Steel & Tube Holdings Limited v Hickey

[2016] NZHC 2243

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2016-412-000100 [2016] NZHC 2243

BETWEEN

STEEL & TUBE HOLDINGS LIMITED

Plaintiff

AND

PAUL BRIAN HICKEY Defendant

Hearing:	22 September 2016
Appearances:	J E Beck for Plaintiff No appearance for  Defendant
Judgment:	22 September 2016

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

[1]      The plaintiff applies for summary judgment in relation to a debt, the payment of which was guaranteed by the defendant.  The defendant has taken no step in the proceeding.

[2]      I am satisfied that the defendant has no defence to the basic elements of the plaintiff’s claim.   I will accordingly be entering judgment for those indisputable sums.

Collection costs

[3]      The  plaintiff’s  terms  and  conditions  of  trade  to  which  the  defendant’s guarantee relates allow the plaintiff to recover all costs and disbursements incurred by the plaintiff in recovering the principal debt.

[4]      Pursuant  to  that  entitlement,  the  plaintiff  has  claimed  a  disbursement  of

$4,851.42, which is the amount it says was invoiced by MFL Services Ltd, a debt recovery company. That invoice is attached as Schedule A.

STEEL & TUBE HOLDINGS LIMITED v HICKEY [2016] NZHC 2243 [22 September 2016]

[5]      The invoice includes $632.79 for GST, a sum which ought to have been excluded as I take Steel & Tube Holdings Ltd to be GST registered and to be able to recover that sum.1    The recovery claimed for the disbursement in the proceeding should not have been more than $4,218.63.

[6]      That left for consideration the amount of the invoice exclusive of GST.

[7]      I have explained to Mrs Beck who appeared on instructions, that the invoice is disputable on its face.  Significant issues are self-evident.  For instance, without reference to the skill or expertise of the person undertaking particular tasks, a series of four tasks are said to have taken 45 minutes each. The four tasks are:

(a)       Searches verifying identity of defendant; (b)    Search social media, internet, etc;

(c)       Search credit records;

(d)      Search property register.

[8]      If  the  four  times  (each  45  minutes)  recorded  were  accurately  recorded, serious issues must arise as to the competence of the person undertaking the task and therefore as to the reasonableness of the fee.  This is particularly so when the invoice indicates that the person’s time has been charged at $250 per hour.

[9]      Another task (which is said to have taken 1 hour 30 minutes) is “receiving legal opinion, considering same”.   Given that proceedings have followed, the inference is that a lawyer has advised in relation to a summary judgment proceeding and that the client has accepted advice to proceed.  The time (of 1 hour 30 minutes) for the MFL employee to “receive” the legal advice and to “consider” the legal advice is in the absence of explanation, unreasonable.

[10]     The above are simply examples of disputable items.

1      See New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282.

[11]     There are two final matters which have occurred to me since I indicated to Mrs Beck that I would be reserving my judgment and delivering it later today.  First, I note that the invoice is not simply entitled “invoice” or “tax invoice” but bears the heading “pro forma tax invoice”.  In the absence of explanation, the implication is unclear.   Secondly, there is the peculiarity of a catch-all item claimed for “further attendances  with  client,  general  administration  and  all  things  incidental  thereto” which is calculated at 0.87 hours ($218.63).  The item appears to bear no relationship to  a rounded  sum  of the sort  that  some  service providers  charge for  incidental attendances.  That led me to contemplate the possibility that a series of items were being added together so as to total a sum which represents a standard percentage recovery for a particular debt.  My calculation is that $4,218.63 represents a figure very close to 1 per cent of the principal debt ($391,713.98).

[12]     In these circumstances I am not satisfied that the individual components of the invoice are the product of someone accurately recording their time.  Rather, there is, in the absence of evidence, a possibility that the components have been arrived at as a back-process from a given total.

[13]     The Court would hope that some of the possible inferences do not represent what in fact happened.  More evidence would in any event be required to justify as reasonable the invoiced sum.

[14]     For these reasons the summary judgment application will be dismissed to the extent of $4,851.42.

Orders

[15]     I enter judgment against the defendant as follows:

(a)       Judgment for the plaintiff in the sum of $386,862.56;

(b)      Interest  on  the  balance  of  the  sum  of  $336,791.66  at  the  rate  of

$166.09  per  day  from  9  July  2016  to  22  September  2016  being

$15,280.28; and

(c)       Costs of $8,028.00 together with disbursements of $1,572.50.

[16]     In relation to the claimed sum of $4,851.42, the plaintiff’s summary judgment

application is dismissed.

[17]     The proceeding, so far as the claim of $4,851.42 remains, is adjourned for mention in the List at 10.00 am, 20 October 2016.

Case management

[18]     If the plaintiff wishes to pursue the collection costs, the matter will need to be set down for formal proof hearing.  In the event the plaintiff elects to continue rather than to file a Notice of Discontinuance as to the balance, counsel for the plaintiff is to file a memorandum requesting the allocation of a formal proof hearing and suggesting a timetable for the filing of additional evidence in relation to the invoice. The Court’s hearing fee will be payable.  The Court expects additional evidence to contain a proper explanation of:

(a)       the basis of time recording in relation to the items comprising the invoice; and

(b)the experience and expertise of the individual or individuals whose time has been charged at $250 per hour; and

(c)       the use of the term “pro forma” in the invoice.

[19]     In the event the plaintiff decides not to pursue the balance, the plaintiff is to promptly file and serve a Notice of Discontinuance.   In that event, however, the Court still requires in the form of a memorandum from counsel as an officer of the Court  an  explanation  as  to  whether  the  invoice  submitted  to  the  Court  as  a reasonable invoice properly recoverable was indeed so.

[20]     I will consider such documents as are filed at the call on the 20 October 2016 list.  If counsel wishes to have me consider matters on the papers at an earlier date,

he or she may when filing such documents request the Case Officer to refer them to me immediately for consideration.

Associate Judge Osborne

Solicitors:

Kevin McDonald & Associates, Auckland

Instructed solicitor: Jenny Beck Law, Dunedin

SCHEDULE A