Jacanna Holdings Limited v Pacific Auto Carrier (NZ) Limited

[2019] NZHC 2996

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2018-419-229

[2019] NZHC 2996

IN THE MATTER OF

an application to interplead under rr 4.58(1), 4.59(3), 4.63(2)(f) and 4.63(4)

BETWEEN

JACANNA HOLDINGS LIMITED

Plaintiff

AND

PACIFIC AUTO CARRIER (NZ) LIMITED

First Defendant

AND

IBC JAPAN

Second Defendant

AND

ROBERT DEVON STONE

First Interested Party

AND

LUCIANE DE SOUZA FERNANDES

Second Interested Party

AND

MELANIE ELEANOR LATUMBO

Third Interested Party

Hearing:

On the papers

Counsel:

M D Branch for Interested Parties D Harrison for First Defendant

J A MacGillivray for Second Defendant

Judgment:

18 November 2019

COSTS JUDGMENT OF PAUL DAVISON J

This judgment was delivered by me on 18 November 2019 at 12:00 pm

pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Harkness Henry, Auckland Gurnell Harrison Law, Auckland Tompkins Wake, Hamilton

JACANNA HOLDINGS LTD v PACIFIC AUTO CARRIER (NZ) LIMITED [2019] NZHC 2996 [18 November 2019]

Introduction

[1]        In my judgment dated 30 April 2019,1 I granted the first, second, and third interested parties’ (the interested parties’) interlocutory application for an order that monies paid into Court by the plaintiff company Jacanna Holdings Ltd (the Jacanna funds) remain in Court pending determination of a dispute over the ownership of the Jacanna funds.

[2]        For the reasons I gave in that judgment, I granted the application. I held that having succeeded, the interested parties are entitled to costs.2 I accordingly directed the interested parties and the first and second defendants to file and serve memoranda as to costs. I have now received and considered the memoranda filed. The parties disagree as to whether some of the steps taken by the interested parties should be included for the purposes of the costs award. This judgment determines that dispute as to costs.

Submissions

[3]        The interested parties seek, on a joint and several basis, an award of costs on a 2B basis, plus disbursements, in the sum of $23,507.60.

[4]        Counsel for the second defendant submits that costs should not be awarded on any steps taken by the interested parties prior to their application for leave to intervene being filed, and dispute the interested parties’ claim for costs in respect of the steps taken before 22 November 2018. The effect of this submission, if it is accepted, would be to reduce the costs awarded against the first and second defendants to $7,582.

[5]        For the second defendant (IBC), Mr MacGillivray notes that, after Mr Stone and Ms Latumbo (the first and third interested parties) initially opposed the plaintiff’s interpleader proceedings by filing appearances reserving rights, counsel for IBC wrote to counsel for the interested parties. That letter, a copy of which is annexed to Mr MacGillivray’s memorandum, informed the interested parties of IBC’s view that the

1      Jacanna Holdings Ltd v Pacific Auto Carrier (NZ) Ltd [2019] NZHC 931.

2      At [115(d)].

interested parties did not have standing to file the appearances. The interested parties refused to withdraw the appearances.

[6]        IBC then filed an interlocutory application to strike out the appearances. Before that was resolved, Mr Stone and Ms Fernandes (the second interested party) filed their application for leave to intervene. Ms Fernandes had not previously filed an appearance. The applications were to be heard on 27 February 2019. However, the parties subsequently agreed to the making of the consent orders of Jagose J dated 27 February 2019. Those orders removed Jacanna (as interpleader) from the proceedings and required the interested parties to seek the order that I granted on 30 April 2019, regarding the funds that would otherwise be paid to IBC.

[7]        The second defendant submits it should not be required to pay costs in relation to the filing of the appearances when the position put forward in support of the appearances being sustained was not the position relied on at the hearing. Because of this, and because the interested parties had no standing to file the appearances, the filing of the appearances and steps taken up to the time of the filing are said to have been unnecessary.

[8]        For the interested parties, Mr Branch maintains that the second defendant’s applications to set aside the appearances would have been unsuccessful but accepts that question cannot now be revisited. In any case, counsel submits that every step taken by the interested parties was to preserve their interest in the Jacanna funds in the face of the first and second defendants’ denial that those rights existed.

Discussion

[9]        Ordinarily, costs follow the event.3 However, costs are at the discretion of the Court;4 subject to the guidance contained in the High Court Rules 2016, and especially the principle that the determination of costs should ideally be predictable and expeditious.5 Relevantly, r 14.7(f)(ii) provides that:

14.7     Refusal of, or reduction in, costs

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

4      Rule 14.1(1).

5      Rule 14.2(g).

… the court may refuse to make an order for costs or may reduce the costs otherwise parable under those rules if–

…

(f)the party claiming costs has contributed unnecessarily to the time or expense of the proceeding or a step in it by–

…

(ii)taking or pursuing an unnecessary step or an argument that lacks merit;

…

[10]      The second defendant’s argument, as I understand it, is that by initially seeking to secure their interests in the Jacanna funds by means of an inappropriate procedure, the interested parties caused the second defendant unnecessary time and expense in opposing the interested parties’ unsustainable appearances.

[11]      To demonstrate the unmerited nature of those appearances, counsel for the second defendant points to the consent orders that were made by Jagose J and the interested parties’ change of position. I take the second defendant to be effectively saying that the interested parties only acknowledged that the initial steps they took were misconceived and unsustainable after having put the defendants to the burden of opposing them.

[12]      In Thorn v United Steel Ltd,6 Mr Thorn had succeeded, but on only one of four grounds that he had advanced. Many of Mr Thorn’s arguments had failed, and some were plainly without merit. The ground on which Mr Thorn succeeded was one that had emerged in oral argument after “extensive affidavits, memoranda, and submissions were filed” by all sides on the three grounds on which Mr Thorn initially relied. Nation J held that costs should lie where they fall. IBC appears to say the position here is analogous.

[13]      In Thorn, Nation J was clearly of the view that Mr Thorn’s three initial grounds of argument were entirely ill-conceived. Here, as Mr Branch says, I am not now able to revisit the question of whether the interested parties’ appearances were, as IBC

6      Thorn v United Steel Ltd [2017] NZHC 3152.

maintains was the case, wholly unsustainable. The parties, sensibly, overcame the difficulties engaged by the form in which the interested parties initially sought relief by agreeing to the consent order suggested by the Court. I am not prepared, given those circumstances, to decide whether the parties’ efforts in respect of that ‘phase’ of the proceeding (ie during the currency of the interest parties’ appearances) were rendered unnecessary by subsequent developments.

[14]      The remaining question is whether, as IBC says, the interested parties’ position during the currency of their appearances was so different from that on which they ultimately succeeded, to render the effort involved in advancing and responding to the earlier position redundant and a wasted effort. Specifically, IBC characterises the interested parties’ initial position as being that Pacific Auto Carrier (NZ) Ltd (PAC) had no interest in the Jacanna funds. However, the interested parties’ position as advanced at the hearing was that PAC and Autoterminal International Limited (ATI)’s rights could be affected if the funds were paid to IBC and PAC was found to be the ultimate owner of the funds.

[15]      It is correct that the way the interested parties have advanced their claim, both in terms of form and substance, has changed over time. However, it remains the case that the interested parties are the successful parties, and I do not consider there are exceptional reasons justifying departure from the primary principle that costs follow the event.7 Even on the highest view of IBC’s achievements in delaying the interested parties’ success, “success on more limited terms is still success.”8 Each step taken by the interested parties was clearly aimed at preventing the dissipation of the Jacanna funds pending the resolution of the substantive proceeding, given their claimed interest in the funds. The first and second defendants failed to resist that claim.

Result

[16]      It follows that costs should follow the event. I have reviewed the schedule of costs and disbursements filed by counsel for the interested parties. Absent

7      See Ace Structural Ltd v Green [2019] NZHC 2094 at [13] and [18]; and AAM Ltd v Exotica Enterprise Ltd [2019] NZHC 1807 at [39].

8      Weaver v Auckland Council [2017] NZCA 330 at [26].

submissions to the contrary from the parties, I agree that a 2B categorisation is appropriate in respect of each step claimed for by the interested parties.9

[17]      Subject to one qualification I am satisfied that the disbursements claimed are reasonable and reflect the costs reasonably incurred in respect of this proceeding.10 The qualification relates to the interested parties’ claim for three filing fees in respect of orders for appearances reserving rights. In fact, only two of the three interested parties filed appearances. The interested parties’ claim for one of those filing fees is accordingly disallowed.

[18]      The first and second defendants are to pay, on a joint and several basis, the first, second, and third interested parties’ costs and disbursements in the sum of

$23,397.60, subject to the item disallowed in [17] above.

Paul Davison J

9      High Court Rules 2016, rr 14.3(1) and 14.4; schs 2 and 3.

10     Rule 14.12(2).