Homestead Bay Trustees Limited v Fiordland Experience Group Limited

[2023] NZHC 3854

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2022-404-2160

[2023] NZHC 3854

BETWEEN

HOMESTEAD BAY TRUSTEES LIMITED

Applicant

AND

FIORDLAND EXPERIENCE GROUP LIMITED

Respondent

On the papers
Counsel:	R Hollyman KC and R Stewart for the applicant A Butler KC and R Harrington for the respondent
Judgment:	21 December 2023

COSTS JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 21 December 2023 at 12.30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

HOMESTEAD BAY TRUSTEES LIMITED v FIORDLAND EXPERIENCE GROUP LIMITED [2023] NZHC

3854 [21 December 2023]

[1]                 In my judgment dated 16 November 2023 I said that the applicant (HBTL) was entitled to costs (it having succeeded in this proceeding). I encouraged counsel to agree costs. I indicated that, in the absence of any other information, a reduction in costs of about 50 per cent was warranted, given that HBTL had failed on most of its arguments at the hearing.

[2]                 The parties have failed to agree costs. By some margin. HBTL says costs should be $45,097.75. The respondent (FEG) says they should be $5,109.50. Counsel raise six issues for me to resolve as I navigate my way through the gulf between the parties.

[3]                 First, HBTL claims that band C is appropriate for filing its application and supporting affidavits, preparing written submissions and preparing the common bundle. FEG says band B. Under rr 14.2(1)(c) and 14.5 of the High Court Rules 2016, the question is whether a reasonable time for the step is a normal amount of time (band

B) or a comparatively large amount of time (band C). In answering that question, I take into account what the application, affidavits, bundle and written submissions should reasonably  have  covered.  Here,  while  those  materials  would  have taken a comparatively large time to prepare, to some extent that was because HBTL chose to advance several arguments that were unsuitable for a summary hearing. So, I apply band B.

[4]                 Secondly, FEG disputes HBTL’s claim for step 37, the filing of the originating application and supporting affidavits. FEG points to HBTL having filed an amended originating application. FEG seeks to draw an analogy with r 7.77(8), which provides that where an amended pleading under that rule is filed, the party filing the amended pleading must bear all the costs of and occasioned by the original pleading and any application for amendment (unless the Court directs otherwise). I accept there is some analogy, but it does not mean that HBTL cannot claim at all for filing its application and supporting affidavits. There are two consequences. One is that HBTL cannot claim both for the initial application and affidavits and then again for the amended versions. But HBTL claims only once for this step. The other consequence is that HBTL has to bear the cost occasioned by the original pleading. This means FEG is

entitled (by way of deduction) to costs for having had to plead twice to two applications. The analogy is with step 9 of sch 3. I allow FEG one day for this.

[5]                 Thirdly, FEG disputes HBTL’s claim for seven memoranda and one case management appearance. FEG says these all arose out of HBTL’s failure to meet timetables, from HBTL’s amendments to the pleadings or from HBTL seeking costs on an unjustified basis. I agree with that characterisation, except in respect of the memoranda dated 27 February 2023 and 3 March 2023 and the case management appearance. HBTL is entitled to costs for those (together with the one memorandum and appearance to which FEG did not object).

[6]                 Fourthly, FEG  disputes HBTL’s  claim  for second  counsel  at  the  hearing.  I allow for second counsel. Even if HBTL had narrowed its arguments, second counsel was justified.

[7]                 Fifthly, HBTL seeks increased costs on the basis that FEG unreasonably failed to accept a written offer of settlement. The offer was made on 27 February 2023. HBTL offered that it would not seek costs from FEG if FEG withdrew its opposition, removed its caveat and undertook not to lodge any further caveat.

[8]                 FEG says that HBTL’s offer was simply a “walk away” proposition. It says that in Hira Bhana & Co Ltd v Wrightson Ltd the Court of Appeal held that a court should not award increased costs based solely on the making of such an offer.1

[9]                   The Court of Appeal in Hira Bhana was not laying down a hard and fast rule. Rule 14.6(3)(b)(v) says increased costs may be awarded if the party opposing costs has contributed unnecessarily to the costs of the other party by failing, “without reasonable justification”, to accept an offer of settlement. In Hira Bhana, the Court said it was not unreasonable “in this case” for the plaintiff to proceed to trial rather than accept the offer.2

1      Hira Bhana & Co Ltd v Wrightson Ltd [2007] NZCA 342 at [26].

2 At [27]. The Court, at [21]–[24], took some care to explain why it was not unreasonable for the plaintiff to proceed to trial.

[10]            In this case, HBTL’s offer was made at a relatively advanced stage of the proceeding. FEG had plenty of time to consider the offer. The fact that the offer was predicated in part on allegations on which HBTL failed before me does not make it reasonable for FEG to have rejected the offer. FEG has not provided any other justification for failing to accept the offer.

[11]            FEG’s failure to accept the offer unnecessarily increased HBTL’s costs for the steps that followed. I consider HBTL is entitled to increased costs for those steps.

[12]            However, any increase is balanced by the need for a reduction to account for the arguments on which HBTL failed (which is the sixth issue between the parties).  I have already taken some account of that by awarding costs on a band B rather than band C basis for various steps. A further reduction is needed to reflect the unnecessary cost to which FEG was put in responding to these arguments. I consider that the appropriate way to do this is to disallow the increased costs that I would otherwise have awarded to HBTL under r 14.6(3)(b)(v).

[13]            This means that HBTL is entitled to costs for steps 37, 39 (three memoranda and two appearances), 40, 41, 42 (one day), 43 (half a day) and 29. This comes to

$17,686. From that I deduct $2,390 for the one day I allow to FEG. This leaves a costs award of $15,296. HBTL is also entitled to disbursements totalling $2,972. That includes the $640 hearing fee. I direct the Registrar to arrange for HBTL to be invoiced for that amount (if that has not already been done).

Result

[14]FEG is to pay HBTL costs and disbursements of $18,268.

Campbell J