Hubbard v Kiwirail Limited

[2017] NZHC 1700

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-003145 [2017] NZHC 1700

UNDER

The Property Law Act 2007

BETWEEN

PETER BRENT HOME HUBBARD AND HARLEY HAYNES

First Applicants

AND

OCEANIC PALMS LIMITED Second Applicant

AND

KIWIRAIL LIMITED Respondent

On the papers
Appearances:	Appellants in person, E Martin for Respondent
Judgment:	21 July 2017

COSTS JUDGMENT OF TOOGOOD J

This judgment was delivered by me on 21 July 2017 at 3.00 pm

Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Hubbard v Kiwirail Limited [2017] NZHC 1700 [21 July 2017]

[1]      On  20 May 2016,  Fogarty  J  delivered  a  judgment  between  the  parties dismissing applications by the applicants for orders preventing Kiwirail Limited from increasing the rent on a lease of commercial premises, and preventing Kiwirail from  re-entering  and  terminating  the  lease.1    The  subsequent  history  of  the proceeding is set out in a judgment I delivered on 14 November 2016,2  in which I dismissed an application by the applicants for a stay order in relation to a costs judgment delivered by Fogarty J on 19 August 2016.3

[2]      In my judgment I said that Kiwirail was entitled to costs and set a timetable for the filing of memoranda.  Memoranda were exchanged in a timely manner and I regret the delay in issuing this judgment which resulted from the court file having been mislaid.   The respective positions of the parties as to costs may be briefly stated.

[3]      Kiwirail says that its proposal that the applicants should pay costs totalling

$7,134.50 was not accepted and it now seeks an uplift of 50 percent in respect of certain steps taken in the proceeding.   It relies on r 14.6(1)(a) of the High Court Rules, submitting that a reasonable settlement proposal after the applicants' application for a stay was filed was unreasonably rejected. The proposal was that the applicants should grant Kiwirail security over their assets to the extent of the judgment debt owing, on the basis that Kiwirail would not enforce the debt until the outcome of an extant appeal to the Court of Appeal was known.  The uplift is said by Kiwirail "to represent actual costs which were incurred as a result of the applicants' failure to accept Kiwirail's reasonable settlement offer".  Put that way, it is close to an application for indemnity costs.

[4]      The applicants submit that it was reasonable of them to assume, in light of the procedural history, that Fogarty J's costs judgment had been stayed by the earlier consent  order  made  by  Muir J.    They  say  also  that  they  did  not  receive  prior notification from Kiwirail that the company would be seeking to enforce the costs order and that they spent time and money on a forensic analysis of their computer to

prove that the email sent by Kiwirail was not received.

1      Hubbard v Kiwirail Limited [2016] NZHC 1061.

2      Hubbard v Kiwirail Limited [2016] NZHC 2719.

3      Hubbard v Kiwirail Limited [2016] NZHC 1937.

[5]      On  that  basis  they  argue  that  Kiwirail  should  not  receive  any  costs. Alternatively, they argue that schedule costs only should be ordered and that liability for such costs should be added to an instalment plan for the payment of other costs ordered in the proceeding.  The applicants also seek an order directing Kiwirail to meet the costs incurred by them in proving that they did not receive prior notice of the intention by Kiwirail to enforce Fogarty J’s costs order.

[6]      In reply, Kiwirail submits that it is not relevant that the applicants did not receive the July notice of its intention to enforce the payment of costs (assuming the Court accepts that that is the position) following Muir J’s stay order.  It is said to be evident  from  the  response  to  Kiwirail's  efforts  to  enforce  the  costs  order  in September 2016 that the applicants would have opposed it in July.   Kiwirail notes that it is not disputed that notice was sent to the applicants, even if it was not received.

Discussion

[7]      Although I accept that Kiwirail made a timely proposal to obtain security over the applicants' assets to protect all of the orders made in its favour, I do not consider it unreasonable of the applicants to have resisted that proposition pending an appeal against the Court's substantive judgment.  I also accept that it was at least arguable that the order for stay made by Muir J in June 2016 applied pre-emptively to the Costs Judgment delivered by Fogarty J in August 2016.   The fact that the argument failed does not mean it was unreasonable of the applicants to seek to clarify whether Muir J’s stay extended to staying to cover costs.

[8]      Accordingly,  I  see  no  basis  for  awarding  indemnity  or  increased  costs. Equally, however, the usual principle that an unsuccessful party in litigation should pay the reasonable costs of a successful opponent should apply.4

[9]      There is no dispute as to the scale amount claimed on a Category 2B basis. Accordingly, I direct that the applicants shall pay the respondent's costs in the sum of

$7,470.50 together with disbursements of $160, a total of $7,630.50.

4      High Court Rules 2016, r 14.2(a).

[10]     The Court has not been given any information about arrangements to pay other costs orders by instalment and I do not see any basis in the material before me on which that should ordered.  It is a matter for the parties.

................................................

Toogood J