Galt Nominees Limited v Bank of New Zealand

[2021] NZHC 922

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-002556

[2021] NZHC 922

BETWEEN

GALT NOMINEES LIMITED as trustee of the WAINUIOTOTO TRUST

First Plaintiff

GLENCOE LAND (JOINT VENTURE) LIMITED

Second Plaintiff

AND

BANK OF NEW ZEALAND

First Defendant

NATALIE GYTHA BURRETT and NEALE JACKSON

Second Defendants

NATALIE GYTHA BURRETT and NEALE JACKSON

Third Defendants

Hearing:	(On the papers)
Judgment:	23 April 2021
Amended Issued:	28 April 2021

ADDENDUM TO COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 28 April 2021 at 2.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Lowndes Jordan, Auckland

Minter Ellison Rudd Watts, Auckland Chapman Tripp, Auckland

Counsel:            J Goodall/D Chisholm QC, Auckland

GALT NOMINEES LIMITED v BANK OF NEW ZEALAND [2021] NZHC 922 [23 April 2021]

Introduction

[1]    The costs judgment delivered on 23 April 2021 refers. In that judgment the Court fixed indemnity costs in favour of the BNZ against the plaintiffs jointly and severally but reserved the parties’ positions in relation to whether the enforcement of the award was subject to the limitation provisions of the relevant facility agreements.

[2]    Following delivery of the judgment counsel for BNZ drew to the Registrar’s attention that the timetable provided a right of reply for BNZ which had not been filed and considered by the Court.

[3]    BNZ’s memorandum in reply has now been filed. BNZ submits that the Court has jurisdiction to determine whether the costs award is subject to the limitation of liability and that, on a correct interpretation of the relevant clauses, costs fall outside the limitations of liability provided in the facility agreement and deed.

[4]    The Court has now had the opportunity to consider the further submissions of the BNZ, particularly in relation to whether the Court has jurisdiction, in the costs judgment, to determine whether the limitation of liability provisions in the facility agreement and deed apply.

[5]    Rather than recall and reissue the costs judgment, I propose to deal with the matter by way of an addendum to the costs judgment.

BNZ reply submissions on jurisdiction

[6]The BNZ argues the Court has jurisdiction for a number of reasons.

The scope of r 14.6

[7]    BNZ submits that High Court Rules 2016, r 14.6 provides the Court with jurisdiction to determine a party’s entitlement to indemnity costs, which includes the determination of whether those costs are payable (referring to r 14.8). Further, contractual interpretation is inherent in the exercise of determination whether there is an entitlement to indemnity costs under a contract under r 14.6(4)(e).

[8]    Rule 14.8 does not assist the BNZ’s argument. That rule is directed at establishing a default position that costs on an interlocutory application should be fixed and paid when the interlocutory application is determined rather than be reserved to the outcome of the substantive hearing. The reference to “payable” is a reference as to timing rather than an interpretation of the parties’ rights.

[9]    While the Court must consider the relevant clause relied on in order to determine whether an award of indemnity costs should be made on the basis of a provision of a contract or a deed, the Court has engaged in that exercise in the present case and accepted that the relevant provision supports an award of indemnity costs. Such an interpretation exercise is expressly contemplated by r 14.6(4)(e). That is, however, a quite separate issue to the interpretation of a limitation of liability provision of broader scope.

The discretion in r 14.1

[10]   The BNZ argues that the discretion in r 14.1(1) provides a broad discretion in relation to costs. I agree that the discretion is a broad one. It enables the Court to decline to make an award of costs where one otherwise would follow from an application of the Rules. For example, the Court may depart from the scale and time allowances provided for in the Rules. The discretion does not however expand the jurisdiction of the Court on a costs issue to enable the determination of a contractual liability issue.

Sanderson and Bullock orders

[11]   Next, BNZ submits the Court often goes beyond the determination of quantum when addressing costs issues, for example, in determining the liability of costs of unsuccessful parties, including Sanderson and Bullock orders. Again, such orders are generally contemplated by r 14.14. Such orders are examples of the application of the discretion applicable to the fixing of costs. They do not involve contractual interpretation.

Costs order nugatory

[12]   BNZ then submits that unless the Court determines the plaintiffs’ argument that liability for costs is effectively excluded by limitations of liability against it that will render the costs order nugatory and undermine the principle that costs should follow the event. With respect that confuses two issues. As noted, the prima facie position found in the costs judgment is that BNZ is entitled to costs on an indemnity basis. That is a quite different issue to whether such an award is enforceable. Costs awards do not guarantee payment. In a number of cases costs orders are made by the Court which, for one reason or another, may not be enforceable.

Inefficiency

[13]   Finally BNZ submits that it would be inefficient to require it to issue separate proceedings solely in relation to the limitation of liability issue. Costs should, so far as possible, be predictable and expeditious, citing r 14.2(1)(g).

[14]   Again, with respect, the submission confuses the fixing of costs and whether or not costs are actually recoverable. In context, r 14.2 is directed at ensuring, so far as possible, parties to proceedings will be able to assess the likely cost of litigation and whether it will be worthwhile. Costs on a scale basis are effectively self- calculating.

[15]   The additional costs that may arise in relation to the enforcement of the costs award by BNZ is a consequence of the need to interpret the relevant provisions of the facility agreement and deed entered by the parties (including BNZ) and by the practical circumstances of the parties to the agreement.

Result

[16]   For the above reasons, the Court remains of the view expressed in the judgment that the Court’s jurisdiction on the application for a costs award does not extend to determining whether or not the recovery of those costs is subject to the limitation of liability provisions in the loan documents.

Venning J