Fowler Homes Southern Lakes Limited v Bose

[2017] NZHC 2989

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2017-425-000030

[2017] NZHC 2989

UNDER

the Construction Contracts Act 2002

BETWEEN

FOWLER HOMES SOUTHERN LAKES LIMITED

Plaintiff

AND

MICHELLE NEETA BOSE AND ROBERT JAMES WOOD

Defendants

Hearing:	4 December 2017 (Determined on the papers)
Counsel:	R S Cunliffe for Plaintiff M R Taylor for Defendants
Judgment:	4 December 2017

COSTS JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1]                 On 21 July 2017 the Court issued a judgment dismissing the plaintiff’s application for summary judgment. At [93] of the judgment, the Court said:1

I will apply the practice recognised by the Court of Appeal in NZI Bank Ltd v Philpott [1990] 2 NZLR 403.

[2]The second order made at [95] was an order reserving costs and disbursements.

[3]                 The Court has received a memorandum from the defendants in which they now seek an award of costs. Whilst noting that costs were reserved, the basis of their application is that the single cause of action pleaded in the original statement of claim

1      Fowler Homes Southern Lakes Ltd v Bose and Wood [2017] NZHC 1707.

FOWLER HOMES SOUTHERN LAKES LTD v BOSE AND WOOD COSTS [2017] NZHC 2989 [4 December 2017]

has now been replaced, in an amended statement of claim, by two causes of action, one in contract and one for breach of an indemnity. This, the defendants say, means that the claim under the Construction Contracts Act which was the basis of the initial claim has now effectively been discontinued.

[4]                 Thus, they say, a hearing cannot and will not be conducted in respect of the claim which was before the Court on the summary judgment application and therefore the Court should, in its discretion, determine costs on the plaintiff’s unsuccessful application.

[5]                 The plaintiff opposes the application. It says that although the cause of action pleaded in the first statement of claim under the Construction Contracts Act does not appear in the amended statement of claim, the proceeding remains a claim to recover money which the plaintiff says is due and owing under the construction contract. Therefore it would be inappropriate to make a determination on costs when the claim between the parties remains to be determined at a substantive hearing.

[6]                 The principle in NZI Bank Ltd v Philpott is well known and frequently applied. The basis for the decision of the Court of Appeal is well-summarised in this passage from the judgment of Heron J:2

Having regard to the difficulty in determining those matters until the case itself is concluded, in many cases the best course will be for the Judge or Master to reserve the question of costs until the litigation is determined … We repeat however that the incidence of costs is best settled when the result of the litigation is known. Hence the widespread practice as we see it of reserving costs in such situations.

[7]                 Although the basis upon which the plaintiff seeks to recover its alleged debt from the defendants has been repleaded, the litigation between the plaintiff and the defendants has not been determined. Specifically, the defendants’ liability (if any) remains at large. An amendment to the causes of action, whilst materially varying the pathway to judgment which the plaintiff elects to follow, nonetheless relies on the same contract. Ultimately the defendants may be found liable to the plaintiff for the sum for which it sues. In that event the plaintiff will be entitled to costs. As the Court

2      NZI Bank Ltd v Philpott [1990] 2 NZLR 403 at 405.

of Appeal recognised, it may be that the defendants’ successful defence of an application for summary judgment will be a matter which will be taken into account at that point. In this case, I would expect that the Court would do so because the issues raised on the summary judgment will not be live issues at trial so far as they concern the application of the Construction Contracts Act. In the end, though, that is for the Judge determining the costs at that point.

[8]The application for determination of costs now is dismissed.

[9]                 In this circumstance it is not necessary to consider the defendants’ application for an increase in costs. That, too, is an issue for the Judge to consider when determining costs when the result of this case is established.

[10]              Although raised by memorandum, this is in effect an application for an order for costs and has required a response. It has not succeeded and, in my opinion, was not soundly based. It is plain from the judgment that the Court had already considered the application of the principle in NZI Bank Ltd v Philpott. The outcome of the case is not known, and the claim is based on the contract that it has been based on since the inception of the claim. In my opinion the plaintiff is entitled to costs as though this were an interlocutory application, which has not succeeded. However, as counsel have not been heard on this I reserve costs on this application as well. I refer to it now so that this can be taken into account when costs are assessed, overall, at the conclusion of the case.

J G Matthews Associate Judge

Solicitors:

Macalister Todd Phillips, Queenstown Parlane Law, Auckland