Canaan Farming Dairy Ltd v Westland Dairy Company Ltd
[2022] NZHC 2788
•27 October 2022
IN THE HIGH COURT OF NEW ZEALAND GREYMOUTH REGISTRY
I TE KŌTI MATUA O AOTEAROA MĀWHERA ROHE
CIV-2022-418-000005
[2022] NZHC 2788
BETWEEN CANAAN FARMING DAIRY LTD
Applicant
AND
WESTLAND DAIRY COMPANY LTD
Respondent
Hearing: On the papers Appearances:
A V Foote for Applicant
J A Craig and S A Comber for Respondent
Judgment:
27 October 2022
JUDGMENT OF DOOGUE J
(Costs)
This judgment was delivered by me on 27 October 2022 at 2.15 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
CANAAN FARMING DAIRY LTD v WESTLAND DAIRY COMPANY LTD [2022] NZHC 2788 [27 October 2022]
Introduction
[1] Canaan Farming Dairy Ltd (Canaan) seeks costs following my judgment dated 3 October 2022 (judgment).1
[2] Both parties are in agreement as to the relative items for which costs can be claimed by Canaan and also in relation to the disbursements that can be claimed.
[3] The respondent, Westland Dairy Company Ltd (Westland), accepts that Canaan, as the successful party in the interim injunction application, is entitled to costs.
[4] The sole scale cost issue in dispute is whether the scale for these items should be set at 3C (as maintained by Canaan) or 2B (as maintained by Westland).
Costs – legal test and criteria
[5]It is well established that costs are ultimately at the discretion of the Court.2
Applicant’s submissions
[6]Canaan submitted that these proceedings fall into costs category 3.
[7] First, because the matter was objectively both relatively complex (factually and legally) and significant to the parties (in terms of the dollar amounts at stake and the potential ramifications of the decisions at issue on hundreds of people).
[8] Second, Canaan submitted that band C is reasonable for the steps taken as a comparatively large amount of time was required for each step.
[9] Third, Canaan argued that an award of increased costs in this case would reflect the balance between the conduct of the parties. Canaan relied on r 14.6 of the High
1 Canaan Farming Dairy Ltd v Westland Dairy Company Ltd [2022] NZHC 2524.
2 High Court Rules 2016, r 14.8; guiding principles contained in r 14.2 – these principles apply to both substantive proceedings and interlocutory applications.
Court Rules 2016, which sets out the criteria for increased or indemnity costs. For an increased costs award this includes:
(a)where the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C;
(b)where the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by taking or pursuing an unnecessary step or an argument that lacks merit; and
(c)the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected.
[10] Canaan submitted that all the above factors are relevant here and that increased costs should be ordered where there was a failure by Westland, the paying party, to act reasonably.3 First, in terms of its original demands of Canaan. Secondly, because all of its ultimately unsuccessful arguments required a comprehensive reply by Canaan, adding time and therefore costs.
Respondent’s submissions
[11] Westland submitted that scale costs should be awarded on a 2B basis for the following reasons:
(a)This case was not so complex or significant either factually or legally to warrant it being category 3. It was an interlocutory matter of average complexity between two parties concerned with breach of contract issues.
(b)It was also not a case where a comparatively large amount of time was required for each step so as to warrant band C applying — rather a
3 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400.
normal amount of time was required. The exception to this was the necessity for additional evidence and further hearing time on 28 September 2022 as a result of Canaan’s incorrect oral submission at the hearing on 25 July 2022 that “since 2017, there were no children at all” working on Canaan’s dairy farms. Canaan has (appropriately in Westland’s submission) recognised that it cannot seek costs for this new evidence issue, but it reinforces the fact that the time required to prepare for and conduct the initial hearing on 25 July 2022 itself was not comparatively large.
(c)Westland’s conduct was unimpeachable in the provision of notice it gave to Canaan that it was not going to continue to take delivery of Canaan’s milk.
Applicant’s submissions in reply
[12] I accept the submissions made at [2], [5], [6] and [7] of the applicant’s submissions in reply.
Discussion
[13] As a general point, the determination of costs should be predictable and expeditious. Increased costs are regarded as an exception to that principle, as recorded in r 14.6(3)(d). The Court of Appeal in Bradbury v Westpac Banking Corp found that the standard scale for costs applies by default where cause is not shown to depart from it as “[c]lear cause must be shown to justify an increase”, and increased costs should only be ordered where there is a failure by the paying party to act reasonably when assessed against the grounds in r 14.6(3).4
[14] The point that the courts will only apply increased costs in clear circumstances was reiterated by Fitzgerald J in Minister of Education v James Hardie New Zealand.5 The Judge stated:6
4 Bradbury v Westpac Banking Corp, above n 3, at [27]–[28].
5 Minister of Education v James Hardie New Zealand [2018] NZHC 2960.
6 At [7].
… It is, in my view, becoming increasingly common for successful parties in commercial litigation (not confined to this proceeding) to seek increased and/or indemnity costs. That is often on the basis the party has been successful, but without detailed or significant analysis of why the other party’s conduct appropriately falls within those relatively limited circumstances in which increased and indemnity costs are appropriate. …
[15] I do not consider there is any merit in Canaan’s first submission. This case was not so complex or significant either factually or legally to warrant it being in category 3. It was simply a case of contractual interpretation.
[16] As to Canaan’s second submission, I can find no clear cause to justify a departure from the standard scale for costs for the “large” amount of time required for each step to warrant time band C applying.
[17] Westland filed a 10-page notice of opposition, a seven-page statement of defence, and one affidavit in support (the latter being 25 pages in total excluding exhibits). Both Canaan’s and Westland’s written submissions for the 25 July 2022 hearing were limited to 15 pages (with the permission of the Court), and that hearing lasted less than a day. There is nothing unusually lengthy in that in the context of an interim injunction.
[18] As to Canaan’s third submission, mere urgency does not in itself provide a basis for ordering costs above scale costs.7 Otherwise any successful urgent interim injunction application would give rise to increased costs.
[19] On 14 June 2022 (the day after the interim injunction was filed), Westland agreed on a voluntary basis to have Canaan’s application heard on notice, and to continue collecting Canaan’s milk in the interim while that injunction application was resolved.
[20] Westland promptly agreed on 5 August 2022 to continue collecting Canaan’s milk, following the emergence of the new evidence issue regarding minors having worked on Canaan’s farms more recently than 2017. Westland also advised the Court
7 McLaughlin v McLaughlin [2020] NZHC 144 at [23].
on 20 September 2022 that it was willing for the new evidence issues to be dealt with on the papers, but Canaan preferred to appear for the hearing on 28 September 2022.
[21] Nor is it the case that Westland’s principal arguments in defence are without any merit as required for r 14.6(3)(b)(ii) to apply.8
[22] While an interim injunction was granted, it was nonetheless necessary — because of the ambiguity of Canaan’s evidence — to require Canaan to provide an undertaking that no minors and associate partners under the age of 18 were working on its dairy farms and would not do so pending further order of the Court (with the exception of the sharemilker arrangements).
[23] There remain valid issues to be determined at the substantive hearing. For instance, the judgment noted that whether the terms under which young persons had historically worked on Canaan’s farms are ultimately found to offend against those individuals’ rights is “still an issue reasonably open to debate to be resolved at trial”.9 The judgment also accepted that some doubt had arisen as to the accuracy of statements made by two of Canaan’s witnesses insofar as Canaan’s historic practices were concerned.10
[24]In summary, Canaan’s application for increased costs fails in its entirety.
Result
[25] Costs shall issue on a 2B basis. Disbursements are the filing fee for interlocutory application $173.91 and hearing fee $556.52, totalling $730.43. The total of 2B scale costs and disbursements is $11,485.43.
Doogue J
Solicitors:
Duncan Cotterill, Christchurch Simpson Grierson, Auckland
8 Powell v Hally Labels Ltd [2015] NZCA 11 at [4]-[5] where the Court declined the application for increased costs in circumstances where Hally advanced “some untenable arguments and took a needlessly uncompromising approach”, but its principal arguments were not without merit.
9 Canaan Farming Dairy Ltd v Westland Dairy Co Ltd, above n 1.
10 At [185].
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