Beatson v Property Brokers Limited

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE

CIV-2024-454-013

[2024] NZHC 2057

BETWEEN

BARRY BUSTER BEATSON, MAURICE GEORGE BEATSON and PETER JOHN ROEBUCK

Appellant

AND

PROPERTY BROKERS LIMITED

Respondent

Hearing:	On the papers
Appearances:	M B Lawson for Appellants D I Sheppard for Respondent
Judgment:	26 July 2024

JUDGMENT OF CHURCHMAN J [COSTS]

Introduction

[1]    On 16 May 2024 I dismissed an appeal against the District Court’s decision that the appellants were in breach of a real estate agency agreement between themselves and the respondent (the Agency Agreement) in failing to pay a commission to the respondent following the sale of Waiaruhe Station.1

[2]    I invited the parties to settle costs between themselves and, in the absence of an agreement within 14 days, I directed the parties to file memoranda. The parties have been unable to agree as to costs and have filed memoranda.

1      Beatson v Property Brokers Ltd [2024] NZHC 1583.

BEATSON, BEATSON and ROEBUCK v PROPERTY BROKERS LIMITED [2024] NZHC 2057 [26 July 2024]

Submissions

Appellants’ submissions

[3]Mr Lawson for the appellants submits that:

(a)the entitlement to indemnity costs under cl 5.3.2 of the Agency Agreement only arises from failure to pay fees and expenses and does not relate to the commission;

(b)if the Court does find that cl 5.3.2 does apply, solicitor/client costs do not necessarily follow as the Court retains a discretion to deny recovery of indemnity costs where they are not objectively reasonable; and

(c)a general right to be indemnified for costs or even legal costs does not necessarily extend to an indemnity for solicitor/client costs, with the clause relied upon not “plainly and unambiguously expressed”.

[4]    Mr Lawson argues that costs in the sum of $10,755, calculated on a category 2B basis, should be awarded.

Respondent’s submissions

[5]    Mr Sheppard for the respondent submits that costs in the sum of $42,025.01 should be awarded against the appellants. He argues that:

(a)the costs sought do not exceed the actual costs incurred, with tax invoices provided to support the sum claimed;

(b)the Agency Agreement does entitle the respondent to recover solicitor/client costs for non-payment of the commission, as the clause regarding non-payment applies generally, whether calculated based on the standard percentage arrangement in the first part of cl 5.3, or the bespoke “fees and expenses” arrangement;

(c)an interpretation of cl 5.3 that indemnity costs only apply to the bespoke arrangement would largely thwart the purpose of the clause to enforce the client’s obligation to pay for the agent’s services;

(d)the consequences of non-payment of commission are also imported at cl 7 of the Agreement, so regardless of how the commission is calculated, the consequences of non-payment are the same; and

(e)the respondent’s claim is being sought under a specific clause for all expenses and legal costs, not in reliance of a general indemnity cause.

Does the Agency Agreement provide for indemnity costs?

[6]    Under r 14.6(4)(e) of the High Court Rules 2016 (HCR),…