Buller Coal Limited v Brightwater Engineers Limited

[2015] NZHC 248

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV-2014-442-000054 [2015] NZHC 248

BETWEEN

BULLER COAL LIMITED

Plaintiff

AND

BRIGHTWATER ENGINEERS LIMITED Defendant

Hearing:	23 February 2015 (Determined on the papers)
Counsel:	R J Gordon and D Mackenzie for Plaintiff D G Hurd and S Stokes for Defendant
Judgment:	23 February 2015

COSTS JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1]      Buller Coal Limited (Buller) failed in its application to the Court for entry of summary judgment  against  Brightwater Engineers  Limited  (Brightwater).   Costs were reserved.  I have received a memorandum from Brightwater, seeking costs.  I have received a memorandum in opposition from Buller, saying costs should be reserved.   I have received a further memorandum from each counsel.   I have considered all this material.

[2]      When an application for summary judgment by a plaintiff is unsuccessful the general rule is that costs will be reserved, for a decision to be made once the final outcome of the proceeding has been established at trial.1   As noted in Air Nelson Ltd

v Airways Corporation of New Zealand Ltd,2  costs may be awarded in exceptional

cases.  Examples given by the Court are where the rules do not allow the summary judgment procedure to be invoked by a plaintiff or where a plaintiff proceeds in the

1      NZI Bank Ltd v Philpott [1990] 2 NZLR 403.

2      Air Nelson Ltd v Airways Corporation of New Zealand Ltd (1992) 6 PRNZ 1.

BULLER COAL LTD v BRIGHTWATER ENGINEERS LTD [2015] NZHC 248 [23 February 2015]

certain knowledge that there is a bona fide question of fact or law which can be determined only after a trial.

[3]      Both counsel referred the Court to other cases where, by one iteration or another, these principles have variously been applied.   I have considered all the submissions made by counsel, and reflected on them in the context of the judgment dismissing the application for summary judgment.

[4]      The first issue raised by Brightwater was the interpretation of cl 5.3(e) (the second).   This is dealt with at paragraphs [25] to [49] of the judgment.   It was necessary for Buller to establish that the contract was terminated prior to the completion of the services required by it, and some criticism can legitimately be levelled  at  Buller  for  not  focusing  its  evidence  on  precisely  what  the  services required by the contract were, and precisely which of those services remained uncompleted at the date it terminated the contract.  However, as can be seen by the review of the evidence, I ultimately reached a conclusion, and in my opinion it cannot be said that on this point Buller proceeded in the certain knowledge that this position could only be established after a trial.   Certainly its evidence could have been considerably more focused and frankly directed with precision at the point it needed to establish under this clause of the contract, but that does not bring it within an exception to the rule.

[5]      The second point Buller needed to establish was whether the contract for consultancy services was terminated other than for the convenience of Buller.  This argument is discussed at paragraphs [50] to [75].  It was rejected.  On this argument, Buller was on considerably weaker ground.  Its own evidence demonstrated that the sole reasons for terminating the contract were the difficulties which delays in the consenting process had caused, coupled with a drop in the prices attainable for coal, on export.  On any objective view of it, terminating the contract for these reasons was strongly arguably for the convenience of Buller.  This should have been plainly apparent to Buller at the outset.

[6]      Further, even if Buller could establish that terminating for these reasons was not for its convenience, it was necessary for it to show, also, that these factors

prevented the performance of the services required by the contract, in whole or in part, as distinct from making it undesirable to proceed.  This point, too, is made in the judgment.3

[7]      The difficulties these points place in the way of Buller do not arise from a conflict in the evidence, or otherwise from the case put before it by Brightwater. Rather, Buller relied on a specific clause of the contract in its letter of termination, and its own evidence establishes the reason why it could not succeed – see the evidence of Mr Tacon quoted at paragraph [51] of the judgment, and the discussion of that evidence in the following passages.

[8]      Whilst   Mr   Gordon   expresses   in   his   submissions   in   opposition   to Brightwater’s application for costs, considerable confidence in Buller succeeding at trial, the identified impediment to it doing so remains.  It was certainly evident on the face of Buller’s own evidence, on the application for summary judgment.

[9]      I am therefore satisfied that, for this reason, Buller should not have applied for summary judgment, and its application was therefore an abuse of process. Whilst Mr Gordon has referred to the theory of Buller’s case, nothing alters the inescapable fact established by Buller on its own evidence that it terminated the contract for reasons entirely related to its own operation.   This obstacle to success, at least at summary judgment level if not later, was squarely in the way of Buller before it commenced the proceeding.  This is one of those comparatively rare cases where an exception to the general rule applies.  I therefore award costs to Brightwater.

[10]     Counsel have agreed that costs should be on a 2C basis.  The award of costs relates to steps on the summary judgment application only, and therefore excludes the statement of defence which is not required for that procedure.  I have considered the  suggestion  that  there  should  be  costs  for  a  second  counsel,  but  in  the

circumstances I do not think that necessary.

3      At [56] and [57].

[11]     Costs are awarded on the memorandum filed on 8 October 2014, but not in relation to memoranda concerning costs.   As a result of these rulings costs are awarded for seven days, together with disbursements fixed, if necessary, by the Registrar – but excluding disbursements for second counsel.   All other costs are

reserved.

J G Matthews

Associate Judge

Solicitors:

Minter Ellison Rudd Watts, Wellington.

Dawson Harford & Partners, Auckland.