Forbes v Townsend

[2023] NZHC 2833

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-665

[2023] NZHC 2833

UNDER

the Contract and Commercial Law Act 2017

BETWEEN

GRANT DAVID FORBES, JENNIFER LEE FORBES and STEPHEN LAWRENCE

GALLAUGHER as trustees of ASSURER TRUST
Plaintiffs

AND

SARAH CAROLINE TOWNSEND and

FREDERICK MUIR WARD as trustees of the ERSKINE TRUST

Defendants

Hearing:	On the papers
Appearances:	S C Price and R G Muston for Plaintiffs P C Murray for Defendants
Judgment:	10 October 2023

JUDGMENT OF ASSOCIATE JUDGE PAULSEN (COSTS)

This judgment was delivered by me on 10 October 2023 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

FORBES v TOWNSEND (COSTS) [2023] NZHC 2833 [10 October 2023]

[1]                  In a judgment of 15 September 2023, I dismissed the plaintiffs’ application for summary judgment.1 I noted that I was not aware of any reason why costs should not be reserved in the usual manner,2 but if either party wished to apply for costs they could do so although I was not to be taken as encouraging that course of action.3

[2]                  The defendants have applied for costs on a 2B basis with a 50 per cent uplift. The plaintiffs oppose the defendants’ application for costs but themselves seek costs for having to file a memorandum for doing so.

[3]                  The defendants accept that the usual position is, where a plaintiff is unsuccessful on a summary judgment application, costs are reserved until determination of the substantive claim. However, they submit costs may be fixed where there are legal or factual issues which made the case unsuitable for summary judgment and where the application should never have been brought.4

[4]                  The defendants argue the plaintiffs’ summary judgment application should never have been brought because:

(a)based on a settled line of authorities the plaintiffs’ claim could not succeed;

(b)the plaintiffs sought to fundamentally change their approach to the claim during the hearing, which was never appropriate in a summary judgment context;

(c)there were factual matters arising on the plaintiffs’ own evidence that made the case unsuitable for summary judgment; and

(d)summary judgment was sought as to liability only, but in this case liability could not be determined separately from quantum.

1      Forbes v Townsend [2023] NZHC 2578 at [77].

2      NZI Bank Ltd v Philpott [1990] 2 NZLR 403 (CA) at 406.

3      Forbes v Townsend, above n 1, at [78].

4      Srinagar Ltd v Horowhenua District Council [2022] NZHC 1094 at [8] and [10], citing Emmons Development New Zealand Ltd v Mitsui Sumitomo Insurance Co Ltd [2016] NZHC 1244 and Vision Aluminium Ltd v McLaughlan HC Christchurch CP 123/90, 8 June 1990.

[5]                  In addition, the defendants say the plaintiffs were on notice that the summary judgment application could not succeed. On two occasions the defendants’ solicitors wrote to the plaintiffs’ solicitors advising them it was inappropriate to seek summary judgment and that costs would be sought if the application was not withdrawn.

[6]                  The plaintiffs oppose the application for costs. They say the usual position that costs are reserved should apply. They reject the suggestion the application was unreasonably pursued and say that the correspondence between solicitors is not a basis for awarding increased costs.

[7]                  The common approach where a plaintiff is unsuccessful in obtaining summary judgment is for the court to reserve costs until the final result of the case is known.5 This is said to encourage the use of the summary judgment procedure to efficiently resolve proceedings and recognises it may be difficult to determine who should pay costs until the litigation is complete, and that even an unsuccessful application may ultimately prove beneficial to the parties in efficiently resolving the dispute. As the defendants correctly submit, however, these considerations may not justify reserving costs where the plaintiff’s application has been commenced erroneously, unreasonably or in circumstances where the plaintiff ought to have known that summary judgment would not be granted, or as an experiment.6

[8]                  When I indicated in my judgment of 15 September 2023 that I was not encouraging the parties to apply for costs that was because, having heard the respective arguments and being familiar with the principles that apply to costs awards on these sorts of applications, I had formed a view that the plaintiffs’ application was not so devoid of merit that it was unreasonable for them to pursue it, and that it was therefore appropriate for costs to be reserved. However, I did not finally determine the issue of costs because of the possibility there were other matters I was unaware of that might alter my view.

5      NZI Bank Ltd v Philpott, above n 2, at 405.

6      Emmons Developments New Zealand Ltd v Mitsui Sumitomo Insurance Co Ltd, above n 4, at [9]; Vision Aluminium v McLaughlin HC Christchurch, above n 4, at 4; Mason v Dodd [2020] NZHC 2005 at [10]; and Srinagar Ltd v Horowhenua District Council, above n 4, at [8].

[9]                  While I consider this something of a borderline case, I did not think the plaintiffs were acting unreasonably because:

(a)in respect to the argument that the plaintiffs’ nominees were unable to obtain a remedy for any misrepresentation made to Mr Forbes, there was a competing authority, no appellate authority on the point, and the plaintiffs raised matters not previously argued;

(b)the factual matters were not as straightforward as the defendants would suggest; and

(c)while the plaintiffs did suggest at the hearing an alternative basis of claim involving just some of the plaintiffs, that was never going to be accepted and did not significantly add to the defendants’ costs.

[10]              The only matter I was unaware of at the time I issued my judgment is the correspondence prior to the hearing where the defendants’ counsel invited the plaintiffs to withdraw their application. On reflection, that does not alter my view that costs should be reserved. I agree with the view expressed in Worldwide NZ LLC v QPAM Ltd:7

… In virtually every case, lawyers for each party will set out in letters their contentions as to the legal position. On the law of averages, half the time the position advocated in such letters will accord roughly with what a court ultimately decides. But that does not mean that a party who has sent such a letter is entitled to increased costs from the date of its prescient letter. That would drive a coach and four through the standard costs regime.

[11]              I shall reserve costs. I am not prepared to award the plaintiffs costs on filing memoranda in respect to costs. As I have indicated the plaintiffs might consider themselves fortunate not to have had costs awarded against them and they also did not correspond with the defendants’ counsel in respect to costs before memoranda were filed.

7      Worldwide NZ LLC v QPAM Ltd [2009] NZCA 226 at [28].

Result

[12]Costs on the plaintiffs’ application for summary judgment are reserved.

O G Paulsen Associate Judge

Solicitors:

MinterEllisonRuddWatts, Auckland Paterson Legal Limited, Auckland