Deep v Auckland Gold Line Co-Operative Taxi Society Limited

[2019] NZHC 1494

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-1516

[2019] NZHC 1494

BETWEEN

RAMAL DEEP

First Plaintiff

SATNAM SINGH
Second Plaintiff

SURINDER KUMAR
Third Plaintiff

AND

AUCKLAND GOLD LINE CO- OPERATIVE TAXI SOCIETY LIMITED

Defendant

Hearing:

On the papers

Appearances:

L T Keys for Plaintiffs

S Khan and M Orange for Defendant

Judgment:

28 June 2019

JUDGMENT OF LANG J

[as to costs[

This judgment was delivered by me on 28 June 2019 at 3.30 pm

Registrar/Deputy Registrar Date……………

DEEP v AUCKLAND GOLD LINE CO-OPERATIVE TAXI SOCIETY LTD [2019] NZHC 1494 [28 June 2019]

[1]                 On 22 February 2019, I issued a substantive judgment determining the plaintiffs’ application for judicial review against the defendant.1 Counsel have been unable to reach agreement regarding the issue of costs. I am therefore required to determine that issue based on the submissions filed by counsel for both parties.

Background

[2]                 The plaintiffs owned, or claimed to own, shares in the defendant, a taxi society incorporated under the Industrial and Provident Societies Act 1908 (the Society). They sought to judicially review eight separate decisions made by the Society’s Board. They contended the Board had made the decisions in a manner demonstrating bias against the plaintiffs and other shareholders, or that it had acted for other improper purposes.

[3]                 I upheld the plaintiffs’ claim in relation to two decisions. These were decisions declining to hold any Annual General Meeting of the Society between 2016 and 2018 and declining to allow the plaintiffs to have access to the Society’s share register. I granted relief in relation to these decisions but dismissed the remainder of the plaintiffs’ claims.

The arguments

[4]                   The plaintiffs contend they were the successful parties overall. They accept, however, that any award of costs needs to reflect the fact that they were not wholly successful in their claims. The plaintiffs therefore contend they should receive an award of costs on a Category 2B basis, but reduced by 50 per cent to reflect the defendant’s partial success in defending the claims.

[5]                 The Society takes a different view. It contends it was the successful party overall and that it should receive an award of costs on a Category 2B basis with a reduction of 20 per cent to reflect the plaintiffs’ partial success.

1      Deep v Auckland Gold Line Co-Operative Taxi Society Ltd [2019] NZHC 217.

Approach

[6]                 Although costs are at the discretion of the Court,2 the Court is guided in the exercise of that discretion by the principles set out in r 14.2 of the High Court Rules 2016. To the forefront of these is the principle that the party who fails with respect to a proceeding shall pay the costs of the party who succeeds.3

[7]                 In assessing who should pay costs the courts regard limited success as still being success.4 For that reason costs will not generally be awarded against a claimant who has enjoyed a measure of success. Instead, and where appropriate, the costs awarded to the successful party may be reduced to reflect partial success or costs may be directed to lie where they fall.

[8]                 In his memorandum filed in support of the plaintiffs’ application for costs   Mr Meys has referred to events that occurred subsequent to my judgment. He should not have done so because those events are irrelevant to my decision on costs. I put those issues to one side in determining that issue.

Decision

[9]                 The plaintiffs enjoyed a measure of success in the present case because they established two of their six causes of action and obtained relief in relation to both. It is important to bear in mind, however, that the case began as a challenge to the decisions on the basis that the Board had deliberately made them to disadvantage the plaintiffs or for other improper purposes. It ended with wholesale rejection of those allegations.

[10]             Although two decisions were held to be in breach of the Society’s rules, I found that the Board made one of those decisions to give effect to a resolution passed by a clear majority of those present at a lawfully constituted general meeting of the Society’s shareholders.5 This was a decision not to hold any further annual general

2      High Court Rules 2016, r 14.1.

3      High Court Rules 2016, r 14.2(1)(a).

4      Water Guard NZ Ltd v Midgen Enterprises Ltd [2017] NZCA 36; Weaver v Auckland Council

[2017] NZCA 330.

5      Deep v Auckland Gold Line Co-operative Taxi Society Ltd, above n 1, at [38].

meetings during the term of a contract the Society had entered into with the Auckland Airport. The Board therefore made that decision not for its own purposes but to ensure a commercial decision made by the Society’s shareholders was implemented.

[11]             The second successful challenge related to the Board’s decision not to provide two of the plaintiffs with access to the Society’s register of shareholders and financial information. The Board was aware that disciplinary proceedings were in train against those two shareholders but had been halted as a result of proceedings issued in the District Court by another of the plaintiffs. Counsel for the Society advised me during the trial that the Board would provide the two plaintiffs with access to the information they seek if and when the disciplinary proceedings against them resume. I found that in failing to provide the plaintiffs with access to the share register the Board had acted in a manner that was contrary to the requirements of the Society’s rules.6 I also found, however, that the decision was not made on grounds tainted by bias or any improper motive.

[12]             The factual situation in the present case bears some similarities to that in Mills v Far North District Council, a case cited to me by the plaintiffs.7 In that case, also an application for judicial review, the plaintiffs succeeded in establishing two causes of action out of six. The Court had exercised its discretion, however, not to grant relief. Fitzgerald J considered the two causes of action on which the plaintiffs had succeeded were the more important of those pleaded, and did not consider the fact that relief had not been granted was material for the purpose of fixing costs. She awarded costs to the plaintiffs on a category 2B basis but reduced by 50 per cent.

[13]             The exercise of the discretion is obviously not a mathematical exercise based on the number or proportion of successful causes of action because the ultimate objective is to do justice between the parties having regard to the circumstances of the case. Where unsuccessful causes of action or arguments have occupied a considerable proportion of the evidence and submissions, however, a significant reduction in costs will often be warranted.

6      Deep v Auckland Gold Line Co-operative Taxi Society Ltd, above n 1, at [49].

7      Mills v Far North District Council [2018] NZHC 3091.

[14]             I consider the argument for the Society to be more compelling than appears to have been the case for the respondents in Mills. Taking into account the factors I have identified I consider the interests of justice will be met if the Society is required to pay costs to the plaintiffs calculated on a Category 2B basis but reduced by 70 per cent. The plaintiffs will also be entitled to disbursements as fixed by the Registrar.

Lang J

Solicitors:

Neilsons Lawyers, Auckland Fortune Manning, Auckland