Finlay v Floorman Limited

[2024] NZHC 3838

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2023-485-368

[2024] NZHC 3838

BETWEEN

STEVEN JOHN FINLAY AND SUSAN JEAN BEAUMONT FINLAY

Plaintiffs

AND

FLOORMAN LIMITED

First Defendant

BRETT IRVING
Second Defendant

KAPITI FLOORWORKS LIMITED
First Third Party

HASMAT WELLINGTON LIMITED

Second Third Party

On the Papers

Counsel:

F E Geiringer for Plaintiffs

H E Cameron for First Defendant
M R G van Alphen Fyfe for Second Defendant and First Third Party
T J Kim for Second Third Party

Judgment:

13 December 2024

JUDGMENT OF McQUEEN J

[Costs]

[1]        In a judgment dated 20 November 2024, I declined the plaintiffs’ application for confidentiality orders (the Application).1 I was satisfied that costs should follow the event. I encouraged the parties to agree costs but set a timetable for memoranda to be filed and served if that was not possible.

1      Finlay v Floorman Ltd [2024] NZHC 3487.

FINLAY v FLOORMAN LTD & ORS [2024] NZHC 3838 [13 December 2024]

[2]        The plaintiffs indicate they have agreed costs with the first and second defendants and first third party amounting to $1,912, and these costs were premised on only parts of the costs for items 11 and 13 of sch 3 to the High Court Rules 2016 (the Rules) being applicable.

[3]        The plaintiffs were unable to agree costs with the second third party. Memoranda have been filed outlining their respective positions.

[4]        I now determine costs between them, noting that it is unfortunate agreement was not reached given the small sum in issue.

Parties’ positions

[5]        Mr Kim, for the second third party, seeks costs against the plaintiffs for preparing written submissions in an interlocutory application (item 24 in sch 3 to   the Rules) on a 2B basis in the sum of $3,585. Mr Kim submits that despite the informal nature of the Application, the second third party filed submissions by way of memorandum and therefore has incurred costs in respect of those submissions.

[6]        Mr Geiringer, for the plaintiffs, opposes the application for costs on the basis the costs sought are excessive and were incurred unnecessarily. He submits that no order for costs should be made. Mr Geiringer says the issue of confidentiality is of no relevance to the second third party as it is not a party to the plaintiffs’ claim. He further submits that even if the second third party were to file submissions on the Application, it failed to take steps to avoid duplicate costs by co-ordinating with the other parties opposing the Application. Mr Geiringer says that the second third party filed brief submissions that were mostly duplicative of those of the other parties, and yet seeks twice as much in costs as the other opposing parties combined, which is excessive.

Discussion

[7]        All matters of costs are at the discretion of the court.2 The general principles which apply to the determination of costs include that costs follow the event, and that

2      High Court Rules 2016, r 14.1.

the determination of costs should be predictable and expeditious.3 The overriding consideration when exercising the discretion to award costs is that the costs award ought to do justice between the parties.4 Costs on an opposed interlocutory application must be fixed in accordance with the Rules when the application is determined and become payable when they are fixed.5

[8]        I am not persuaded in principle that costs for preparing a memorandum in response to the Application were incurred unnecessarily by the second third party.

[9]        The plaintiffs bring a claim against the defendants, seeking relief from them. The defendants have filed statements of defence to that claim. The first defendant has also filed a claim against the first and second third parties and a cross claim against the second defendant. The first defendant makes two claims against the second third party alleging breach of contract and negligence. The relief sought by the first defendant includes “damages in an amount corresponding to any liability to the plaintiffs found against the first defendant”.

[10]      The plaintiffs claim damages from the defendants including those based on emotional harm suffered by the plaintiffs. Thus, if damages are ultimately awarded to the plaintiffs on these grounds, whether the second third party is then responsible to the first defendant for those damages is at issue, and any damages ultimately awarded against the second third party may include damages for emotional harm suffered. Therefore, whether the plaintiffs suffered the relevant emotional harm is a matter of proper interest to the second third party, as is any confidentiality order made over certain information that might establish that emotional harm.

[11]      I also make the following observations. The question of confidentiality orders was raised by the plaintiffs at the telephone conference on 29 October 2024. The defendants and third parties opposed the orders the plaintiffs sought. I indicated that I would not decide this disputed matter on a telephone conference. Counsel agreed that the matter could be determined on the papers following the filing of memoranda. I

3      Rule 14.2(1)(a) and sub-r (1)(g).

4      Packing In Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA) at [5].

5      Rule 14.8.

issued a Minute on 30 October 2024 which, amongst other things, set a timetable for memoranda to be filed and served in relation to the orders sought by the plaintiffs. This made it clear that the defendants and the third parties were to respond on the issue. Neither at the telephone conference nor after the Minute was issued was any concern raised by the plaintiffs that it was unnecessary or inappropriate for the third parties to engage with the issue.

[12]      Accordingly, I consider that it is both necessary and logical for the second third party to have engaged with the Application.

[13]      Mr Geiringer also relies on r 14.15 of the Rules to say that the other parties correctly co-ordinated as to their opposition to the Application and sought one award for costs, and here there is no good reason to make a second costs award to the second third party. That rule provides:

14.15 Defendants defending separately

The court must not allow more than 1 set of costs, unless it appears to the court that there is good reason to do so, if—

(a)several defendants defended a proceeding separately; and

(b)it appears to the court that all or some of them could have joined in their defence.

[14]      I am mindful of r 14.15 of the Rules, including its relevance to interlocutory steps.6 This reinforces that parties should cooperate in advancing a common position to the Court.

[15]      It seems to me that if the plaintiffs wished to rely on the application of r 14.15 it may not have been prudent to reach an agreed position on costs with only three of the four other parties. Mr Kim says that he received no response from counsel for the plaintiffs to his two emails seeking to agree costs and nor was he part of the discussions as to costs between counsel for counsel for the plaintiffs and counsel for the other parties.

6      Houghton v Saunders [2013] NZHC 3452 at [36].

[16]      If the matter had come before the Court in relation to all parties, the Court would have been in a better position to apply the rule. It is difficult now for the plaintiffs to raise r 14.15 against the second third party to suggest it has no entitlement to a costs award.

[17]      My position is reinforced by considering the joint memorandum filed by the other parties in opposition to the Application. That memorandum states that counsel for those parties “have reviewed and agree with” the “comprehensive” memorandum filed by the second third party. So rather than the second third party duplicating what the other parties had said, as Mr Geiringer seems to suggest, it was effectively the other way around.

[18]      Therefore, where the second third party successfully defended the Application, there is good reason to award costs to the second third party.

[19]      The remaining question is quantum. Mr Kim notes the parties have previously agreed that the appropriate categorisation of the proceedings is complex but have not addressed the reasonable time pursuant to r 14.5 of the Rules. Nevertheless, the second third party only seeks costs on a band B basis. Mr Kim submits that responding to the Application took a normal amount of time and costs on a 2B basis are appropriate.

[20]      Mr Geiringer argues that the costs sought by the second third party are excessive. I agree that applying item 24 of sch 3 of the Rules on a 2B basis results in a costs award that is too high in circumstances where the Application was narrow and advanced informally.

[21]      This is a dispute over a small amount. In the circumstances, I conclude that justice will be done between the second third party and the plaintiffs by an award close to the level agreed between the plaintiffs and the other parties.

Result

[22]I order the plaintiffs to pay the second third party’s costs in the sum of $2,000.

McQueen J

Solicitors:

BMC Lawyers, Paraparaumu for Plaintiffs

Cameron Lawyers, Wellington for First Defendant

Reflective Construction Law, Wellington for Second Defendant and First Third Party Duncan Cotterill, Auckland for Second Third Party