Hira Bhana & Co Ltd v PGG Wrightson Ltd - [2007] NZCA 342

IN THE COURT OF APPEAL OF NEW ZEALAND

CA203/06

[2007] NZCA 342

BETWEEN

AND

HIRA BHANA & CO LIMITED Appellant

PGG WRIGHTSON LIMITED Respondent

Hearing: 19 July 2007

Court: Chambers, O’Regan and Wilson JJ
Counsel: N W Ingram QC and G D Stringer for Appellant

C H Toogood QC and J W S Baigent for Respondent

Judgment: 9 August 2007 at 3 pm

JUDGMENT OF THE COURT

A The appeal is dismissed.

BThe appellant must pay costs of $3,000 plus usual disbursements. We do not certify for second counsel.

REASONS OF THE COURT

(Given by O'Regan J)

HIRA BHANA & CO LIMITED V PGG WRIGHTSON LIMITED CA CA203/06 [9 August 2007]

Introduction

[1] This is an appeal against a costs judgment of Keane J, in which he awarded costs in favour of the appellant, Hira Bhana & Co Ltd, on a Band 2B - 2C basis, but declined Hira Bhana's claim for indemnity costs or increased costs: PGG Wrightson Limited v Wai Shing Ltd & Anor HC AK CIV 2003-404-6579 25 August 2006.

Issues

[2] The respondent (to which we will refer as "Fruitfed", which is the name of the relevant trading division of the respondent) commenced proceedings against both Wai Shing Ltd and Hira Bhana in late 2003, and the matter went to trial in late 2005.

[3] In August 2004, Hira Bhana sent a letter containing a settlement offer to Fruitfed, which was expressed to be "without prejudice save as to costs". The offer was that Fruitfed should discontinue its proceeding against Hira Bhana, on the basis that each party would bear its own costs up to that date. The offer was not accepted. Fruitfed was unsuccessful at trial. Hira Bhana sought indemnity costs or increased costs which, as noted above, the High Court Judge refused.

[4] The question for determination is whether increased or indemnity costs should have been awarded. On our view of the case, the answer to that question turns on another question: was it unreasonable for Fruitfed to reject Hira Bhana's offer and go to trial?

[5] To answer those questions, we will first outline the background to Fruitfed's action, and the outcome at trial. We will then consider Hira Bhana's offer, and the reasons why it was not accepted. Once we have dealt with those factual issues, we will consider the application of the law, namely the relevant parts of Rules 46 - 48G of the High Court Rules, to the facts.

Factual background

[6] Fruitfed was the victim of fraud by its Pukekohe branch manager, Mr Dark. Mr Dark had sold items of stock at less than retail price (and, in some cases, at less than cost price) to Hira Bhana and Wai Shing, both of which were market gardeners at Pukekohe and major customers of the Fruitfed horticultural supplies business. Many sales were involved over an extended period. The allegation at trial against Hira Bhana was that it was, or should have been, on notice as to Mr Dark's dishonesty when…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] NZCA 342
Decision Date: 9 August 2007

CaseChat Overview and Summary

Hira Bhana & Co Ltd, a market gardener, brought an appeal against a costs judgment made by Keane J, who awarded costs in favour of Hira Bhana on a Band 2B - 2C basis, but declined Hira Bhana's claim for indemnity costs or increased costs. The respondent, Fruitfed (trading division of PGG Wrightson Limited), commenced proceedings against both Wai Shing Ltd and Hira Bhana in late 2003. The matter went to trial in late 2005. In August 2004, Hira Bhana sent a letter containing a settlement offer to Fruitfed, which was expressed to be "without prejudice save as to costs". The offer was that Fruitfed should discontinue its proceeding against Hira Bhana, on the basis that each party would bear its own costs up to that date. The offer was not accepted. Fruitfed was unsuccessful at trial. Hira Bhana sought indemnity costs or increased costs which the High Court Judge refused. The question for determination was whether increased or indemnity costs should have been awarded. The Court found that it was not unreasonable for Fruitfed to reject Hira Bhana's offer and go to trial. Therefore, the appeal was dismissed, and costs of $3,000 plus usual disbursements were awarded to Fruitfed.

Orders