Galt Nominees Limited v Bank of New Zealand

[2021] NZHC 875

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-002556

[2021] NZHC 875

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

COSTS JUDGMENT OF VENNING J

This judgment was delivered by me on 23 April 2021 at 2.00 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 875 [23 April 2021]

[1]    Galt Nominees Limited (Galt) and Glencoe Land (Joint Venture) Limited (Glencoe JV) had guaranteed the obligations of a related entity to the BNZ. The related entity defaulted. The BNZ appointed the second and third defendants as receivers of Galt and Glencoe JV’s property and took steps to sell Galt’s and Glencoe JV’s property.

[2]    Galt and Glencoe JV brought proceedings against the BNZ and sought injunctions to prevent them acting in reliance on the Property Law Act Notices that had issued. Galt and Glencoe JV also took proceedings against the receivers. The proceedings were consolidated.

[3]    Ultimately Galt and Glencoe JV withdrew their respective applications and sought leave to discontinue their substantive proceedings. The proceedings were discontinued by leave on 11 March 2021.

[4]    The remaining issue is costs. BNZ seeks indemnity costs in accordance with the facility agreements between it and Galt and Glencoe JV. Costs in the sum of

$243,419.84 (excluding GST) are sought, made up of:

(a)$122,870.45 for BNZ’s actual and reasonable costs and disbursements;

(b)$10,175.00 for costs of the receivers; and

(c)$110,374.39 for the receivers’ actual and reasonable legal costs.

[5]    The receivers have filed a memorandum seeking costs which they only need to pursue if the Court does not make an indemnity costs award in favour of BNZ. In that case the receivers seek scale costs on a category 2B basis together with disbursements.

[6]    In their memorandum in response the plaintiffs confirm they do not oppose the BNZ’s claim for indemnity costs under the facility agreement and deed of guarantee and indemnity.

[7]    The live issue between the parties is whether the liability of Galt and Glencoe JV under the facility agreement and deed of guarantee and indemnity is limited to the value of certain assets. BNZ’s position is that its entitlement to recover costs is not subject to that limit. The plaintiffs say it is. I return to that issue shortly.

[8]    Although the plaintiffs do not oppose indemnity costs the Court must still be satisfied that BNZ is entitled to indemnity costs in this case.

[9]    Rule 14.6(4)(e) applies. BNZ has a contractual entitlement to the costs against both Galt and Glencoe JV.1

[10]   In terms of the considerations noted by the Court of Appeal in Black v ASB Bank Ltd, the steps taken by BNZ attract a costs indemnity award on a proper construction of the guarantees. The enforcement steps were covered by the relevant clauses and no other principles drawn from the general law of contract operate to deny the claim.

[11]   Relevantly the plaintiffs do not oppose. The plaintiffs concede that the clauses relied on by BNZ for an award of indemnity costs support such an award. The fees charged appear reasonable and have not been challenged.

[12]   As noted above however, the plaintiffs’ position is that the Court’s jurisdiction on this 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 provision in the loan documents. I agree with that submission. That issue must be for another day when and if BNZ seeks to enforce the costs award.

[13]   In summary, BNZ is entitled to an award of costs on an indemnity basis, and the quantum sought of $243,419.84 is an appropriate figure.

1      Black v ASB Bank Ltd [2012] NZCA 384.

Result

[14]   The order of the Court in relation to the costs of these proceedings is that the BNZ is to have costs against the plaintiffs jointly and severally in the sum of

$243,419.84.

[15]   For the avoidance of doubt I reserve the parties’ positions in relation to whether the enforcement of that award is subject to the limitation provisions of the relevant facility agreements.

Venning J