Biscuit Creek Forest Ltd v Vallance - [2021] NZHC 1345

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE

CIV 2018-454-56

[2021] NZHC 1345

BETWEEN
BISCUIT CREEK FOREST LTD

Plaintiff

AND

SIMON FREDERICK VALLANCE and ROSA VALLANCE

Defendants

CIV 2019-435-15

BETWEEN

SIMON FREDERICK VALLANCE and ROSA VALLANCE
Plaintiffs

AND

ANDREW PHILIP VALLANCE

Defendant

On the papers

Judgment:

8 June 2021

JUDGMENT OF MALLON J

(Costs)

Introduction

[1] These two proceedings, heard together, concerned the rights to an “Owner’s Share” under a Forestry Right:

(a)In one proceeding, the plaintiff (Biscuit Creek) claimed damages for breach of a contract under which it had purported to purchase the Owner’s Share. I entered judgment for the defendants (Simon and Rosa Vallance) on this claim.

BISCUIT CREEK FOREST LTD v VALLANCE [2021] NZHC 1345 [8 June 2021]

(b)In the other proceeding, Simon and Rosa Vallance claimed that Andrew Vallance (the defendant in this proceeding, and the sole director and shareholder of Biscuit Creek) had engaged in misleading and deceptive conduct in relation to the contract to purchase the Owner’s Share. They claimed indemnity costs relating to the first proceeding as compensation for that conduct. I entered judgment for Andrew Vallance on this claim.

[2] In giving judgment on those proceedings, I granted leave for submissions on costs if they could not be resolved by agreement and said:1

[220] For the purposes of costs, I can indicate that my view is that Simon and Rosa Vallance are the successful party although they did not succeed on all the defences they raised. I consider that the counterclaim is best viewed as an adjunct to the affirmative defences on which they did not succeed. …

[3] The parties were unable to agree on costs. Andrew Vallance disagrees with the indication I gave about what I described as “the counterclaim” (being the second proceeding referred to above). There are also some issues about whether a step is category C and about witness fees.

The successful party

The relevant rules

[4] On the issue of who was the successful party on the two proceedings, the following rules are relevant:

(a)Rule 14.2(1)(a): it provides the general principle that “the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds”.

(b)Rule 14.7(d) and (f): it provides that, despite r 14.2, the court may refuse or reduce costs if, although the party claiming costs has succeeded overall, that party “has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing

1 Biscuit Creek Ltd v Vallance [2021] NZHC 640.

costs” or they “contributed unnecessarily to the time or expense of the proceeding or step in it by … taking or pursuing an unnecessary step or argument that lacks merit”.

(c)Rule 14.16: which provides:

Claim and counterclaim both established

The court must award costs as if each party had succeeded in an independent proceeding, unless, in the court’s opinion, the justice of the case…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NZHC 1345
Decision Date: 8 June 2021

CaseChat Overview and Summary

In the case of Biscuit Creek Forest Ltd v Vallance, the High Court of New Zealand was tasked with resolving a complex dispute involving the ownership and sale of an "Owner’s Share" under a Forestry Right. Biscuit Creek Forest Ltd, the plaintiff, sought damages from Simon and Rosa Vallance, the defendants, for the alleged breach of a contract to sell the Owner’s Share. Conversely, Simon and Rosa Vallance counterclaimed against Andrew Vallance, the sole director and shareholder of Biscuit Creek Forest Ltd, asserting that he engaged in misleading and deceptive conduct related to the contract. The Court was required to determine who should bear the costs of the proceedings, given the intertwining nature of the claims and counterclaims.

The central legal issues revolved around identifying the successful party in the proceedings to determine the apportionment of costs. The Court had to consider whether Simon and Rosa Vallance were the successful party despite not prevailing on all defences and whether Andrew Vallance should bear any costs related to the second proceeding, which was contingent on the outcome of the first proceeding. The Court also had to address specific issues such as the classification of costs bands, the apportionment of hearing fees, and the reasonableness of witness fees claimed by the parties.

The Court ruled that Simon and Rosa Vallance were the successful party overall, though not on all issues. It found that despite their failure on several affirmative defences, they succeeded on the principal issue of whether they or the Trust held the right to the Owner’s Share at the time of the contract with Biscuit Creek. The Court also found that the second proceeding, which involved claims of misleading and deceptive conduct, would not have been brought if not for Biscuit Creek’s initial claim. Therefore, the approach to costs should reflect the substantial overlap between the two proceedings. The Court applied the principle from Medway Oil and Storage Co Ltd v Continental Contractors Ltd, holding that Simon and Rosa Vallance were entitled to costs for the first proceeding, less a reduction for unsuccessful defences, while Andrew Vallance was entitled to costs for the second proceeding that were additional to those incurred in the first proceeding. The Court also resolved specific issues concerning the classification of costs bands, the apportionment of hearing fees, and the reasonableness of witness fees.

Ultimately, the Court ordered that Simon and Rosa Vallance were to bear costs for the first proceeding, less a 12% reduction, while Andrew Vallance was to bear costs for the second proceeding that were additional to those already incurred in the first proceeding. The parties were directed to resolve the exact figures of costs payable within ten days of the judgment.

Orders