George Grant Engineering Limited v Steelrite Engineering Limited

[2023] NZHC 3295

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-419-238

[2023] NZHC 3295

BETWEEN

GEORGE GRANT ENGINEERING LIMITED
Applicant

AND

STEELRITE ENGINEERING LIMITED

Respondent

Hearing:

On the papers

Appearances:

T J P Bowler for the Applicant

K T Glover with Gavin Arnet for the Respondent

Judgment:

21 November 2023

COSTS JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

This judgment was delivered by me on 21 November 2023 at 3:00pm

pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

Solicitors:

Neilsons (Trent Bowler), Onehunga, Auckland, for the Applicant Arnet Law (Gavin Arnet), Pukekohe, for the Respondent

Counsel:

K T Glover, Shortland Chambers, Auckland, for the Respondent

GEORGE GRANT ENGINEERING LIMITED v STEELRITE ENGINEERING LIMITED [2023] NZHC 3295

[21 November 2023]

Introduction

[1]    Steelrite Engineering (Steelrite) has applied by interlocutory application on notice dated 14 August 2023 seeking the following orders:

(a)Rescinding, or alternatively recalling, the Court’s judgment of 20 July 2020 in favour of George Grant Engineering Ltd (GGE) as to costs;

(b)that GGE pay Steelrite’s costs and disbursements in relation to the proceeding;

(c)that GGE pay Steelrite’s costs and disbursements in relation to this application.

[2]    Mr Glover, on behalf of Steelrite, has filed in support of the application a memorandum of counsel dated 10 August 2023 and an affidavit of Andre Stephen Styles sworn on 10 August 2023.

[3]    GGE filed a notice of opposition to the application, dated 14 September 2023, and filed in support an affidavit of John Janani Keith Grant, sworn 12 September 2023. Mr Styles filed an affidavit in reply, sworn on 13 October 2023.

Background

[4]    In August 2019, GGE applied to this Court to set aside the statutory demand issued by Steelrite. GGE admitted that the amount was owing but said that it had a counterclaim for an amount exceeding the amount of the demand. The Court in its judgment of 20 July 2020 set aside the demand on the basis that GGE had an arguable counterclaim but it was not possible to resolve the conflicts of evidence without cross- examination.

[5]    The Court directed that Steelrite pay GGE ’s costs and disbursements in the oral judgment of Associate Judge Bell, but without particularising those amounts.

GGE submitted to the Court an order for sealing which specified costs at $13,384.00 and disbursements of $2,319.14 (the 2020 costs order).

[6]    GGE sought to enforce the costs order by way of statutory demand in April 2021. Steelrite applied to have the statutory demand set aside on the basis of its own claims against GGE. GGE withdrew its demand in July 2021.

[7]    Steelrite issued proceedings in the District Court in September 2021, making a claim against GGE in debt for unpaid invoices (including the invoice which provided the basis for the statutory demand). GGE made counterclaims in the District Court proceedings, including a counterclaim cause of action that was identical to the counterclaim that it relied on for the purposes of having Steelrite’s statutory demand set aside in July 2020.

[8]    The District Court proceedings were due for trial on 21 July 2023, but immediately before the hearing GGE’s solicitors advised that GGE admitted Steelrite claim in debt and that it would not be pursuing the counterclaims. The District Court entered judgment for Steelrite against GGE on Steelrite’s primary claim and Steelrite’s defence on GGE’s counterclaim.

Steelrites’s submissions

[9]    Mr Glover acknowledges that as the order has already been sealed it cannot be recalled under r 11.9 of the High Court Rules 2016. However Mr Glover submits that the costs judgment should be recalled based on the Court’s inherent jurisdiction, and refers to the decision in Herron v Wallace:1

[33]     From these cases, in my view, the principles may be extracted in the following way:

(a)The starting point must be the finality of litigation which reflects the public interest in there being an end to litigation, and the private interests of the parties in not being subject to vexatious litigation; however

1      Herron v Wallace (2016) 23 PRNZ 620; [2016] NZHC 2426 at [33].

(b)absolute finality of litigation is unsafe There are circumstances in which the Court may invoke its inherent jurisdiction. There are some established categories of exception to the finality of litigation:

(i)a slip or omission may be rectified;

(ii )a judgment may be set aside, usually by separate action, where it was obtained by fraud;

(iii)a case may be reopened where fresh evidence not previously available has come to light which is material to the outcome of the case;

(iv)a judgment obtained by consent may be reopened; and

(v)a supplementary judgment may be given to cover a matter not previously dealt with.

He notes that the decision in Herron v Wallace was endorsed by the Court of Appeal in Slavich v Attorney-General.2

[10]   As to the recall of the costs judgment, Mr Glover submits that Steelrite relies on the third category listed by Faire J in the Herron decision, namely that “the case may be reopened where fresh evidence not previously available has come to light which is material to the outcome of the case.” Mr Glover submits the fresh evidence in this case is that Steelrite has ultimately prevailed on the counterclaim relied on by GGE as a result full admissions made by GGE the day before the District Court trial was due to take place. He submits that it is clear that GGE did not have a proper basis for resisting Steelrite’s statutory demand in 2019 and 2020.

[11]   Mr Glover also submits that since June 2023, new evidence has come to light which would have been material to the Court’s decision regarding the statutory demand (and, by extension, costs) at the 2020 hearing, as set out at [23] of his submissions.

Quantification of Steelrite’s costs claim

[12]   Mr Glover seeks indemnity costs on the basis that the application to set aside the statutory demand was an abuse of process and circumstances were that GGE later

2      Slavich v Attorney-General [2020] NZCA 32.

admitted its foundation for a counterclaim could not be substantiated. In the alternative, he seeks costs of $7,648.00 on a 2A basis, together with an uplift of 50 per cent to reflect GGE’s application having been an abuse of process (ie total of

$11,472.00) and disbursements of $139.13.

[13]   Mr Glover submits, as an alternative, that if the Court orders the 2020 costs order should stand, the 2020 costs order should be recalled and reduced because it was sealed in irregular circumstances. He submits the draft order was not sent to Steelrite before being sealed, that it was highly irregular, and the unusual process adopted by GGE led to GGE being awarded costs and disbursements in excess of what would have been ordered had Steelrite been heard on the items being claimed. Mr Glover submits the difference, as set out at [30] of his submissions, is $4,7077.57, leaving a balance of $10,931.47 which he submits is the maximum amount that GGE should be awarded if the Court considers the 2020 costs order should stand.

[14]   Mr Glover also seeks costs on the recall application of $2,987.50 plus disbursements of $434.78 (reserving his right to seek further costs if the recall application is opposed).

GGE’s submissions

[15]   Mr Bowler, for GGE, submits that the inherent jurisdiction of the Court is not available to set aside a sealed judgment, He submits in the present case there are no truly exceptional circumstances to enable recall of the 2020 costs order, and that no injustice has been suffered by Steelrite. He submits there is no new evidence to justify recall of the 2020 costs order.

[16]   As to GGE agreeing to admit to judgment being entered in the District Court proceedings, Mr Bowler submits that this was solely due to the unavailability of its expert witness. Mr Grant deposes that GGE’s decision to agree to the District Court judgment to be entered was based on having a set-off under the 2020 costs order of approximately $15,000 against Steelrite’s claim for $45,000. Mr Grant deposes that GGE made a decision that it was uneconomical to proceed with a full day’s hearing in

the District Court with the unavailability of its expert witness, and therefore made a pragmatic decision regarding agreeing to judgment being entered on Steelrite’s claim.

[17]   As to the quantum of the 2020 costs order, Mr Bowler submits that GGE has already admitted an appropriate reduction of the costs order although he does not state by how much the 2020 costs order has been reduced.

[18]   Mr Grant also deposes that GGE’s counterclaim has never been determined on the merits, as it was only discontinued by GGE due to the unavailability of its expert witness and the fact it was uneconomical to proceed with a full day’s hearing in the District Court under those circumstances.

Result

[19]   I am of the view that Steelrite’s application to recall the 2020 costs order should be dismissed. The reasons for this are as follows:

(a)In the July 2020 hearing of GGE’s application to set aside Steelrite’s statutory demand, the Court was persuaded that GGE had an arguable counterclaim against Steelrite exceeding the demand. The Court made a judgment on evidence available to it at the time and the fact that ultimately the counterclaim was conceded by GGE is not a valid reason to recall the 2020 costs order.

(b)Steelrite alleges that GGE’s counterclaim was never sustainable and accordingly, using the counterclaim as a basis for setting aside the statutory demand was an abuse of process. However this has not been established as Mr Grant deposes that GGE withdrew the counterclaim on the basis that the evidence of the expert witness was unavailable and accordingly the merits of the counterclaim had never been determined.

(c)Overall, in my view the circumstances put forward by Steelrite for recall of the2020 costs order are not sufficiently exceptional or special to justify recall of a sealed order.

(d)As to Steelrite’s claim for costs for the July 2020 hearing, this should be declined for the same reasons as set out above. It is not possible for the Court to, with hindsight, review the 2020 costs order and reverse it based on what Steelrite claims was an abuse of process by GGE, which is disputed by GGE.

(e)As to the quantification of GGE’s costs order, as the Judge involved in the hearing is no longer available, it is not feasible to review the aspects of the costs as sought at [30](a) and (b) of Mr Glover’s memorandum. If the filing fee was claimed twice, this amount should be adjusted.

(f)As to costs on the re-call application by Steelrite that has been dismissed, I am of the view that costs should lie where they fall.

Orders

[20]I make the following orders:

(a)Steelrite’s application to recall the2020 costs order is dismissed and accordingly Steelrite’s application for a costs order in its favour in respect of the July 2020 hearing is also dismissed;

(b)costs on Steelrite’s application for recall of the 2020 costs order will lie where they fall;

(c)if the filing fee in the 2020 costs order has been claimed twice, this should be adjusted between the parties.

…………………………….. Associate Judge Taylor