Country Land Limited v Blackley

[2012] NZHC 3068

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-488-000173 [2012] NZHC 3068

BETWEEN  COUNTRY LAND LIMITED Plaintiff

ANDDAVID BLACKLEY First Defendant

ANDPARUA BAY FARMS LIMITED Second Defendant

Judgment:      19 November 2012

COSTS JUDGMENT OF GILBERT J

This judgment was delivered by me on 19 November 2012 at 10.00 am pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:

Counsel:             D Hollings QC and S Robertson, Auckland:  [email protected]

Solicitors:           Sharp Tudhope, Tauranga:  [email protected]

Urlich McNab Kilpatrick, Whangarei:  [email protected]

COUNTRY LAND LIMITED V DAVID BLACKLEY HC AK CIV 2012-488-000173 [19 November 2012]

[1]      The plaintiff and the second defendant own and operate adjoining farms.  The first defendant, Mr Blackley, is the sole director of the second defendant and a trustee of the trust which owns its shares.   Mrs Blackley owns all but one of the shares   in   the   plaintiff   company.      The   two   farms   were   run   as   one   until Mr and Mrs Blackley separated.   The plaintiff sued the defendants for conversion and trespass following the removal on Mr Blackley’s direction of some stock and equipment from the plaintiff’s farm to the second defendant’s farm.   There is a dispute about which company owns the stock and equipment.

[2]      The  plaintiff  filed  a  without  notice  application  for  a  mandatory  interim injunction requiring the defendants to return the property.  Lang J declined to make the orders sought on a without notice basis but made an interim preservation order preventing the defendants from selling the stock and equipment until further order of the Court. This order was varied three days later by Woodhouse J.

[3]      It was obvious that these interim orders were intended only as a short term holding measure and would have to be varied at an early stage to allow the defendants’ farm to operate.  Both sides accepted that the interim orders should be rescinded.  However, they could not agree on the terms until I gave an indication of the likely outcome at the conclusion of the hearing of the defendants’ rescission application.  Orders were then made by consent on the following basis:

(a)      Mr Blackley would keep records of all stock sales (he had already confirmed  that  he  would  do  so  in  an  undertaking  set  out  in  his affidavit  sworn  on  18  June  2012  and  filed  in  support  of  the defendants’ rescission application).

(b)The defendants would not sell or dispose of any of the equipment without the plaintiff’s agreement or order of the Court.

[4]      Costs should normally follow the event.  The defendants have succeeded with their application.  They are therefore entitled to costs.  The only issue is whether the plaintiff should pay increased costs.   The defendants seek increased costs on the

basis that the plaintiff failed without reasonable justification to accept an offer of settlement and pursued unmeritorious arguments in support of its original application for interim injunction.

[5]      The plaintiff was not satisfied with the undertakings Mr Blackley gave in his affidavit.  It wanted the defendants to agree to an independent stock agent entering the defendants’ farm to assess stock numbers and the likely progeny.  The defendants were prepared to go along with this so long as the plaintiff also agreed to such an assessment being undertaken on its farm and to keep records of its stock sales. The plaintiff was not prepared to agree to this proposal on the basis that there is currently no claim by the defendants that any of their stock is on the plaintiff’s farm.

[6]      The preservation orders were discharged by consent without any arrangement for independent assessment of stock numbers and progeny.  The plaintiff is correct that there is presently no claim by the defendants alleging that any of its stock is currently held on the plaintiff’s farm.  It follows that the Court would not have made any order requiring the plaintiff to allow access to its property for the purpose of the assessment proposed  by the defendants.   However, this does  not mean  that the defendants’ proposal was unreasonable.  It was designed to facilitate the assessment sought by the plaintiff.   In my view, it was reasonable for the defendants to seek reciprocity as a condition of its consent to this process particularly given the dispute over ownership arising out of the fact that both farms had been run together, using the same farm manager.

[7]      The plaintiff ought to have accepted the defendants’ proposal had it wished to obtain the independent assessment of stock numbers.   Alternatively, if it was not prepared to allow an independent assessment of stock numbers of its own farm, it ought to have accepted the undertakings given by Mr Blackley in his affidavit. There was no proper basis for the interim preservation orders to continue in the light of these undertakings.  I note that the plaintiff implicitly accepted this by agreeing to the consent orders that were made following completion of the hearing.

[8]      In  my  view,  the  plaintiff’s  failure  to  accept  reasonable  proposals  for resolution is a sufficient reason to justify an uplift on scale costs.  The plaintiff has

not achieved anything beyond what was offered and it ought not to have opposed the rescission application in view of these proposals.

[9]      The defendants also claim that the plaintiff did not have any proper basis for applying without notice for a mandatory interim injunction.   I agree that the application should not have been made without notice.  I note that Lang J declined to deal with the application on that basis.   However, it is not necessary for me, in determining   whether   increased   costs   should   be   awarded   on   the   rescission application, to address whether there was substance in the grounds relied on in support of the interim injunction.   Whatever the position when the injunction application  was  made,  it was  clear that  the preservation  orders  were  no  longer required and had to be rescinded by the time the rescission application was brought. The interim preservation orders could not continue because they impeded the normal operation of the defendants’ farm.

[10]     I consider that the defendants are entitled to an uplift on scale costs.   The application should not have proceeded to a hearing.   The plaintiff ought to have accepted the undertakings given by Mr Blackley in his affidavit.   That is all it secured as a result of the hearing.  Had the plaintiff wanted independent verification of stock numbers and progeny, it ought to have accepted the defendants’ proposal.

[11]     The defendants are entitled to 2B costs on their application with an uplift of

50 per cent for all steps taken after service of Mr Blackley’s affidavit sworn on

18 June 2012.

M A Gilbert J