resolution of  the  statutory demand  process  by attaching  conditions  to  the  payment  of  the undisputed $35,339.90 when that sum ought to have paid unconditionally.

[4]      Each of the parties has caused the other unnecessary expense through either the negotiating approach they have adopted or in relation to the steps they have taken in this proceeding or both.   All this in relation to what is in fact a dispute over

$11,725.

[5]      Counsel made submissions which I have taken into account.   They do not alter my preliminary view.  For LRM, Mr Bayley emphasised that LRM, through the setting aside of the statutory demand, has been successful. LRM has established that the demand to the extent of $11,725 was excessive.  Because of the tight timeframe for a setting aside application, LRM had been forced to make its application to ensure that the demand could be set aside at least as to the disputed $11,725.  But that approach gives no weight to the fact that when LRM eventually (after Jamon’s demand was issued) completed the quantity surveying calculations which it ought to have completed at an earlier date, LRM was obliged to acknowledge that it owed Jamon the sum of $35,339.90 (equivalent to around 75 per cent of the total sum demanded  by Jamon).

[6]      For Jamon, Mr Russ emphasised the fact that Jamon has through this process had its claim to the substantial portion of the debt vindicated.  While that is so, it is also the case that Jamon persisted with an approach as to the disputed portion of the debt which abused company winding up procedures by pursuing a properly disputed portion.

[7]      Ultimately, it is self-evident in this case that each party saw a way of trying to achieve finality over the residual sum of $11,725 by continued engagement in a process related to company liquidation.   Neither has succeeded in achieving that finality precisely because the $11,725 represents a disputed debt, the resolution of which is not available in this jurisdiction.

[8]      It would be possible to focus, as Mr Bayley for LRM invited me to do, on a step by step analysis of each step taken in the proceedings.  Such an analysis would indicate that once LRM got its quantity surveying calculations completed (the day after the demand was issued), it was able to point to a substantial dispute as to

$11,725 which should have led Jamon to withdraw reliance on the demand to that extent.  I take into account the “entitlement” to costs which would arise on such an analysis.  But in the exercise of the overall discretion under r 14.1 High Court Rules, the much greater influence on the just determination of costs lies in the extent to which both parties sought to take tactical positions which caused this proceeding to run to a hearing over the entire demand.   The appropriate resolution was by unconditional payment by LRM of the undisputed sum and acceptance of an alternative dispute resolution procedure over the $11,725.

[9]      In my judgment, and having heard the substantive application, neither party is deserving of an award of costs or disbursements.   The just outcome is that each absorb its own costs and disbursements.

Costs order

[10]     I order:

(a)       There is no order as to the costs or disbursements of the applicant’s

application.

Associate Judge Osborne

Solicitors:

Rhodes & Co, Christchurch

Fletcher Vautier Moore, Nelson