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…

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: [2017] NZHC 1700
Decision Date: 21 July 2017

CaseChat Overview and Summary

In Hubbard v Kiwirail Limited, the applicants, Peter Brent Home Hubbard and Harley Haynes, along with Oceanic Palms Limited, challenged Kiwirail Limited's decision to increase the rent on a commercial lease and its right to terminate the lease. The applicants initially sought orders to prevent these actions, but their applications were dismissed by Fogarty J. Following this, Kiwirail sought an uplift in costs incurred by the applicants' refusal to accept a settlement offer, arguing that the applicants unreasonably rejected a reasonable settlement proposal. The applicants contended that they had no prior notice of Kiwirail's intention to enforce the costs order and incurred expenses proving this fact.

The primary legal issue before the court was whether Kiwirail was entitled to an uplift in costs due to the applicants' refusal to accept a settlement offer. The court had to determine whether the applicants' resistance to Kiwirail's proposal for security over their assets was reasonable, considering the procedural history and the stay order previously made by Muir J. Additionally, the court had to assess whether the applicants' failure to receive notice of Kiwirail's intention to enforce the costs order justified a reduction or denial of costs.

The court found that it was not unreasonable for the applicants to resist Kiwirail's proposal for security over their assets, given the procedural context and the appeal pending against the substantive judgment. The court also considered the applicants' argument that they believed the costs order was stayed due to a previous order by Muir J. While acknowledging the applicants' stance was arguable, the court ruled that the applicants should still pay the reasonable costs of the successful party, as per the usual principle in litigation. The court did not find sufficient grounds to award indemnity or increased costs but directed that the applicants should pay the respondent's costs, amounting to $7,630.50. The court did not order Kiwirail to meet the costs incurred by the applicants in proving the lack of prior notice, as it was deemed a matter for the parties to arrange.

Orders