Fullers Bay of Islands Limited v Otehei Bay Holdings Limited HC Auckland CIV-2009-404-007207

[2011] NZHC 2103

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-404-007207

BETWEEN  FULLERS BAY OF ISLANDS LIMITED First Plaintiff

ANDINTERCITY GROUP (NZ) LIMITED Second Plaintiff

ANDOTEHEI BAY HOLDINGS LIMITED First Defendant

ANDEXPLORE NZ (2004) LIMITED Second Defendant

ANDMINISTER OF CONSERVATION Third Defendant

Hearing:         on the papers

Counsel:         JD McBride for Plaintiffs

SJ Katz for First and Second Defendants
B Arthur for Third Defendant

Judgment:      21 December 2011

JUDGMENT OF ASHER J (Costs)

This judgment was delivered by me on Wednesday, 21 December 2011 at 4.45pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Bell Gully, DX CP20509, Auckland 1140.  [email protected]

Russell McVeagh, DX CX10085, Auckland 1140. Email:  [email protected]

Crown Law Office, PO Box 2858, Wellington 6140. Email:  [email protected].

FULLERS BAY OF ISLANDS LTD V OTEHEI BAY HOLDINGS LTD HC AK CIV-2009-404-007207 [21

December 2011]

Introduction

[1]      Fullers Bay of Islands Ltd and Intercity Group (NZ) Ltd (“the plaintiffs”)

succeeded before Hugh Williams J in a judgment delivered on 24 September 2010.1

The plaintiffs obtained various declarations and orders against Otehei Bay Holdings Ltd, Explore NZ (2004) Ltd and the Minister of Conservation (“the defendants”). The defendants appealed the judgment of Hugh Williams J.  In a majority judgment of 1 July 2011 that appeal was dismissed although there was a variation to the orders by consent.2  The plaintiffs now seek costs in the High Court proceeding.

The contest

[2]      There is no contest that category 3 is the appropriate category.   There are three areas of disagreement.  The first is the determination of what is a reasonable time for the commencement  of the proceeding  by the plaintiff.   The  second  is whether increased costs are appropriate on either of the two alternative bases advanced by the plaintiffs.  The third, which I will address separately, is whether the plaintiffs are entitled to interest on costs.

[3]      The plaintiffs first seek costs in excess of the normal band B in respect of the commencement of the proceeding by the plaintiff: receiving instructions, researching facts and law, and preparing, filing, and serving statement of claim and notice of proceeding or equivalent or originating application.3   In respect of this step they seek determination of what is a reasonable time by reference to band C.  They argue that this was a complex judicial review and civil proceeding involving three factually and legally distinct causes of action.  They argue that it is evident from the pleadings and the judgment that the proceeding required a comparatively large amount of time to

commence.

[4]      The    plaintiffs    further    seek    increased    costs    under    r 14.6(3)(a)    or r 14.6(3)(b)(ii).  In respect of r 14.6(3)(a) they argue that the nature of the proceeding

1      Fullers Bay of Islands Ltd v Otehei Bay Holdings Ltd HC Auckland CIV-2009-404-7207, 24

September 2010.

2      Otehei Bay Holdings Ltd v Fullers Bay of Islands Ltd [2011] NZCA 300, [2011] 3 NZLR 449.

3      High Court Rules, sch 3.

was such that the time required for two steps in the proceeding, its commencement and preparation for the hearing, substantially exceeded the time allocated under band C.   They refer again to the three causes of action and also the voluminous evidence, including 30 affidavits at the substantive hearing.  They seek an uplift of

50 per cent in respect of the commencement of the proceeding and preparation for the hearing.

[5]      In respect of r 14.6(3)(b)(ii), the plaintiffs submit that the argument raised by Otehei Bay Holdings Ltd and Explore NZ (2004) Ltd (“the Explore defendants”) on jetty access was without merit and contributed unnecessarily to the time and expense of the proceeding. They seek a global uplift of 50 per cent.

[6]      The defendants disagree on all fronts.  They argue that band B is appropriate for the commencement of the proceeding by the plaintiffs as for the other steps in the proceeding and that the nature of the proceeding was not such that either the time required to commence it or prepare for the hearing exceeded the time normally allocated under band B, let alone band C.  The hearing was relatively short and the facts  and  argument  relatively  confined.     Much  of  the  evidence  related  to interlocutory matters in respect of which costs have already been considered.  The defendants point generally to the special skill and experience required of counsel in category 3 proceedings.   For counsel with this special skill and experience, they argue,   there   was   nothing   unusually   demanding   or   time-consuming   about commencing the proceeding nor preparing for the hearing.

[7]      In respect of the plaintiffs’ application under r 14.6(3)(b)(ii) the Explore defendants argue the jetty access point was not without merit, was accorded careful consideration by Hugh Williams J and was not subject to any adverse comment by him.

Discussion

[8]      This was a hard fought case involving the determination of a number of difficult issues.  There is, however, nothing to indicate that the commencement of the proceeding required a comparatively large amount of time and still less that the

nature of the proceeding or the commencement of the proceeding or the preparation for the hearing were such that the time required by the plaintiffs would substantially exceed the time allocated under band C.  There was a tortuous interlocutory process prior to trial but costs orders were made in relation to those applications.   The hearing itself appears to have been conducted with efficiency.  With the exception of the jetty access point the various defences put forward were arguable.   There is nothing to distinguish this case in any marked way from any other similar piece of litigation.  While there were three distinct causes of action, this is not an uncommon circumstance.    I  do  not  consider  that  the  case  for  determination  of  what  is  a reasonable time for commencement of the proceeding by reference to band C is made out, nor that an uplift in respect of the commencement of the proceeding and preparation for the hearing is made out.

[9]      There was Court of Appeal authority that was against the Explore defendants on the jetty access point.4    That point undoubtedly took an appreciable amount of hearing time.   However, it was open to the defendants to seek to distinguish that case, which they sought to do.   Ultimately it was open to them to seek a reconsideration of the point in the Court of Appeal if they thought that appropriate. The fact that ultimately the point was not pursued in the Court of Appeal is not

determinative of the issue of costs.

[10]     Hugh Williams J spent some time in his judgment considering the argument on the issue.  On balance I do not consider that the jetty access point was so hopeless and sufficiently time consuming to warrant a particular uplift beyond that which usually applies to the pursuit of an unsuccessful claim.

Interest on costs

[11]     The parties have also filed submissions in relation to interest on costs.

[12]     The plaintiffs seek interest on costs from the date of judgment at the interest rates prescribed in the Judicature (Prescribed Rate of Interest) Orders 2008 and 2011.

Thus, they seek interest from 24 September 2010 to 30 June 2011 at 8.4 per cent per

4      Hume v Auckland Regional Council [2002] 3 NZLR 363 (CA).

year being the interest rate prescribed in the 2008 Order and from 1 July 2011 onwards at five per cent per year being the rate prescribed in the 2011 Order.

[13]     The defendants oppose.  Counsel for the Minister of Conservation refers to the English position and the New Zealand case law and submitted that  interest should run from the date of the order quantifying the costs payable.  Counsel for the Explore defendants support this stance.   The defendants point out that they have engaged promptly with the plaintiffs to identify areas of agreement and disagreement in relation to costs and have not endeavoured to avoid their responsibilities.

[14]     Rule 11.27(1) of the High Court Rules provides that a judgment debt carries interest from the time judgment is given until it is satisfied.  Hugh Williams J when he delivered the substantive judgment on 24 September 2010 stated that the plaintiffs were “entitled to costs against all respondents.”5

[15]     The House of  Lords  observed  in  Hunt  v RM  Douglas  (Roofing) Ltd6   in relation to the issue of whether interest should run on a costs award:

Since interest is not awarded on costs incurred and paid by the successful party before judgment, why should he suffer the added loss of interest on costs incurred and paid after judgment but before the taxing master gives his certificate?

[16]     Counsel have referred me to three New Zealand cases of this Court where interest has been awarded on costs: Te Mata Properties Ltd v Hastings District Council,7 The Dunes Café and Bar Ltd v 623 Rocks Road Ltd (in liq)8 and Affco New

Zealand Ltd v Anzco Foods Waitara Ltd.9   In the latter decision it was observed that

there is nothing to say that such a jurisdiction does not also exist in New Zealand.10

There appears to have been no argument, and therefore no analysis of the issue of jurisdiction, in these cases.

5 At [207].

6      Hunt v RM Douglas (Roofing) Ltd [1990] 1 AC 398 (HL) at 415.

7      Te Mata Properties Ltd v Hastings District Council HC Napier CIV-2004-441-151, 23 February

2010 at [16].

8      The Dunes Café and Bar Ltd v 623 Rocks Road Ltd (in liq) HC Nelson CIV-2006-442-481, 31

March 2010 at [114].

9      Affco New Zealand Ltd v Anzco Foods Waitara Ltd (2005) 17 PRNZ 676 (HC).

10 At [10].

[17]     While, as recognised by s 16 of the Judicature Act 1908, this Court has had devolved on it the powers of the English superior Courts,11 prior to the passing of the Judgments Act 1838 (UK)12 interest on costs could not be recovered in England.13   In Hunt v RM Douglas (Roofing) Ltd after an extensive analysis of the relevant rules and case law it was found that the English rules did allow for interest on costs to run from the date of judgment.   But that followed  an interpretation of the relevant

English rules.  The New Zealand High Court Rules contain no equivalent provision. Rule 11.27(1) requires a “judgment debt”.

[18]     No judgment debt for costs is created until there is an order to pay a specific amount.  For there to be a judgment debt there must be a final and actual direction to pay.14    There was no such direction made by Hugh Williams J.  Indeed, costs were not quantified.   I am bound to conclude therefore that there is no jurisdiction to award interest on costs prior to there being an order to pay a specific amount for costs, after which interest accrues under r 11.27(1).  The general statement that costs were awarded in favour of the plaintiffs in the original judgment did not at that moment  create  a  judgment  debt  in  the  sense  of  there  being  a  final  and  actual

direction to pay.

[19]     I therefore do not feel able, with respect, to follow Affco New Zealand Ltd v Anzco Foods Waitara Ltd, The Dunes Café and Bar Ltd v 623 Rocks Road Ltd (in liq) and Te Mata Properties Ltd v Hastings District Council.

[20]     Accordingly there will be no order as to the payment of interest on costs.

Result

[21]     I therefore  accept  the  defendants’ position  as  summarised  at  [19]  of the

parties’ joint memorandum on costs which I reproduce below.

11     See Zaoui v Attorney-General [2005] 1 NZLR 577 (SC) at [34].

12     Judgments Act 1938 (UK) 1 & 2 Vict c 110.

13     Hunt v RM Douglas (Roofing) Ltd at 405.

14     Garner v Briggs (1858) 27 LJ Eq 483 and Treadwell v Public Trustee [1944] NZLR 778 (SC) at

781.

[22]     I make costs orders against the defendants to be paid to the plaintiffs on the following basis:

(a)       Costs at the scheduled rate, being $42,117 (category 3, with all items band B), apportioned as follows:

(i)$5,560 for the counterclaim against the Explore defendants jointly and severally;

(ii)The  remaining  $36,557  split  60:40  between  the  Explore defendants and the Minister of Conservation, as follows:

a.   $21,934.20    against    all     defendants    (jointly     and severally); and

b.$14,622.80 against the Explore defendants (jointly and severally).

[23]     There is no order for interest in relation to these costs.

……………………………..

Asher J