Baker v Hodder
[2019] NZCA 270
•28 June 2019 at 2.30 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA520/2016 [2019] NZCA 270 |
| BETWEEN | CHRISTOPHER DUNCAN BAKER AND KATHRYN ANN BAKER |
| AND | WALLACE DOUGLAS HODDER AND ANN ADELE HODDER |
| Court: | Clifford, Simon France and Toogood JJ |
Counsel: | N Jessen and T S D Gilchrist for Appellants |
Judgment: | 28 June 2019 at 2.30 pm |
JUDGMENT OF THE COURT
(Costs)
The first respondents are to pay costs of $13,380.00 and disbursements of $5,070.92 to the appellants.
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REASONS OF THE COURT
(Given by Clifford J)
Introduction
Duncan and Kathryn Baker appealed to this Court from a decision of Ellis J in the High Court which had ordered them to sign a special resolution authorising the sale by the second respondent, Kadd Farm Ltd, of its principal asset — the Heron Creek farm.[1] Kadd Farm was owned as to 30 per cent by the Bakers and as to 70 per cent by the first respondents Douglas Hodder and Ann Hodder.
[1]Hodder v Baker [2016] NZHC 2384.
At the hearing of that appeal we concluded that, as the farm in question had been sold, and the proceeds used to pay the second respondent’s debts, the appeal was moot. We declined to consider the substantive appeal and formally dismissed it.[2]
[2]Baker v Hodder [2017] NZCA 355.
The Bakers appealed that decision to the Supreme Court. The Supreme Court granted leave on the question of whether or not this Court should have heard and determined the Baker’s appeal.[3] It also sought submissions on the substantive issue the Bakers had wished us to determine, namely whether the High Court had been correct to order them to sign the special resolution in question.
[3]Baker v Hodder [2017] NZSC 171.
The Supreme Court decided both issues before it in favour of the Bakers.[4] First, we were wrong not to have heard and determined the appeal: the costs order in the High Court could only stand if the High Court had been correct in the direction it made; there were questions of procedural fairness raised by the way in which the High Court had proceeded; and the question of whether an order under s 174 of the Companies Act 1993 should be made in circumstances such as these was one of public importance.[5]
[4]Baker v Hodder [2018] NZSC 78, [2019] 1 NZLR 94.
[5]At [44].
Secondly, the High Court had been wrong to make the order it did.[6]
[6]At [74].
The Supreme Court awarded the Bakers costs before it and quashed the cost orders made in this Court and the High Court, directing that they should be re‑determined in light of its judgment.[7]
[7]At [76].
We have now received memoranda from the Bakers, the Hodders, and from the Bakers in reply. In this judgment, and as directed by the Supreme Court, we reconsider our previous costs decision, which was to make no order as to costs. We used the following words to express that decision: “In the circumstances, there is no order as to costs”.[8]
[8]Baker v Hodder, above n 2, at [18].
We had earlier observed:
[15] It was for these reasons we declined to hear this appeal. As we emphasised in Court, that decision is neither based on, nor does it reflect, any assessment of the merits as between the Bakers and the Hodders on any aspects of their family dispute.
Submissions
In their initial submission, the Bakers noted the general proposition that the party who fails with respect to an appeal should pay costs to the party who succeeds. On the basis of that, and in light of the Supreme Court’s judgment, they were the party who had succeeded. They said costs should therefore follow the event in their favour on a standard appeal Band A basis plus disbursements, for a half day appeal. On that basis they sought costs of $13,380.00, and disbursements of $5,070.92.
In reply, the Hodders argued that we should confirm our earlier decision, and make no order as to costs. They submitted, given costs normally follow the event and on that basis they would have been entitled to a costs order before us, it was to be inferred we declined to make any order because our conclusion as to mootness was one we had reached on our own motion. As that position had not changed, and given that they had paid the costs ordered against them in the Supreme Court, just as we applied the “other reason” discretion under r 53F(g) of the Court of Appeal (Civil) Rules 2005 in the Bakers’ favour when we heard the appeal and dismissed it, so we should apply it in their favour now.
To take that approach, the Bakers replied, would in effect be accepting an argument that this Court was responsible for the costs incurred by the appellants in the Supreme Court, and hence should not order costs against them at the hearing where we reached wrong conclusions. Whilst we had not articulated a reason for declining to make an order as to costs, aside from our reference to the “circumstances” of the case, the Supreme Court had held our substantive decision wrong for a number of reasons. As a result of the Supreme Court’s decision, they are to be treated as the successful party before us. The Bakers rejected the Hodders’ assertion that the public interest element in the appeal, as identified by the Supreme Court, is relevant to the decision we must now make.
Analysis
The declaratory effect of the Supreme Court’s decision makes the Hodders the losing party before us on the Bakers’ appeal in this Court. The general principle is that costs follow the event. We do not see any reason why that general principle should not apply.
We cannot add to what we said in our earlier judgment as to our reasons for not awarding costs originally. We can only point to the observations we made at [15] of that decision.
Whenever a decision of a lower court is reversed by a higher court, and the lower court is directed to reconsider its costs decision, the party which succeeded below and was awarded costs may well be disappointed that, because of the lower court’s error, not only has it lost the judgment, and had costs awarded against it by the higher court, but on remission it is ordered to pay costs by the lower court. That disappointment may be sharper where, as here, the error by the lower court was on the determination of an issue that the court itself had raised, rather than the parties. By the same token, however, the Supreme Court determined the substantive issues which this Court had not addressed, rather than remitting them to this Court. That has saved all involved the need for further resources to be spent resolving matters.
Result
The first respondents are to pay the appellants one set of costs for the appeal in this Court as sought by the appellants: costs of $13,380.00 and disbursements of $5,070.92.
Solicitors:
Cooper Rapley, Palmerston North for Appellants
Parker Cowan Lawyers, Queenstown for First Respondents
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