Birnie v Outward Limited

[2024] NZHC 3219

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-759 [2024] NZHC 3219

BETWEEN

WILLIAM GEORGE PORTER BIRNIE

First Plaintiff

CHARLES GILBERT PEARCE

Second Plaintiff

AND

OUTWARD LIMITED

First Defendant

PRICEMAKER LIMITED

Second Defendant

ROB DARCE ROGERS

Third Defendant

PLAYMAKER LABS LIMITED

Fourth Defendant

Hearing:

On the papers

Appearances:

R L Latton for Plaintiffs

P A Dowell, Director of the First, Second and Fourth Defendants R D Rogers, Third Defendant in person

Judgment:

31 October 2024

JUDGMENT OF McHERRON J

(Costs)

[1]        In my judgment of 16 September 2024 I set out the following preliminary view in relation to costs:1

The plaintiffs seek costs on a 2B basis uplifted by 50 per cent to reflect breach of a reasonable settlement agreement. My preliminary view is that no uplift

1       Birnie v Outward Ltd [2024] NZHC 2665.

BIRNIE v OUTWARD LIMITED [2024] NZHC 3219 [31 October 2024]

is justifiable given the plaintiffs’ lack of success in respect of their primary arguments for damages in respect of the representations. However, if necessary, I will allow the parties to file and serve submissions on that question (no longer than five pages) within 14 days of the date of this judgment. I will then determine costs on the papers.

[2]        On 19 September 2024, counsel for the plaintiffs filed a memorandum indicating that the plaintiffs accepted my preliminary view and now seek costs on a 2B basis. In support of the plaintiffs’ application, they refer to the Supreme Court’s statement in Manukau Golf Club Inc v Shoye Venture Ltd that:2

A fundamental principle applying to the determination of costs in all the general courts in New Zealand is that costs follow the event.

[3]        The plaintiffs’ counsel also refers to the principle established in the same case that where the Court is simply applying the fundamental principle that costs follow the event and the costs awarded are within the normal range applicable, it does not have to give reasons for costs orders. Rather, it is only when something out of the ordinary is being done that some explanation, which may be brief, should be given.3

[4]        The plaintiffs submit that there is nothing in the present case that would justify departing from these normal principles. They submit that the plaintiffs have been substantially successful and that costs should follow the event. In a schedule attached to the plaintiffs’ costs memorandum, they itemised their 2B scale costs and disbursements. I set out that schedule as an appendix to this judgment.

[5]        Some time after the deadline for submissions had past, the third defendant Mr Rogers filed a memorandum asserting that the defendants would not have agreed to the settlement agreement without the “implicit threat” of “very significant legal costs” to defend the proceeding, knowing it had no merit in the first place. In other words, Mr Rogers argues that the Court should not award costs to the plaintiffs, given that the first to fourth causes of action were dismissed and judgment was only given in favour of the plaintiffs in respect of the fifth cause of action for breach of the settlement agreement. Rather, Mr Rogers submits that his costs should be deducted from the amount due in the settlement. Subsequently Mr Dowell emailed the Court,

2       Manukau Golf Club Inc v Shoye Venture Ltd [2013] 1 NZLR 305 (SC) at [8].

3 At [16].

purportedly on behalf of the second defendant Pricemaker Ltd, indicating that its total legal costs were $20,182.50. I infer Mr Dowell to be suggesting that this amount should be deducted from any costs awarded in respect of the fifth cause of action.

[6]        Counsel for the plaintiffs filed a reply memorandum dated 18 October 2024. In it, Mr Latton points out that the plaintiffs have enjoyed substantial success as similar amounts of damages were sought under the misrepresentation causes of action (first to fourth causes of action) and the breach of settlement agreement cause of action (fifth cause of action). As Mr Latton points out, the most the plaintiffs could have been awarded by way of damages was $325,000 plus interest. Although the misrepresentation causes of action were not successful, Mr Latton submits that the settlement agreement cause of action was wholly successful. The plaintiffs were awarded $290,000 plus interest and were therefore substantially successful overall. Accordingly, under the principle established in Manukau Golf Club Inc v Shoye Venture Ltd, Mr Latton argues that the plaintiffs are entitled to costs.

[7]        Mr Latton also refers to the Court of Appeal’s statement in Water Guard NZ Ltd v Midgen Enterprises Ltd that, in commercial litigation, identifying the party who is to pay money to the other is the surest indication of success and failure for the purposes of costs.4 As Mr Latton submits, despite the misrepresentation causes of action being ultimately unsuccessful, the Court found that Mr Rogers made all the representations at issue in the proceeding without any reasonable belief in the accuracy or truth of those representations.5

[8]        The plaintiffs’ misrepresentation causes of action were not, to use Mr Rogers’ word, “frivolous”. I agree with Mr Latton’s submission that the plaintiffs’ allegations were factually accurate and failed only at the last hurdle.

[9]        I also agree with Mr Latton that the ultimate failure of the misrepresentation causes of action does not justify depriving the plaintiffs of the costs they are entitled to as a result of having succeeded overall.  I accept his submission that the

4       Water Guard NZ Ltd v Midgen Enterprises Ltd [2017] NZCA 36, citing A L Barnes Ltd v Time Talk (UK) Ltd [2003] All ER (D) 391.

5       Birnie v Outward Ltd, above n 1, at [101(d)].

misrepresentation claims provided the “contextual matrix of facts” surrounding the settlement agreement.

[10]      Even ignoring the plaintiffs’ success overall, there is nothing that would justify an award of costs being made to Mr Rogers. He was a litigant in person. As such, he was not entitled to his costs in this proceeding.6 As Mr Latton acknowledges, the High Court Rules 2016 now allow litigants in person to recover costs of $500 per day.7 However, that change did not come into force until 1 September 2024, and only applies to steps in litigation taken after that date.8

[11]      In conclusion, there is nothing in this case that would justify departing from normal costs principles. The plaintiffs have been substantially successful and costs should follow the event on a 2B basis, plus disbursements. The defendants did not identify any defect in the schedule attached to the plaintiffs’ original memorandum.

Result

[12]      Rob Rogers and Playmaker Labs Ltd are jointly and severally liable to pay the plaintiffs costs and disbursements in the sum of $64,981.43.9

McHerron J

Solicitors:
Palmer Macauley Solicitors, Kerikeri for Plaintiffs

6       McGuire v Secretary for Justice [2018] NZSC 116, [2019] 1 NZLR 335.

7       High Court Rules 2016, sch 2, pt 2.

8       High Court Amendment Rules 2024, r 2.

9       High Court Rules 2016, r 14.14.

Schedule

Daily Recovery Rate: $2390

Item	General Civil Proceedings	Days	Amount
Commencement
1	Commencement of proceeding by plaintiff	3	$7,170
Case management
10	Preparation for first case management conference (including discussion about discovery)	0.4	$956
11	Filing memorandum for first or subsequent case management conference or mentions hearing	0.4	$956
Filing memorandum for first or subsequent case management conference or mentions hearing	0.4	$956
Filing memorandum for first or subsequent case management conference or mentions hearing	0.4	$956
Filing memorandum for first or subsequent case management conference or mentions hearing	0.4	$956
Filing memorandum for first or subsequent case management conference or mentions hearing	0.4	$956
12	Appearance at mentions hearing or callover	0.2	$478
Appearance at mentions hearing or callover	0.2	$478
Appearance at mentions hearing or callover	0.2	$478
14	Preparation for and appearance at issues conference	0.5	$1,195
15	Preparation for and appearance at pre-trial conference	0.5	$1,195
Preparation for and appearance at pre-trial conference	0.5	$1,195
Preparation for and appearance at pre-trial conference	0.5	$1,195
Interrogatories, discovery and inspection
20	List of documents on discovery	2.5	$5,975
21	Inspection of documents	1.5	$3,585
Interlocutory applications (including applications for summary judgment and for review of interlocutory decisions)
22	Filing interlocutory application	0.6	$1,434
24	Preparation of written submissions	1.5	$3,585
25	Preparation by applicant of bundle for hearing	0.6	$1,434

Preparing for witness hearing
33	Preparation of briefs, list of issues, authorities, and agreeing common bundle	3	$7,170
33A	Additional allowance for whichever party prepared common bundle	0.5	$1,195
33B	Preparation for hearing	3	$7,170
Appearances at affidavit hearing or witness hearing and other steps
34	Appearance at hearing for sole or principal counsel at trial	3	$7,170
Item	Disbursements		Cost
1	Filing fee - Statement of Claim		$1,650
2	Filing fee - Amended Statement of Claim		$110
3	Accommodation		$1,179.83
4	Printing and Electronic Bundle Costs		$3,450
5	Flights		$753.6
Total:	$64,981.43